There was an interesting and useful breakfast meeting of the DRBF this morning chaired by the indefatigable Ron Finlay in Sydney. It was mostly about dispute avoidance techniques in DABs, but at the end we had a brief discussion about tribalism: the process in which litigation teams in major litigation or arbitration tend to form societal units, with their own loyalties, methods and objectives.
I have long thought that tribalism in major litigation or arbitration is a hugely powerful effect, and encouraged by Kiri Parr from Brisbane, am here offering some observations about it.
One impact is that it renders the “independent” concept of expert witnesses almost entirely meaningless. This is partly because he who pays the piper calls the tune, but also because expert witnesses who get heavily involved in a major piece of litigation or arbitration typically become part of the tribe, consisting of counsel, solicitors, in-house legal and commercial people on any one side. This tribalism is not dissimilar, it seems to me, from what happens in traditional warfare, and which is maximised by organising infantry into groups (companies) of about 20 soldiers. It is in groups of that size that tribal loyalty seems to be that its strongest. And that size is, roughly, the size of a litigation team in a major dispute (including counsel, solicitors, experts, in-house legal and the commercial people). When an expert witness becomes sufficiently embedded into litigation team, the opinions of that witness typically become a secondary tier of advocacy. The expert might not, like a soldier, be prepared to risk his life for other members of his company, but the psychological pressure to support the team as best as possible is huge.
Another less widely recognised impact is that the tribe often becomes resistant to settlement of the dispute, because that settlement means the dissolution of the tribe. For sure, “best for tribe” usually outweighs “best for project”, and often outweighs “best for own party”. In part, of course, this is because the external lawyers and experts get paid more money the longer the dispute goes on, but the interesting and perhaps surprising thing is that even the in-house people in the tribe often align themselves to this resistance to settlement of the dispute, even when it would be in the interests of their company or government agency to settle the dispute.
This is, of course, corrosive and unhelpful. Dispute avoidance boards are, of course, useful to avoid the tribalism taking root in the first place. But what about situations where the tribalism has taken root? The difficult thing is how to get rid of it.
If the project is still ongoing, then a Dispute Avoidance Board might well be able to assist, by using the various techniques in which DAB members have been trained, and with which they should be familiar. A key feature is to get individuals to work with their corresponding people on the other side of the “contractual fence” and not merely with other people on the same side of that fence. This can, of course, work even without a DAB. I remember being very impressed when a Japanese construction manager got involved in a substantial project where the parties had already got into litigation, and were bitterly opposed to each other: the warning sides were required to move their desks such that individuals involved in any particular aspect of the project was sitting opposite the individuals from the other parties involved in that aspect of the project. It was a very effective move in that case.
Sometimes, and particularly after a project has been completed but the dispute rumbles on, the answer is to identify the individuals who are the beating heart of the tribalism on each side, and to get them moved on, and replaced with fresh people.
Not all of the possible answers based only on the psychology. Some of it is just to do with the cash. And a key thing is how the external lawyers are paid. The traditional way to pay the external lawyers is by the hour or by the day. Obviously, that means that their motivation (often subconscious) is for the dispute to continue. Contingency fees do not have this problem, but do have other problems. One answer is a sort of target cost arrangement, of which I have experience. When practising as a solicitor in London, I was instructed in a very large international case, involving very many millions of dollars, for a South American company. My clients wanted to pay me on a contingency basis, and I was obliged to tell them that this was simply not permitted under the relevant professional rules applying in the UK. Instead I proposed, and we implemented, the following scheme:
- We agreed a budget for the total amount of money that it was worth spending by way of legal fees in the arbitration. It was a healthy budget, reflecting the size and complexity of the case. But spending any more that that budget would have been excessive.
- I agreed that that budget would represent the maximum that my firm would charge for the case, regardless of how many hours I and my team spent on it. The client understood that this was not a, “leave no stone unturned” approach. On the contrary, my job was to provide the biggest bang for that buck.
- There was a quid pro quo in return for my agreeing to limit my firm’s fees in that way. As the case went on, my firm delivered its bills in the usual way, at our usual rate and the client paid these bills. But if we were able to obtain a settlement of the case having previously billed less than that overall budget, then my firm was to be paid one-third of the saving. My clients were perfectly happy to agree this. Their senior in-house counsel said that he had never seen a case where he had agreed a budget, and ended up being charged less than that budget.
As it happened, I was able to obtain a settlement without exhausting the whole of the budget, and so my firm benefited from that “bonus” of one third of the saving. As a practising lawyer, my objective was always to win cases with the minimum of hearing time, but even if I had been an avaricious type of lawyer, it would have been in my interests to obtain a settlement when I did.
Another approach is the minitrial variant of ADR, in which there is not a single neutral, but a panel of three, being one experienced ADR professional (truly independent) as chairman (or chairwoman) and from each party one senior executive with settlement authority and with no prior involvement in the dispute. It might seem counterintuitive, but the evidence seems to be that such panels do tend to work as a team, the loyalty of all of the panel members being (at least to a substantial and often sufficient extent) to the process of resolving the dispute, and not to the litigation team on their side of the dispute.
Even in these rather technical issues, the relevant psychology is never far away. And unless you have experience of and understand the tribal thing, you are unlikely to have a really good view of the target of dispute resolution.
 Obviously, there was a careful agreed definition as to what was “in” and what was “out” for this purpose. Thus, for example, appeals by the other party were not covered.