Task Force on Commercial Litigation in the 21st Century

Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on the executive summary of a report issued by the Chief Judge’s Task Force on Commercial Litigation in the 21st Century, which was co-chaired by Mr. Lipton and Former Chief Judge of New York Judith Kaye. The full report is available here.

As the Commercial Division of the New York Supreme Court approaches its twentieth anniversary in a significantly changed world, the Chief Judge constituted this Task Force to ensure that the New York Judiciary helps our State retain its role as the preeminent financial and commercial center of the world. The rule of law and the quality of the courts that apply and enforce it are key elements in keeping us competitive in today’s global economy.

In 1995, New York blazed a judicial trail when it launched the first commercial court of its kind in the country. But since that time, the number and complexity of cases in the Commercial Division have grown dramatically. Today, the judges of the Commercial Division adjudicate thousands of cases and motions that include some of the most important, complex commercial disputes being litigated anywhere. This is especially true in the wake of the financial crisis. Commercial Division judges regularly decide cutting-edge legal issues and oversee massive discovery involving multiple parties, dozens of depositions and millions of documents. Additionally, a host of other states have followed New York’s lead, creating new commercial courts to attract both business disputes and businesses to their jurisdictions. In 2010, even Delaware, whose Chancery Court remains a leader in the world of corporate law, created in its Superior Court a new Complex Commercial Litigation Division.

In this changed landscape, the quality, reliability and visibility of the Commercial Division are essential to assuring the vitality of our State in the 21st century. That self-evident proposition bears restating, and emphasis, as a preface to our recommendations.

The Chief Judge charged this Task Force to explore, without limitation, the path to a world-class Commercial Division. The Task Force is composed of current and retired judges, experienced business lawyers and commercial litigators, professors of law and business leaders listed in this Report. They bring decades of experience from every perspective in the commercial litigation arena. Mindful of the urgency of vastly increased demands and shrunken resources, over six months the Task Force considered how better to manage judicial resources, use non-judicial personnel and alternative dispute resolution, and engage more closely with the corporate academic community and the Bar to ensure that judges and court staff benefit from the most up-to-date independent perspectives and information.

The recommendations of the Task Force cover a range of matters from docket and procedural reform, to judicial support and engagement, to mediation and arbitration. To confront dramatic growth in the size and complexity of the Commercial Division cases, the Task Force endorses the Chief Judge’s legislative proposal to establish a new class of Court of Claims judges to be appointed by the Governor for designation to the Commercial Division; an increase in the monetary threshold for actions to be heard in the Commercial Division; and review of potential adjustments to the categories of cases eligible for the Commercial Division. To strengthen support of the Commercial Division Justices and enhance their engagement with the Bar and Academy, the Task Force’s recommendations include providing Commercial Division Justices with additional law clerks; rehiring Judicial Hearing Officers; recruiting seasoned commercial litigation practitioners as “Special Masters” to support Commercial Division Justices upon consent of the parties; and convening an Institute on Complex Commercial Litigation.

In order to reduce delay and eliminate unnecessary costs in commercial litigation in New York, we endorse a variety of procedural reforms in the Commercial Division, from earlier assignment of cases and uniform and more thorough procedures for expert discovery, to limits on privilege logs and adjustments to the burdens and opportunities of e-discovery. The Task Force also proposes initiatives that will aid parties in reaching early resolution of their business disputes, and that will signal to the international business community New York’s commitment to the efficient resolution of court proceedings that relate to international arbitration. Finally, to facilitate further periodic review of the needs and goals of the Commercial Division, the Task Force proposes the creation of a permanent statewide Advisory Council on the Commercial Division with members to be appointed by the Chief Judge. This Report contains a number of recommendations that leave open choices about the best way to operationalize the objectives we identify. An Advisory Council appointed by the Chief Judge would provide the ideal vehicle for refining and implementing those recommendations.

The dedication of our outstanding judges has fueled the Commercial Division’s remarkable growth into a model for commercial litigation in court systems around the country. In the course of our efforts, we found that the Bar and the business community are immensely proud of the Commercial Division. The recommendations of the Task Force are made for the purpose of ensuring that the Commercial Division continues to earn that approbation.

Finally, while this Task Force was focused on the Commercial Division, we cannot overstate the importance to New York State generally — its economy and its vitality — of maintaining a first-rate court system. We recognize that certain changes to the Commercial Division bear implications for the rest of the court system, and we believe the following recommendations strike a good balance going forward. Just as a successful, highly regarded Commercial Division provides a benefit to the economy and society of New York and an incentive to businesses to locate in New York, so too these suggestions may in time benefit the entire court system as well. In that spirit, we underscore that although budget and other considerations have taken their toll on our court system, hopefully our recommendations for the Commercial Division may also serve as a model for broader reform throughout the courts.

The full report is available here.

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