Canadian Food Inspection Agency

Putting Theory Into Practice: 
CFIA Cuts Costs and Builds Credibility Through DR

"ADR" and "DR" are well-known terms in Canada today and increasing numbers of individuals and corporations have learned of its many benefits. But few have put the theory about dispute resolution into practice as quickly and as effectively as Peter Seguin and the Legal Services team at the Canadian Food Inspection Agency.

The group does act quickly. Within just five weeks of Seguin's assignment to CFIA Legal Services as Project Manager of Dispute Resolution in early November, 1998, the dynamic DR specialist with a 20 year background in labour mediation, arbitration, adjudication and conflict resolution training co-ordinated a project which would fundamentally alter the way the Agency approached conflict. This project, approved by the Agency's Executive Committee in mid-December, 1998, laid the cornerstone of a bold new structure which over the following four months would come to bear impressive results.

"Cases from Hell"

Seguin initiated his tenure in DR by challenging Agency executives to give him their "cases from hell". They responded by directing seven cases his way. The newly-trained DR team, which included several counsel with the Agency's Legal Services Unit (LSU) as well as technical experts, succeeded in diverting these cases from the abyss of lengthy and costly litigation into what Seguin characterizes as the "appropriate" dispute resolution process.

Before a meeting of the "ExCom" in April, 1999, the team had resolved four of these cases, through interest-based negotiation. At the April, 1999 meeting, the team was able to boast estimated cost savings of over $440,000 as a direct result of the innovative, hands on approach to dispute resolution.

It was now in a position to demonstrate objective advantages to exploring alternate approaches to DR.

Initiating ADR: Giving Up?

But change would not come easily. As Acting Vice-President of Programs and Executive Director of Plant Products Peter Brackenridge explains, many Agency officials view the decision to pursue litigation as a corporate demonstration of solidarity. He says that failure to defend claims through the court process, costly as it is with time consuming examinations for discovery, pre-trial motions and trial, carries a risk of sending a message of abandonment and lack of support to those officials.

"Often our staff think they have done everything right. If we tell them we want to negotiate instead of going to court, some feel we are giving up. Using ADR can be seen as being non-supportive of their efforts: " Peter Brackenridge.

"Often our staff think they have done everything right. If we tell them we want to negotiate instead of going to court, some feel we are giving up. Using ADR can be seen as being non-supportive of their efforts," Brackenridge states.

Peter Sylvester is General Counsel of the Department of Justice's office of Dispute Resolution Services, which has assisted the Agency's DR efforts with financial support and contribution of training materials. He is familiar with the dynamics of regulatory bodies through his background in environmental law. Sylvester is also aware of the DR initiatives of CFIA's team from recent discussions with the Agency about legal risk management. He agrees with Brackenridge about the wariness many regulators have towards negotiation.

Sylvester says that for a regulatory body, using DR can be attractive when an official accepts he has made a mistake and finds he is in a weak legal position. But he points out that, where the regulator does not see any error on his side, he may be inclined to reject negotiation for what he sees as ethical reasons. "As a matter of principle many regulators would prefer to go to court before exposing themselves to any process where they might be pressured to compromise," says Sylvester.

Faced with this attitude, Seguin realized the Agency "needed to effect not just a change in practice but a change in mindset."

Faced with this attitude, Seguin realized the Agency "needed to effect not just a change in practice but a change in mindset."

Top-Level Training

The project adopted a "top-down" approach to start the process of bringing about that change in mindset. The Agency engaged the DR training firm Stitt Feld Handy Houston to deliver, in the first part of April, 1999, an intensive two day Principled Negotiation workshop for 25 of its top-level executives: the Vice-Presidents of the Operations, Programs, and Human Resources Branches and their "direct reports".

That training was well-received. Later that month the Executive Committee approved a plan to extend DR initiatives for a further two years.

That plan included creation of a Dispute Resolution Services office headed by Seguin within the Agency's LSU. The new office was given a mandate to serve as a centre of expertise in DR, providing advice, assistance, facilitation and fact-finding skills to Agency personnel.

That mandate also included delivering DR skills training to staff. The DR team embarked on an ambitious goal: to train up to 300 middle managers across the country in conflict resolution theory and skills following the well-established Harvard Negotiation Project's interest-based (also referred to as "principled") model - all of this before the end of March, 2001.

