Avoiding Litigation in a Litigious Culture

It is easier for parties to talk about how they will resolve  disputes in the future should one arise, rather than attempting to resolve it once already embroiled in the emotions and acrimony of conflict.  Use the opportunity in the contracting phase of the relationship to agree on a dispute resolution process and incorporate that into the contract.

An effective dispute resolution clause usually involves a stepped up process. For example, the parties agree to attempt negotiation at the first manifestation of a dispute. If it is not resolved within 10 days, the parties agree to mediate with the help of a mutually acceptable mediator. If it is not resolved through mediation within 10 days, the parties agree to binding arbitration.

By including an effective dispute resolution clause in your contracts, you will be protected from costly, stressful, destructive and time consuming law suits.

NEGOTIATE  A  DISPUTE  RESOLUTION PROCESS

Even in the event that the parties neglected to include a dispute resolution clause in the contract, it is still possible to avoid litigation. At the first sign of a clash, the parties should agree to talk about the process they wish to use to resolve the differences. Sometimes a limited scope mediation for the sole purpose of reaching agreement on the process is useful. This is usually more productive before lawyers are involved but can be achieved even afterwards also.

Identifying an agreed upon dispute resolution process can be quite creative too. Recently, I was facilitating a limited scope mediation (limited to agreement on a dispute resolution process only) between two business partners. One of them insisted upon a lawsuit because he felt he would be best served by justice that the court system offers, while the other preferred resolution through assisted negotiation or mediation. They eventually agreed on an innovative process where they would initially take it to non-binding arbitration, after which they would attempt to negotiate a resolution which both parties felt was  better then what the arbitrator ruled. If they were not able to find a mutually satisfying solution by the end of 30 days, that non-binding arbitration ruling would then become binding.

NEGOTIATE THE GROUND RULES

Once you have agreed to a non-adjudicated process to resolve your dispute such as negotiation or mediation, be prepared to negotiate the rules of the negotiation or mediation. Will the parties agree to put a moratorium  on any legal proceedings such as discovery, depositions and motions for the duration of the negotiations or mediation?  Who will be negotiating and how will decisions be made? Will agreements need to be authorized or ratified before commitment can occur and how will that be achieved? Will parties agree to spend time in the same room and have direct dialogue or would they prefer a shuttle diplomacy  mediation approach? 

The success of the negotiation or mediation will depend to a large extent on how it is initially set up. In addition to creating a productive negotiation environment, reaching agreement on these pre-negotiation issues sets a tone of agreement before the negotiations even begin and help to build the parties' trust in the process.  

As I write this column, the leaders of North Korea and South Korea are in talks about who will head each delegation for the upcoming negotiations over the reopening of the Kaesong joint industrial park on their border.  Other's might see this as procrastination, but I see this as proactive foresight and a great forecast for successful negotiations!