NY Commercial Division Now Requiring Settlement Discussions Before Trial
February 3, 2022
Types : Alerts
On January 7, 2022, New York Chief Administrative Judge Lawrence K. Marks issued a new directive which requires parties to attend a court-ordered settlement conference before proceeding to trial in New York’s Commercial Division. Positioning itself at a critical stage of the dispute, this new rule requires parties to attend a settlement conference after discovery has been completed but before a trial begins.
The amendment to Rule 30 of Section 202.70(g) of the Rules of the Commercial Division of the Supreme Court, which became effective on February 1, 2022, applies to circumstances where opposing parties have not been able to resolve the matter amongst themselves—or perhaps have not even tried. While historically some parties view the initiation of settlement discussions as a sign of a weaker case, Rule 30 mandates a discussion where one may not have occurred at all. This mandatory settlement conference is triggered by the filing of the Note of Issue—which certifies that discovery is complete. Accordingly, both parties should be better suited at that stage to have meaningful discussions about the strengths, weaknesses and ultimate values of their respective cases.
Under the new rule, parties are given an opportunity to pursue one of four tracks for this mandatory status conference. The tracks include: (1) a settlement conference before the assigned justice or another judge; (2) a referral to a Judicial Hearing Officer or Special Referee to conduct the conference; (3) a referral to the ADR coordinator for the appointment of a neutral or mediator at no charge to the parties; or (4) the parties may agree to engage a private neutral, presumably at their own cost. The mandatory settlement conference must be attended by a person with knowledge of the case and authority to settle the case. Further, this conference is mandatory for all cases in the Commercial Division unless specifically exempt by the assigned justice for good cause shown.
Ultimately, the goal of this new directive is to make business litigation in New York less costly and more expeditious, and also potentially a more desirable venue for resolution than arbitration. Time will tell if these goals are met or if this is just another step in an already lengthy litigation process.
If you have any questions regarding the new directive issued by New York Chief Administrative Judge Lawrence K. Marks, please reach out to a member of our New York Litigation Department.