Dispute Planning

As in medicine, prevention of disputes is generally far more cost effective than efforts to resolve issues after they arise. Even when disputes cannot be prevented, effective management can prevent small disputes from growing into large ones. We are available to consult with you about projects or programs that may lead to foreseeable disputes.

The key to dispute management is simply to recognize, plan for, and respond to common areas of conflict in commercial agreements.  Although the nature of predictable disputes will vary across industries, many industries exhibit a pattern of predictable conflicts that can be managed and contained.

For example, in both information technology (“IT”) and construction , disputes over the scope of work that the vendor or contractor must complete without additional compensation are common-place, as are disputes over cost increases arising from project delays.  Most IT and construction agreements require the customer to submit written requests to modify the project.  The vendor must then, within a specified period, identify any likely cost and timing effects of the request. But many such contracts fail to establish a protocol for addressing disagreements as to whether a customer’s instructions are an increase in the scope of the project (as the vendor may contend) or simply instructions related to implementation of the project’s scope.  IT and construction contracts also frequently fail to set rules for the parties in the event of delays (and the parties’ inevitable conflicting arguments as to which party was responsible).

Contract provisions that attempt to specify procedures for changing project scope or addressing other likely areas of conflict are more important for establishing expectations and for dispute management than for their legal significance.  Obviously, even in the absence of a contract term describing procedures for “change,” the parties could modify contract terms by amendment.  The value of a protocol should not, however, be understated. One of the principal reasons IT projects fail is the inability of project personnel to document, and agree upon, changes in project responsibilities or scope.  Absent consistent and complete documentation—including terms and conditions of project modification—it can be difficult, or impossible, to evaluate the project’s success or failure (at least for the purpose of assigning responsibility).

Investigatory Arbitration and Mediation

Many business disputes can, and should be resolved, through a remarkably straight-forward and cost-effective procedure that would likely cost 70 percent less than business litigation while providing higher quality decisions. Specifically, Gary Kaplan's Executive Guide explains that many business disputes should be investigated and decided by a single Arbitrator. Instead of each party retaining an attorney to investigate the facts and law and then adversarily present a version of those interpretation of fact and law to a passive arbitratror, judge and/or jury, the parties would jointly retain an investigatory Arbitrator to conduct his or her own investigation.  In the Executive Guide, Gary Kaplan refers to this approach as investigatory mediation and arbitration or IMA.

Because IMA departs from the adversarial advocacy that underlies traditional common law means of resolving disputes, it will raise some eyebrows and doubts.  The substantial benefits and cost savings afforded by IMA, however, could provide compelling benefits to modern businesses seeking to resolve good faith disputes in a cost effective, confidential, and reasoned manner.

IMA would invariably cut dispute resolution cost dramatically by eliminating wasteful expenditures on, for example, redundant factual investigation and research, discovery disputes, trials and posturing.  In the place of duplicative procedures and posturing that do little to promote quality decisionmaking, in IMA, an  Investigatory Neutral would both investigate the facts and decide the dispute based upon applicable law. Throughout the process the Investigatory Neutral would interact with the parties to advise them of progress and preliminary conclusions. The purpose of such interactions would be to enable the parties to understanding and consider their respective risks of moving forward and thereby to encourage settlement and to encourage business or other non-traditional means of resolving the dispute.

IMA would not only reduce cost of dispute costs to a fraction of current costs, but would improve the quality of final resolution and decisions, because (i) the Investigatory Neutral would be selected based upon his or her suitability (in terms of expertise and experience) for efficient understanding and resolution of the dispute; (ii) the Investigatory Neutral would have the time, resources, and incentive to obtain a thorough understanding of the relevant facts and law; (iii) The factual record would be developed for the purpose of resolving the dispute rather than to paint a party in a particular light or posture; and (iv) the parties could interact with decisionmaker rather than simply put on a show for him or hear and then await the reviews of the parties’ performance (in the form of a verdict).

A diagram of the Executive Guide's IMA process follows: