Research showing that ADR-favoring law departments spend less and achieve more

In 2003 the American Arbitration Association (AAA), using an independent market research firm, interviewed by telephone 254 US general counsel or other senior law department lawyers. According to a summary published in the ACC Docket, July/Aug. 2004 at 93 , the respondents were asked to rank their law departments on eight attributes.

The aggregate scores from those self rankings were the basis for the researchers sorting the companies into three equal groups. One group, with the highest scores, they called “dispute-wise,” the middle third of scores made up the intermediate group of companies, and the third with the lowest scores were, shall we say, “dispute-dumb.”

For those law departments who gave their internal and external legal spending, the dispute-wise were reported as having “40 percent lower mean internal legal department budgets” than the dispute-dumbs. Bizarrely, the mean external legal budgets were virtually the same. Size does not explain the results, because the three size and type categories (Fortune 1000, “mid-size,” and privately-held) had close to equal representation.

I have no interpretation that can make sense of this result, and in fact have many serious methodological questions about this study. For one, what does the answer to the question, “A lot of our time is spent on international issues” have to do with ADR? To the same puzzlement, what about, “A lot of our time is spent on highly complex and technical questions.” In terms of attitude toward resolving disputes, what does the response to this question suggest: “The legal department is highly integrated into the general corporate planning process”? The dispute wise were much higher than the dispute dumb on this, but I see no evident connection.

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