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Private Justice: Good Idea, Needs Work



The U.S. legal system is guilty of costly inefficiencies that hurt the competitiveness of American companies. A business week/Harris Poll of senior executives drawn from the business week 1000 found that 62% of those surveyed believe that the American civil justice system significantly hampers the ability of U.S. companies to compete with Japanese and European rivals. And 83% of those polled say that the fear of lawsuits inhibits their decision-making more than it did 10 years ago.

Now, after years of mounting frustration with soaring legal costs and lengthy court delays, companies are applying logic to the problem. Theyre resolving their battles privately, through mediation and arbitration, as well as such innovative techniques as mini-trials and rent-a-judge services (page 36). Some 600 top corporations have signed a pledge drafted by New Yorks Center for Public Resources, a nonprofit group that promotes alternatives to litigation. Signers pledge to consider negotiation and other forms of alternative dispute resolution before heading to court against others who have taken the pledge. Some companies go further. Motorola Inc. makes its in-house lawyers seek all possible alternatives to running to court. At the same time, its lawyers counsel Motorola executives to forestall conflicts through better contracts, improved product quality, and truthful salesmanship.

Companies should be encouraged to settle their disputes, but such alternative dispute techniques have dangers that need addressing. Whether or not they embody a public interest or novel legal question, they are held in private. And the booming resolution business is largely unregulated. Almost anyone can be a self-appointed mediator. At a minimum, standards must be set so that mediators are qualified. Also, the proceedings must be open to the public. Alternative justice mustnt be used to avoid disclosure of potentially damaging information, such as health and safety risks.

Congress and the Bush Administration are right to promote alternative dispute resolution to help lift the burdens on the courts. But that should be just the beginning of efforts to bring efficiency to the legal system.

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