April 20, 2016

The Role of In-House Counsel in the Sound Administration of Justice

Frédéric Pérodeau

When discussing how to promote the sound administration of justice, the roles of the judiciary, the litigants, and the trial lawyers are traditionally considered. Yet, the role of in-house counsel is central and it has been the subject of little discussion. The many facets of this role place the in-house counsel in a position well suited to promote an effective and efficient use of judicial resources and to ensure the sound administration of justice. In-house counsel –  as legal service providers, law firm clients, and trusted business advisors – have opportunities to become major contributors. To be as effective as possible in this regard, in-house counsel need to develop certain personal and professional skills that will enable them to work proactively and, in so doing, promote both the proper functioning of the justice system and access to high-quality justice. 

Court Delays and Access to Justice: A Worldwide Concern

It has been said repeatedly that justice delayed is justice denied. Court delays compromising access to justice are a worldwide plague, which various stakeholders have tried, are trying, and will continue to try to find solutions for. There are plenty of recent examples where bar associations, law societies, courts, academia, and others have dissected, diagnosed, and proposed solutions to this complex situation.

In 2014, the Supreme Court of Canada rendered a judgment in Hryniak v. Mauldin, [2014] 1 SCR 87, and emphasized the necessary culture shift that all providers of legal services and users of the justice system have to embrace to ensure access to justice:

[1] Ensuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial. Without an effective and accessible means of enforcing rights, the rule of law is threatened. . . .

[2] Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying  pre-trial procedures and moving the emphasis away from the conventional trial in favor of proportional procedures tailored to the needs of the particular case. The balance between procedure and access struck by our justice system must come to reflect modern reality and recognize that new models of adjudication can be fair and just.

In Pinto v. Kaur, 2015 ONSC 1356, the Ontario Superior Court of Justice made one particular plea to legal service providers and users of the justice system as to the importance of this culture shift:

[3] What does it mean to enhance the goals of “efficiency, affordability, and proportionality” in civil justice? It means that we are trying to make a system of civil justice that people can afford to use. It means resolving cases faster. It means resolving cases cheaper. It means resolving cases with an investment of costs commensurate with the amount in issue. While easy to say, how can it be achieved? The Supreme Court of Canada has told us.

In his 2015 Year-End Report on the Federal Judiciary, Chief Justice John G. Roberts Jr. emphasized that “we must engineer a change in our legal culture that places a premium on the public’s interest in speedy, fair, and efficient justice.”

The solution to access to justice cannot always be to add more resources, allocate more money, and appoint more judges (not to be confused with filling judicial vacancies). The solution lies in the efficient use of the resources (human, financial, and material) already allocated to the justice system for the purpose of facilitating access to justice. These scarce resources should be used only for the matters that really need to be dealt with judicially.

In-house counsel ought to drive this culture shift because they are uniquely positioned to cultivate an environment promoting timely and affordable access to the civil justice system. As legal service providers, law firm clients, officers of the courts, and trusted business advisors, in-house counsel are at the juncture of a variety of concerns, interests, constraints, and opportunities, and they are well positioned to act as a catalyst for change.

To fulfill this potential, in-house counsel have to master a certain number of skills that are essential in resolving cases faster, cheaper, and with a cost investment commensurate with the interests at stake. 

Embrace a New Mindset

In his 2015 report, Chief Justice Roberts stated:

As for the lawyers, most will readily agree – in the abstract – that they have an obligation to their clients, and to the justice system, to avoid antagonistic tactics, wasteful procedural maneuvers, and teetering brinksmanship. I cannot believe that many members of the bar went to law school because of a burning desire to spend their professional life wearing down opponents with creatively burdensome discovery requests or evading legitimate requests through dilatory tactics. The test for plaintiffs’ and defendants’ counsel alike is whether they will affirmatively search out cooperative solutions, chart a cost-effective course of litigation, and assume shared responsibility with opposing counsel to achieve just results.

Trial lawyers are being asked to shift their litigation approach from warrior to facilitator. This should be the case for in- house counsel instructing private practitioners as well.

A more rational approach to dealing with disputes is needed from all the stakeholders. This approach should forgo, as much as possible, emotions and antagonistic forces, and should instead focus on compromises, mutual benefits, early resolution, and commercially sound solutions. This is a crucial first step. 

