Focus, Government, and Law

New business court receives good early grade

August 31, 2012
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Mark Smith, a shareholder and litigator for Rhoades McKee, has taken part in the Specialized Business Docket, the official name for what is basically a pilot program to determine whether the state’s circuit court system should establish a court solely dedicated to business matters.

So far, Smith has been duly impressed with what he has seen.

The legal experiment began about six months ago at the 17th Circuit Court in Kent County. It came from an idea the State Bar of Michigan sprang a little more than two years ago. The purpose of the pilot is to simplify business litigation, reduce the cost of that litigation, speed up the judicial process and clear up the court’s overall docket.

Many practioners have felt that trying business lawsuits has become too complex, is too expensive, takes too long and clogs the court’s trial schedule.

Circuit Court Chief Judge Donald Johnston appointed Circuit Court Judge Christopher Yates last fall to preside over the new court. Yates was previously assigned to both the court’s criminal-civil and family court divisions.

The circuit courts in Oakland and Macomb counties also are part of the pilot program.

Smith has appeared before Yates on a couple of matters, including a non-compete covenant in which an employer found a former employee working for a competitor after allegedly agreeing not to do that. He also made an appearance in a case involving the supposed oppression of minority shareholders by the company’s majority owners.

In his cases before the court, Smith said he came away with a good impression of the proceedings and the judge.

“Judge Yates is dedicated to this business docket and is someone who has a good deal of business acumen. Because he is being regularly channeled these cases, he doesn’t have to be brought up to speed and taught what the law is,” said Smith, a past president of the Grand Rapids Bar Association.

That was an important point for Smith because he felt circuit court judges are assigned a broad variety of cases and are expected to be experts in every one that comes before them.

“Any case over $25,000 comes their way, and it’s just an impossible task to know everything. But through this business court program, Judge Yates has a narrower focus. It’s still a very broad area, but it doesn’t include personal injuries, race or age discrimination, or those whole areas of the law,” he said.

The pilot program has allowed Yates to focus on 18 business matters. A handful of those are shareholder disputes, torts, antitrust matters, intellectual-property concerns and securities law.

Smith said his cases before Yates were generally based on contractual law but also involved statutes. “He was able to focus on those statutes,” he said.

In the standard circuit court situation, judges are randomly assigned cases and attorneys don’t know who they will plead before until a case is filed. If someone hasn’t argued regularly before an assigned judge, they will likely have little knowledge of how that justice handles a case. By only having Yates behind the business bench, Smith said it was easier to counsel his clients and prepare their cases.

“One of the promises of the business court was that the judge was going to publish his opinions, and, in fact, Judge Yates has published a number of opinions in the covenant not-to-compete area that proved helpful in meeting with clients.

“We knew who we were going to get, and we knew from his published decisions what he thought about some of these issues,” he said.

“We don’t have to do that anymore,” he said of having to go through the random-assignment process. “We know exactly where it’s going to go, and we know, within a range, what the probable outcome is. Every case has different facts and different dynamics that may lead to a different result. It’s not like he decides once, and it’s written in stone forever. But you do have a pretty good idea of what’s ahead of you.”

Another reason Smith has a favorable view of the business court is the pilot program has initiated the electronic filing of cases, a first for the circuit court here. Before this program, business attorneys had to file their cases and subsequent documents in person with the court’s clerk at the county courthouse.

“With this pilot program, we file everything electronically after the original pleading. So when we have a deadline upon us, it’s a question of pushing a button and the document gets there, rather than having to have someone chase across the street to file it. And it’s filed simultaneously with opposing counsel,” he said.

In the run-it-over-to-the-clerk’s-office routine, the court usually receives a case’s file before an opposing lawyer does because the attorneys often have to wait for their versions to arrive in the mail.

“That doesn’t happen anymore. It allows the parties to be completely transparent with one another and to kind of level the playing field,” said Smith.

The pilot program for the business court is projected to be in session until early 2014. Through the first half of this year, Smith said the court has made a good impression on him.

“I think, so far, the docket has moved more quickly than the general civil docket, which is, in these business cases, of great importance. Usually, the issues involve lots and lots of dollars and lots and lots of paperwork,” he said.

“In law, time translates into money, and the quicker these cases can be moved, the faster business knows what the playing field is and knows how to manage its business.

“There’s nothing worse than to have a cloud of uncertainty hanging over your business for two, three or four years. Here the goal is to expedite that process and have that cloud blow over you quite quickly. And that’s huge.”

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