Most businesses are probably aware of how devastating litigation can be, not only for the loser, but for the winner as well. The costs of time and money involved can make a defeat absolutely crippling and a victory nearly cost prohibitive. Avoiding these conflicts is ideal, but sometimes disagreements happen, and it can be difficult to anticipate them.
For example, someone might outright violate a contract, or there may be circumstances out of your control that frustrate your company’s role in a project. An agreement may be misinterpreted, or one party may blatantly try to take advantage of the other. These things will lead to a dispute, and you will want to resolve the issue as quickly, quietly, and inexpensively as possible.
This is where alternative dispute resolution (ADR) comes in. There are a few different types of ADR, each of which has its own benefits. Some of these types are:
Each of these forms aims to resolve a conflict in a quiet and fair manner. ADR can be quicker and less expensive than litigation, but only if you plan for it correctly. Otherwise, the process of determining which ADR method to use and how it should be implemented can result in a long, drawn out battle that might have been more easily resolved in a courtroom.
In order to keep a process that should take weeks to months from ballooning into a several year long battle, you need to start preparing well before any semblance of a dispute takes place—namely, when drafting the agreement. Many contracts between two parties will include an arbitration clause that details how disputes will be handled.
Ideally, this clause should be as clear and complete as possible. To ensure this, consider whether the clause answers the following questions:
- What method of dispute resolution should be used?
- Who should arbitrate/mediate/conciliate?
- What qualifications should an arbitrator/mediator/conciliator have?
- How will we decide on an arbitrator?
- What role will evidence play in the process?
- How long should the discovery process take at the very most?
- How much should be spent on discovery? How should it be carried out?
These are just a few of the items you’ll need to figure out between you and the other party. If you can outline this while discussing the contract or agreement, you’ll likely save yourself some costly hassles if a dispute comes up.
Matter of Policy
In addition to ensuring your agreements with other parties include a well-written arbitration or mediation clause, you will also want to make sure your own company is committed to making it work. This is as much a matter of philosophy as it is of policy. If a dispute comes up and you are pursuing arbitration, you will need to make sure you treat it as arbitration and not as some form of privately handled litigation.
If you are looking for assistance planning for dispute resolution, you will benefit greatly from legal help. A skilled corporate lawyer can help you plan ahead and ensure that your disputes are handled swiftly and securely. For more information, contact Hart & David today.