The prenuptial agreement: It’s not just for marriage anymore.

Enter the “litigation prenup,” the brainchild of Daniel B. Winslow, a former state District Court judge and chief legal counsel to Massachusetts Gov. Mitt Romney who now practices in the litigation and dispute resolution department at Boston’s Proskauer Rose.

Winslow’s prenup, also known as an “economical litigation agreement,” sets limits on the costliest elements of a civil dispute, such as discovery and dispositive motions. The model agreement also calls for escalating negotiation and, if necessary, a jury-waived trial.

By laying down the ground rules of litigation in a commercial contract, Winslow believes that his “game-changing” prenup will make civil lawsuits more affordable and efficient. He says the model should encourage parties to go to court and resolve their differences rather than letting cases stagnate as costs pile up.

“The reality is that an infinite unlimited process of dispute resolution is unsustainable and is a drag on the American economy,” he says. “I think there is a universal agreement that we have a problem. This is one solution that we think can work.”

But others in the legal community anticipate that Winslow’s prenup will do more harm than good. They say his 19-page model agreement could actually bog down the litigation process. They also fear that it will deprive litigants of access to sufficient discovery and their right to a jury trial.

“We already have rules of civil procedure in state courts and federal courts, and [the American Arbitration Association] has its own arbitration rules,” says Douglas J. Emanuel of Chace, Ruttenberg & Freedman in Providence, R.I. “I don’t think the legal system needs yet another set of rules for attorneys to fight over, take advantage of, or twist to their tactical benefit, all of which make litigation more untenable and more unpalatable than it is on its own.”

Clauses on the menu

During his seven years as a judge, Winslow says he became concerned about the growing number of backlogged cases, delayed hearings and trials, and ever-rising cost of litigation.

He began developing the prenup agreement in 1998 as a way to provide “prompt and affordable justice” to litigants and offer an alternative to binding arbitration, which restricts important rights, such as the right to appeal in court. He says the widespread use of arbitration clauses also keeps litigants out of the courts, which has created confusion about
the state of the law.

“Arbitration deprives lawyers of the development of the common law,” Winslow says. “The real value of the common law is that it gives lawyers the tools to give good advice to their clients to stay out of trouble in the first place.”

The model agreement serves up contract clauses like items on an a la carte menu: The parties select the clauses they want in their contract and leave the others behind.

One clause requires individuals from both parties to meet early in the dispute process and try to negotiate a resolution. Additional clauses establish discovery limits based on the monetary amount of a claim.

In a dispute involving $400,000 or less, for example, both parties must agree to a cap of five interrogatories, seven document production requests, three informal witness interviews and two depositions.

“What Dan has proposed is maintaining the rule of the court and some sense of proportion and discipline over discovery that isn’t part of the process,” says Michael B. Keating, a partner at Boston’s Foley Hoag. “You don’t get buried in paperwork. You don’t get buried in expense.”

Winslow’s efforts have already received the backing of U.S. District Court Judge William G. Young, who knows Winslow from his days on the bench. The prenup agreement could streamline the civil litigation process, Young says.

“We’re too slow and we’re too expensive,” Young says. “This is a way for litigants to intelligently control expense and control it by their own choice and obtain the benefits of being within the court system, which is truly independent and impartial.”

‘Not a good idea’

Providence lawyer Mark B. Morse, former president and current board member of the Rhode Island Trial Lawyers Association, is leery of the model prenup agreement. Like Emanuel, he sees it as yet another impediment to the court system.

“I’m just not sure that these types of agreements, whether commercial arbitration or alternative dispute resolution that calls for arbitration, really effectively reduce cost,” Morse says. “I don’t think they really accomplish what they set out to do.”

While Morse appreciates that the model agreement directs litigants to the courts after a private arbitrator and the parties have reached agreements on the rules of litigation, he suspects that the discovery restrictions will harm one of the parties in the end.

“I think [restricting discovery] is a bad idea. It limits the opportunity to arrive at a fair decision because you’re limited in the amount of information you can get,” he says. “You’re limiting the judge’s ability and the parties’ ability to discover what really occurred.”

Morse also takes issue with a clause in the model agreement that requires both parties to share the hourly cost of a private arbitrator. He says the clause could actually raise the price of litigation.

“It really puts the cost right back in,” Morse says.

Finally, Morse rejects the notion that the model agreement offers a fair playing field for both parties because of its pick-and-choose flexibility. A party may leverage bargaining power over the other and use its position to mandate that a certain clause be inserted into the contract, he says.

“Then it’s not really voluntary,” Morse says. “Agreeing to arbitration before any claim accrues is just not a good idea. I certainly don’t support it.”

Attracting major companies

Businesses across the world will soon have access to the model prenup agreement, which recently received approval from the International Institute for Conflict Prevention & Resolution.

The dispute resolution organization will begin offering the agreement for free on its website by early August, Winslow says. He hopes companies will fold the agreement into contracts with partners as they form new commercial relationships.

DuPont is already planning to train its business lawyers to incorporate the agreement into contracts, says David H. Burt, corporate legal counsel for the world’s second-largest chemical company. Burt says the agreement could help rein in the “no-holds-barred earth-scorching” style of discovery process that has become commonplace.

“The way that litigation is done in commercial disputes today is often disproportionate to the monetary value of the dispute,” he says. “If you limit the process and do it in an evenhanded way, it does not confer an advantage on the complainant or defendant. This [model agreement] is a drive toward economy, toward efficient dispute resolution.”

Several other large companies have expressed interest in the model agreement, according to Winslow. He declined to identify the businesses.