At some point in the life of every business, its officers or senior employees have a sense of a developing dispute, either internally with an employee or externally with a business partner. When this sense arises, we’re accustomed to seeing the makings of a lawsuit, but this early impression of conflict should also be a signal to turn our attention toward possible solutions or remedies. Taking prudent steps to protect against the challenges of litigation can be balanced with protocols that promote remedies and solutions when embarking on a lawsuit. In fact, the two can be quite complementary.

Internal Workplace Disputes: Fostering a Culture of Resolution

At the onset of an internal dispute, hunkering down for a fight can result in signals that frequently doom early resolution. With an internal dispute, employees take their signal from seniors and if not managed, the workplace can needlessly reflect hostility, unhelpful gossip, and tension. Early intervention and dialogue with the complainant as well as the preservation of a workplace atmosphere which focuses on business as usual promotes resolution.

Human Resources personnel are well equipped to handle these problems when involved early on and armed with clear and unambiguous instructions from management. Dismissing an employee at the cost of a follow-on lawsuit trades a momentary solution for a more expensive, potentially prolonged, and public battle. If such a trade is to be made, it needs to be thoughtfully assessed.

External & Client Business Disputes: The Art of Assessment

Early warning signs of a dispute with business partners or clients present a different problem. Typically, a dispute has been caused by somebody’s inappropriate or unlawful conduct, negligence, or innocent mistake. Getting to the bottom of causes is best assessed early on.

This requires the intervention of litigation counsel and access to those employees’ and business records which can fairly present the anatomy of the business dispute. Sometimes the required information resides only in an opponent’s files or with an opponent’s employees. Nonetheless, every business can make an assessment as to the culpability of its own agents and employees for a particular dispute with a business partner through candid interviews with employees guided by litigation counsel. Either way, such an assessment of fault should be developed based on available information.

When such an assessment has been done, dialogue with the opposing business partner can be fruitful. At that point, the basis of the dispute can be discussed, and an opponent can be advised of the reasons making litigation necessary. A reasoned explanation may aid in securing cooperation from an opponent to explore an information exchange or other alternative dispute measures. Of course, the circumstances of the case may make such reasoned approaches impractical, but ultimately, they need to take place if only after litigation has commenced.

The Ongoing Evolution of Business Dispute Resolution

These approaches to internal and external business disputes weren’t always favored. Not so long ago, an employee might have been summarily fired to avoid disruption of the workforce, annoyance, or simply executive inconvenience. At least in the employment context, we now have laws and internal procedures accepted by most companies that, if used effectively, are calculated to manage and resolve such workplace disputes.

Similarly, the cost of litigation, the burden of time on employees and executives and the limitations inherent in solutions achieved through litigation have made companies wary of quixotic recourse to court. Dispute resolution practices have moved toward a negotiation style which is more dependent on facts and a resolution of common interests than demands and litigation threats. It is not that the business universe has gone soft, but rather that it has grown sensible to what really works in promoting the inexpensive and expeditious resolution of disputes.

Incorporating the ADR Process into Corporate DNA

I would argue that best corporate practices should always involve an in-house lawyer whose sole responsibility is consideration and exploitation of those settlement objectives that will serve the enterprise. They should be involved as early as any litigation counsel and have the same reporting responsibility as in-house litigation counsel.

This model works best for in-house general counsel because it is relatively inexpensive, with good management access, and readily incorporates an ADR orientation with respect to every significant corporate dispute. The use of “settlement counsel” has been attempted by outside firms with uneven results. Cost considerations and competitiveness between outside counsel have been cited as reasons. Because the General Counsel and their legal staff are or can be effectively trained in ADR and are ideally suited and positioned to identify creative and constructive settlement options, their early association with internal or external disputes should become standard operating procedure.

A Blueprint for Business Owners & Litigation Professionals

In the realm of business disputes, a proactive stance always trumps a reactive one. By embracing early intervention and dialogue, businesses can defuse internal conflicts and lay the groundwork for constructive resolution. The shift toward negotiation-based strategies, driven by facts and common interests, reflects a mature and pragmatic approach to dispute resolution. Incorporating an in-house settlement counsel ensures that settlement objectives are central to corporate practices, fostering timely and efficient resolutions. As you navigate the intricate terrain of business disputes, remember that a blend of prudence, open communication, and strategic planning can transform conflicts into opportunities for growth and collaboration, reaping the benefits of ADR.