Have a Good Understanding of the Justice System and Rules of Procedure 

The traditional route to the in-house community is a transition from private practice to an in-house role after a certain number of years. The majority of private practitioners transitioning to in-house roles do not have a litigation background. In some cases, their knowledge of the justice system and rules of procedure goes all the way back to their days in law school. 

For in-house counsel to resolve cases faster, cheaper, and with an investment of costs commensurate with the amount at issue, they must have a good understanding of the justice system and rules of procedure. First, internal clients rely on in-house counsel to guide them through the judicial process and explain the upcoming procedural steps. Second, in-house counsel are required to have the knowledge to fully understand the advice provided by external counsel, challenge them if needed, translate the advice from legal to business language, and, most importantly, assess whether the advice is actually in line with the strategic business objectives of the organization. Failure to understand the justice system and rules of procedure might create a situation where in-house counsel become overly dependent on advice provided by external counsel. This should be avoided if in-house counsel really want to play a role in resolving cases faster and cheaper. 

Be Involved Early and Have Solid Knowledge of the Matter 

From an access to justice standpoint, last-minute settlements do not make sense because they are an inefficient use of scarce judicial resources, lead to court delays, and reduce access to justice. 

From a purely commercial standpoint, last-minute settlements do not make sense because almost all the organization’s resources needed to prepare for a trial have been invested. The organizations involved will have paid a large amount in legal fees and costs. And, most importantly, they will have used a massive amount of human labor on fact-finding, document review, preparation for discovery work, etc. This is disruptive for an organization, and the indirect costs associated with handling litigation are substantial. In addition to the anxiety created by this situation, employees at every level of the organization (including C-suite members) are being asked to do work different than that which they are good at and engaged in. You oblige talented people to perform tasks they are not qualified for and don’t find satisfaction in. 

In-house counsel are uniquely positioned to contribute to settlements earlier in the process, to the benefit of their organizations and the justice system. As the contact point between external counsel and organizations, in-house counsel should ensure that settlement opportunities are being explored early on in the process and that they remain on the radar throughout the progress of the case. For that to happen, in-house counsel have to get involved in a matter as early as possible and must develop solid knowledge of the case. As underlined by the Institute for the Advancement of the American Legal System in its 2015 report, Change the Culture, Change the System, “[u]nderstanding the case as much as possible as early in the process as possible allows a lawyer to design the process in a way that best serves the client and the system.” Otherwise, getting to an efficient resolution becomes highly challenging and unlikely. In addition, business people will much prefer interacting with an in-house counsel who has mastered a case at its early stages and proposes commercially sound solutions than one who relies solely on the periodic progress reports provided by external counsel. 

Be Familiar with Alternative Dispute Resolution

Arbitration (bracketed, baseball, nonbinding, etc.), mediation (evaluative, facilitative, etc.), med-arb, settlement conference: In-house counsel have to master the alternative dispute resolution (ADR) tools available if they want to ensure that the disputes and litigations in their portfolio are being handled as efficiently as possible.

ADR is not just another “flavor of the month”; it is here to stay. More and more, governments and courts around the world expect the stakeholders to consider ADR before spending the resources of the justice system to judicially resolve their disputes.

In his 1996 seminal report entitled Access to Justice (Final Report), Lord Woolf emphasized “the need to bring the uncontrolled features of the adversarial system under proper discipline and to promote more, better and earlier settlements.” One of the most significant procedural changes he proposed was the introduction of pre-litigation protocols. Before commencing proceedings, the parties are expected to try to settle the issues and to consider a form of ADR to assist with the settlement.

On January 1, 2016, the new Code of Civil Procedure came into force in the province of Québec. In its preliminary provision, it states that the code is “designed to provide, in the public interest, means to prevent and resolve disputes and avoid litigation through appropriate, efficient and fair-minded processes that encourage the persons involved to play an active role.”

In such a context, it is indisputable that in-house counsel need a certain level of familiarity with ADR concepts and tools so that they can make the best possible decision as to how to efficiently handle litigation matters.

