I’m intrigued by the so-called “litigation prenup,” a.k.a. the Economical Litigation Agreement, or “ELA,” that’s being proposed by Boston litigator and former judge Daniel Winslow, along with the International Institute for Conflict Prevention & Resolution (CPR Institute).
Sure, there are the inevitable nay-sayers who claim that judges won’t like it (I think they’re wrong about that). And some of the specific ELA terms and conditions might need some fine-tuning.
But on the whole, Mr. Winslow is to be applauded for proposing what I think could be a huge money-saver.
Even so, however, I don’t think I’d counsel a client to make an irrevocable commitment to the ELA just yet. It’s too new a concept. The legal community needs to get some experience with it.
So I would change the proposed contract clause to include a narrow window of opportunity for either party to opt out, thusly:
XX. Economical Litigation Agreement: (a) Except as otherwise provided below, any dispute arising out of or relating to this Agreement or any transaction or relationship arising from it, including for example the breach, termination or validity of this Agreement, whether based on action in contract or tort, shall be finally resolved by civil litigation in accordance with the International Institute for Conflict Prevention & Resolution Economical Litigation Agreement (2010 edition) (the “ELA”), by a judge sitting without a jury.
(b) In jurisdictions where advance waiver of jury is prohibited as a matter of law, or where all parties to this Agreement subsequently agree in writing, such dispute shall be decided by a jury.
(c) Either party may opt out of the ELA by giving written notice to the other within ten business days after service of the summons and complaint or their equivalent.
(Italics indicate my edits; extra paragraphing added for easier reading.)
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Signing a business contract:
Thank you for your remarks on the ELA. There will be some adjustment as companies experiment with adoption of the model clause. Like anything new, there will be some trepidation among potential users of the concept until they see others’ experience. Rather than an opt-out, I suggest a “toe in” approach might be best: companies can try the ELA for smaller contracts to stick a toe in the water. As companies gain experience, the ELA can be incorporated in larger contracts. We already have been told of companies considering the ELA for M&A, IP licensing as well as B2B contracts. Time will tell if it catches on. Best regards, Dan Winslow
Thanks for visiting, Dan, and for putting the ELA forward; I hope it catches on. You’ve done a real service to the business community.