To accomplish this goal, Seguin, and LSU counsel Annie Lemaire and Jana Palacek re-designed two Department of Justice courses, one on negotiation and the other on mediation, to meet Agency requirements. They have been facilitating the product themselves, in an intensive four-day workshop format.

DR Fund

To help defray the significant costs involved in training such large numbers of people, the Agency obtained a grant of $52,500 from the DR Fund. This fund was established by the Department of Justice and Treasury Board and is administered by Sylvester's Dispute Resolution Services office. The grant was earmarked "to support the implementation of DR by the Agency in its role as employer and regulator of the food industry "

Enhancing Relationships

Saving money is not the only benefit the CFIA has realized from using DR. The Agency has a staff of 4,500 in 460 worksites spread across all of Canada's provinces and territories in 18 regional offices, 185 border points of entry and other field offices, 408 slaughter houses and other third-party premises and 22 laboratories and research facilities. These employees are charged with responsibility for the inspection of all food produced in, exported from or imported into Canada through the administration and/or enforcement of 13 federal statutes.

Agency employees are thrust into dealings with food producers, processors, suppliers and other "regulatees" which are often if not generally ongoing- a no-escape relationship Seguin describes as "a forced pre-arranged marriage with no option of divorce". Failure to resolve disputes as they arise could cripple inspectors and other staff as they face their duties working beside those whose products they inspect - and sometimes reject - on a day-to-day basis.

Regulators are in a "forced pre-arranged marriage with no option of divorce: " Peter Seguin

Indeed, the DR Team has identified enhancing existing relationships as one of its key priorities. They point to a number of reasons for this.

• The majority of Agency disputes involve parties with whom they have ongoing dealings.
• Their ability to maintain harmonious relationships is seriously compromised while any dispute remains outstanding.
• ther parties have positively received attempts to resolve issues quickly and fairly.
• The mandate of the Agency makes the emergence of disputes a common occurrence.

Keys to Success

Those on the Agency's DR team have identified several ingredients as the keys to the success of the DR initiatives.

Use DR Early

Seguin says it is necessary to change the way one normally approaches a problem. "You have to apply most of your skills and knowledge at the front end," he asserts, something he refers to as "following the easiest road first." "The first step in dealing with a dispute is to make sure there is a common understanding by all parties involved about what the problem is," he believes. He says this process should be started early, not waiting until the parties become entrenched.

Audie Schwartz, coordinates the legal side of DR within the Agency's LSU. As a lawyer in that office, he also finds timing of the DR intervention is crucial. "You know that if you don't resolve the dispute it will end up in litigation," he says. "With DR, we can be extremely effective before the problem erupts." He says this means, "You have a claim. You don't have a Statement of Claim."

Be Pro-Active

Seguin's manager is Mark McCombs, General Counsel and Head of the Agency's LSU. McCombs agrees that the key to converting staff to DR was being able to demonstrate that a pro-active approach to solving problems between people could actually work. "This was a completely new approach, for our managers and for the Agency," he says.

McCombs looked at what it was costing the Agency for its litigation services. "We realized that some disputes were going to litigation simply because there was no other process available to resolve them. There was a gap between the problem and litigation." He says it became apparent that "there was no point in sending a dispute to litigation when it could be dealt with before it got to that stage."

McCombs believes that if you can have the people who are involved in the dispute determine what the issue is in a non-litigious setting, this provides a better opportunity to resolve it. "Being pro-active provides the easiest road to resolution," he says.

Larry Hillier, Vice President of CFIA Operations also feels that the use of DR in a regulatory agency is a positive step. "I think that our front line managers need to look at the use of DR in light of the CFIA's operational environment. It is much better to resolve a dispute between the Agency and one of its registered establishments at the earliest possible opportunity than to let the problem escalate. We have been quite successful in dealing with complex external disputes through DR."

Peter Brackenridge (Acting Vice-President of Programs and Executive Director of Plant Products), Mark McCombs (Head, Legal Services Unit), Audie Schwartz (DR Coordinator, LSU)

Top-Down Training: Show the Leadership How to Lead

McCombs refers to the contribution of high-ranking executives as being another key to the program's success. "Getting buy-in from the top level first was important," he says. He believes that doing the training presentation to the Executive Committee early on resulted in them understanding how the process works and what the DR team was trying to accomplish. "After that we had their support," he says.