Educate and Influence Internal Stakeholders 

The first step for in-house counsel is to shift their minds from a warrior approach to a facilitator approach and to develop the corresponding skills and attributes. The next step is crucial. Because they might not be the ultimate decision makers when it comes to strategic choices and resolutions, in-house counsel must use their role as trusted business advisors to educate and influence decision makers within their organization on a variety of topics and issues related to handling and resolving disputes. In-house counsel have to create a business culture in which business people and decision makers understand that judicial resources are not unlimited and that they should be reserved for matters that require or deserve them. This is an important role, given that some internal clients’ understanding of the justice system and courts may be inexistent, limited, or – worse – influenced by TV shows and movies.

Do Not Let External Counsel Run Your Business 

Obviously, external counsel will provide in-house counsel with strategic advice. That is an important part of their mandate and that is what they are expected to do. Nevertheless, in-house counsel are uniquely positioned to define the needs of their organization and the scope of representation, understand the advice provided, assess how it advances the interests of their organization, and determine whether it is in line with the organization’s strategic business objectives. In-house counsel should not let external counsel make decisions they are accountable for. In-house counsel must be able to understand and analyze the advice, take it into account, factor in a variety of issues, and then make the best possible decision. In-house counsel understand the implications of strategic advice provided by external counsel better than anyone else. 

One could argue that it takes courage to make decisions that are not in line with the strategic advice given by external counsel. I would argue that it is not courage; it is just doing what management expects from in-house counsel, when needed. Ultimately, in-house counsel are accountable for the decisions they make and they can’t hide behind advice given by external counsel. 

Be Aware of Human Factors and Conflicting Interests 

When conducting a root cause analysis of disputes, you often realize that they are people-driven. These disputes might be the result of bad communication, lack of trust, previous dealings, or underlying escalating disputes between individuals. The individuals that in-house counsel are interacting with might be directly responsible for having created or inflamed, or created and inflamed, the now disputed or litigated situation. Worse, the end result might have an impact on compensation or employment for these individuals. Disputes that are the result of interactions between humans or that involve conflicting interests will be difficult to resolve as long as the individuals with a personal interest in the situation are still involved in the decision-making process. In-house counsel have to master the political skills needed to recognize, diagnose, and resolve these toxic situations. Should the in-house counsel realize that a dispute has become personal between the representatives of opposing parties, has little to do with the interests of the organizations involved, or has escalated to a level that is not commensurate with the commercial interests at stake, he or she must intervene. The more an in-house counsel is successful in positioning himself or herself as a trusted business advisor, the more his or her interventions will be successful. Bringing in new players is always a good opportunity to try to resolve a matter, and a breath of fresh air is more than welcome when leading off or resuming settlement discussions. 

Conclusion 

The purpose of this paper is to raise awareness among the in-house counsel community in the context of access to justice concerns and issues, as well as to highlight the underestimated importance of their role in resolving cases in ways that ensure effective and accessible means of enforcing rights. The many facets of this role place the in-house counsel in a position well suited to promote an effective and efficient use of judicial resources and to collaborate on the sound administration of justice. To fully contribute to this shift in culture, in-house counsel have to master a certain number of skills that are essential to resolving cases faster and to ensuring that judicial resources are devoted solely to matters that require or deserve them. It is hoped that this paper is only the beginning of this discussion, not the end.

Additional Resources

For other materials on this topic, please refer to the following. 

Committee Newsletters 

I Came, I Saw, I Made a Difference: Pragmatic Pro Bono Programs for the Twenty-First Century
By Mark T. Andrus; edited by Cynthia Thaxton
Consumer Financial Services Committee Newsletter December 2015 

Business Law Section Program Library 

Training the Next Generation of Corporate Counsel: How Clients, Law Firms and Law Schools Can Share the Burden (PDF)
Presented by: Corporate Counsel, Business and Corporate Litigation, Business Law Education, Young Lawyer
Location: 2016 Spring Meeting

Frédéric Pérodeau

Frédéric Pérodeau, LLB, BSc, CICC, is the chair of the Canadian Corporate Counsel Association and certified in-house counsel (Canada). He would like to acknowledge the contribution of Christine Staley and Karen Sadler in revising this paper. 

This article was originally published in the ABA Section of Litigation Corporate Counsel Committee newsletter, winter 2016 vol. 30, no. 2.