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'Minitrials' unsnag business disputes

You have a problem to solve. Would you consider hiring someone-into Greek, resolve it in that language, and then hand you an intricate settlement that you couldn't read without a Greek-English dictionary?

Some executives think that untangling a business dispute in court makes about as much sense. Hence current interest in the "minitrial," a new method of conflict resolution which promises to save businesses considerable time, money, and aggravation.

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Why, business managers ask, take what is essentially a business problem, translate it into legal terms, and then put it in the hands of a judge who may understand little or nothing about the issues involved? Meanwhile time and money slip away, and the top managers who really comprehend the ins and outs of the thing are waiting on the sidelines twiddling their thumbs.

The minitrial -- which is not really a trial, bur rather a form of nonbinding arbitration -- is an attempt to cut through legal red tape and bring business expertise into the settlement process.

The minitrial first appeared in 1977 during a sticky patent dispute between TRW Inc. and Telecredit Inc. The conflict had dragged on for over two years, had cost each side over $500,000, and still hadn't come to trial. Then came the minitrial.

"We kind of fell into it," says Harry Jacobs, senior counself for TRW. "Their lawyers didn't seem interested in what we had to say, we weren't getting anywhere, and we felt that if we could just get in touch with their business people, we could work something out. But you can't just pick up the phone and talk to executives of the company you're going to court with."

So first binding arbitration was considered -- and rejected. Then someone proposed out-of-court, nonbinding arbitration, and both sides warmed to the idea.

Rules were drawn up for the arbitration, and the procedure that resulted is now a basic model for the minitrial. (The name "minitrial" was actually the invention of a headline writer at the New York Times. Eric Green, one of the counsels' key to the creation of the process, prefers to call it "an information exchange.")

Telecredit and TRW stuck to the format proposed, and three months later a compromise satisfactory to both sides was reached within 30 minutes at the close of a two-day private hearing. The two companies figure they saved about $1 million in legal fees.

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By Eric Green's count, close to a dozen such minitrials have been tried since he Telecredit-TRW success, and all have reached speedy resolutions. Variations on the theme have been tested as well, with differing degrees of success.

Basically, the minitrials calls for an informal presentation by the lawyers and experts of each party of the "best case" of that side. The presentation, which is limited in length, is made before top management representatives of both companies and a "neutral adviser," or moderator. When both sides have finished, managements of the two parties meet to try to effect a compromise.

Should the compromise efforts fail, the neutral adviser is asked to inform the parties of what he imagines the outcome would be should the issue be brought to court. This, it is hoped, may spur the negotiators to be more reasonable in their compromise demands.

To achieve workable results, the parties involved must be flexible in their demands. Much also depends on the neutral adviser, whose job it is to keep proceedings on the right track.

Not all cases are suited to this kind of treatment. A dispute dealing primarily with questions of law of or credibility would probably not lend itselfs to a minitrial. However, patent cases, antitrust suits, and disputes over product liability or unfair competition are all good minitrial candidates.

TRW tried a second minitrial shortly after the successful accord reached in the Telecredit case. A product liability case involving Automatic Radio of Melrose, Mass., which had been dragging on for four years was settled within four hours after a 2 1/2-day presentation.

In an effort to promote the minitrial, the Center for Public Resources, a New York-based business think tank, sponsored a mock minitrial early this month at the UCLA School of Management. Students at the school drew up a trademark case, and it was "minitried" before 12 teams of top managers and general counsel from Fortune 500 companies. After the presentations, the teams paired off and went into negotiations. Six out of six successfully settled.

Richard Edmondson, vice-president and general counsel of Bristol-Meyers, who participated in the UCLA mock trial, said his group settled within an hour. He called the process "first rate" and said he would definitely be inclined to use it for the right type of case. He commented that all six of the accords achieved were "better than could have been reached through the courts."

Edward Dauer, associate dean of the Yale Law School, comments that "it is hard to imagine the minitrial notm becoming extremely important," largely because "it is at least as acceptable as a court trial, and much c heaper."

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