The LSU boss lists a trio of senior executives as being instrumental in the Agency's change of mindset. "We have had very good support from three key individuals: our (former) Vice-President of Programs (Dr. André Gravel, presently Executive Vice-President), our VP of Operations (Larry Hillier), and our Comptroller (John Jones)," McCombs says. "We worked a lot with Programs and with Operations about determining our needs. Our Comptroller pulled it all together with the financial support."

Leave Ownership of the Problem with the Client

Accountability has been another major factor in the Agency's success with DR.

Schwartz says the DR office and the LSU provide assistance but at the same time they are careful to set their boundaries. "We never take ownership of the problem: We help them identify options but the client retains ownership of the problem."

For those on the DR team, this means knowing when to step back. As Seguin points out, "They (the managers) are the ones who have to live with the results."

Make the Client Financially Accountable

The "client" is, for practical purposes under a new financial system brought in recently, Agency managers and other personnel who are charged with responsibility for carrying out regulatory duties. This new system shifts onto the shoulders of the Agency the burden of significant additional financial accountability. This has been a critical motivator in the Agency's new approach to conflict resolution.

Until creation of the Agency by statute in 1997, four separate federal departments administered government food inspection services. Disputes were channeled into litigation and lawyers defended the claims. Treasury Board paid out the amounts of judgments and settlements.

But Treasury Board announced that starting in 1999 this system was to change. In a process to be phased in gradually over five years, it would transfer to the Agency responsibility for the costs of settlements and judgments.

"When the apron strings were cut Agency managers had to take responsibility for the work handled by their people," Seguin points out. "Before, they were constantly going to litigation over the same kinds of problems in different parts of the country. Now, they could no longer afford to let all of these disputes go through litigation."

"When the apron strings were cut Agency managers had to take responsibility for the work handled by their people," Seguin points out. "Before, they were constantly going to litigation over the same kinds of problems in different parts of the country. Now, they could no longer afford to let all of these disputes go through litigation."

Demonstrate the cost-savings

In McCombs' assessment the biggest challenge in bringing DR into the Agency was about obtaining results. "We needed to show this process would save us money," he says.

Seguin worked with his DR team to gather figures on the actual costs incurred in guiding the "cases from hell" to resolution through interest-based negotiation and to compare them to estimated costs of proceeding with litigation. "We have been able to demonstrate through our calculations just how much money we have actually saved using DR," Seguin says.

Take a Team Approach

McCombs attributes much of their success to taking a team approach, with Seguin leading the DR effort and the counsel assigned to the legal aspects working together on the front lines.

"Peter is also a member of the LSU. In fact this was one of the things that made the project work so well, as Peter and all the lawyers involved all reported to me as the manager,"McCombs says. "This eliminated many potential problems early as we were able to deal with all process/legal issues within the LSU before going out to the client or to the other side."

McCombs says Susanne Frost played a key role in the set up of the project."As legal counsel with the LSU, she coordinated DR on the legal side," he states. Frost has recently assumed the position of the Agency's Director of Enforcement. Audie Schwartz has taken over her role as DR coordinator.

The Future: Ambitious Plans

Now that DR Services has been set up as a centre of expertise in the field, McCombs looks to the future. "Our next challenge will be to establish this (DR) as a permanent program," he says.

There remains much to accomplish before the expiry of the existing DR Services mandate on March 31. In addition to completing training of middle managers and continuing with settlement of claims outside of litigation, its list of projects includes implementing the use of DR for:

• Enforcement and compliance
• Cost recovery
• Operational disputes at registered plants
• Litigation avoidance.

The DR team will be striving to complete as many of these tasks as they can within the narrow time-frame remaining. There is of course a limit to what they will be able to achieve by the end of March and a permanent program, or at least an extended mandate, may appear attractive. But whatever happens, from their track record we can expect they will be setting a fast pace.

Whatever else the flowers of spring will bring and whatever direction the Agency chooses about a future DR mandate, it will know its DR roots have taken firm hold in the soil that CFIA's team have so quickly but effectively cultivated over the course of their very brief mandate.