Select Your Dispute Resolution Strategy Before the Dispute

July 20, 2015


To Save Time and Money Select Your Predispute Strategy Before The Dispute!

In today’s hectic unsympathetic world, little time is spent on dispute resolution strategies prior to the start of a dispute.  Little thought is given on how to handle negotiations prior to negotiating.  Companies or organizations do not think about arbitration strategies as well as preventive measures prior to initiating arbitration.  In fact, very few companies train employees on predispute strategies nor on how to select dispute resolution strategies before the dispute arises.

Selecting a predispute strategy can save time and money.  Predispute arbitration or predispute mediation provisions can be used to strategically impact the cost and timing of resolving the dispute.  Other contractual provisions can also be used to impact the dispute resolution process such as liquidated damages or attorney fees and costs provisions requiring the loser to pay attorneys’ fees.  This is one form of predispute strategy- making it harder or more costly for the other side to prosecute a claim or to defend the dispute resolution strategy.  But there are other benefits as well.

Training employees to use pre-dispute resolution strategies not only encourages people to proactively handle disputes- ie resolve the dispute before it occurs, but it forces them to carefully consider the advantages and disadvantages of each form of dispute resolution prior to deciding on which form of dispute resolution to use.  Each form of dispute resolution, such as negotiations or mediation (or even litigation) has its merits.  And, of course, each form has its disadvantages as well.  Spending time carefully considering the strategy before having to implement it allows one to consider various issues such as cost and expense, time considerations, enforcement, applicability and in cases of arbitration or litigation- relevant laws and the forum of the dispute. In some cases negotiations or even use of an ombudsman may be efficient.

Each situation has a certain level of risk and each company or even individual has a certain level of risk tolerance.  In fact, a Board of Directors may have a different risk appetite than the management of a company.  Selecting a pre dispute strategy helps all relevant parties in the organization or company discuss the risk involved with the various dispute resolution strategies.  In this regard, when discussing pre dispute resolution strategies it may be helpful to use a decision tree to map out the various dispute resolution strategies and the risk as well as cost involved.

Disputes arise in many commercial as well as non commercial situations.  Some disputes may require litigation some may not.  However, the more one is prepared prior to the actual dispute itself, the more efficient and less costly the dispute resolution process may in fact become.  Therefore, prior to a dispute arising, select your predispute resolution strategy.

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