The first Alternative Dispute Resolution Superconference, sponsored by the American Arbitration Association and FORBES Magazine, explored an emerging area for CPAs to practice in as alternative dispute resolution (ADR) consultants, neutrals, and experts. The conference was held in Washington, D.C. on April 28-29, 1997, and was created with the participation of the American Institute of CPAs, National Association of Manufacturers, and other major associations, publications, and professional firms including Price Waterhouse LLP. It was attended by over 600 participants, including all Big Six accounting firms and several smaller firm CPA ADR specialists.
Made public for the first time were the results of a comprehensive survey of ADR use by 1,000 of the largest U.S. corporations conducted by The Foundation for the Prevention and Early Resolution of Conflict (PERC) and Price Waterhouse LLP. The survey showed that during the last three years, 88% of these firms used mediation and 79o/ used arbitration and that use was likely to grow significantly in the future. The areas of use were for disputes in commercial, employment, corporate finance (including mergers and acquisitions), international transactions, financial reorganization (including workout) disputes, construction, intellectual property, and product liability.
CPAs who practice in any of the above areas may wish to follow the example of Price Waterhouse LLP, whose representatives explained at the conference that they are vendors in these areas as neutrals (the mediator or arbitrator in an ADR proceeding), advisor (to suggest, among other things, removing ambiguous language that may lead to a dispute and, in the event of a dispute, to help in the conduct of the ADR proceeding), or as independent experts. They are also users of ADR for certain client disputes and for their commercial contracts.
The CPA profession was represented by several speakers. Among them were Michael O. Gagnon and Deborah Enix-Ross of Price Waterhouse LLP, George R. Zuber of Deloitte & Touche LLP, Kathryn A. Oberly of Ernst & Young LLP, William Barrett, sole practitioner (Richmond, VA), and John Meara of Meara and King (Kansas City, MO).
At the conference Monte M. Kaplan, litigation services technical manager, disclosed that the AICPA will soon release practice aids covering binding and nonbinding ADR procedures.
A way that CPAs can use ADR in their practice was explained by Katherine A. Oberly, Esq., who stated that Ernst & Young LLP, since she had become general counsel approximately three years ago, had begun a program of requiring that all client engagement letters state that in the event of a dispute it be resolved first with mediation or, if that is not successful, go to arbitration under the American Arbitration Association's Rules for Professional Accounting and Related Services Disputes. She believes that the use of ADR is overall a better use of resources than litigation because it costs less in time lost and money as a result of the case being settled more quickly. At present, about 50% of their engagement letters and 100% of their contracts with suppliers and other vendors contain such ADR clauses. As it takes time for disputes to surface from an engagement, there have not yet been many cases that have entered into ADR.
James J. Seifert, Esq., assistant general counsel, the Toro Company, said Toro had over 300 mediations of customer claims during the past seven years. During that time, its business doubled while its transaction and settlement costs dropped 65%. At the same time, the net dollars going to claimants increased because claimants had less in the way of legal and expert fees to pay.
Toro's insurance costs dropped about one million dollars a year while its liability limits were raised 25%. …