By Terri Krivosha and Melissa Muro LaMere
Throughout our legal careers, we’ve advised more than a few company leaders as they sat across the table from competitors, employees, or customers in thorny disputes. When disagreements can’t be resolved, these companies may find themselves embroiled in prolonged and costly litigation—which can undermine business efficiency, damage reputations and relationships, disrupt operations, and increase risk.
Our experience has given us insight into how early mediation can play a powerful role in resolving disputes. Below are five tips for reaching agreement in tough disputes through early mediation.
1. Set up early dispute resolution systems
Making early assessment of a dispute part of your established, written approach to conflicts can help set expectations for company leaders and counsel. When your entire team knows that you will discuss settlement in every dispute, you avoid the argument that such discussions project weakness. It’s helpful to consult advisors who have developed systems for dispute resolution and collect alternative dispute resolution clauses from other companies’ contracts. Look at your current process for handling disputes and identify what needs to change.
2. Try a pilot
Setting up a new system for early assessment can be a lot of work. Change is hard, and there will likely be those who resist it. Initiating a pilot program can help achieve buy-in throughout the organization. Make the rewards clear. Then try it for one to six months and solicit feedback from participants about what they’ve done and how it should be changed. You might then broaden the group from one small set of individuals or one area of cases to something bigger. A pilot can help you evaluate and refine the dispute system without the risk of widespread pushback.
3. Identify your goals
In any dispute, it is vital to ask what success looks like for the company. In-house and outside counsel should be aware of and focused on business priorities. Most business leaders want to pursue their objectives—not spend time and money on lawsuits. Some attorneys may default to litigation, since their job is to score a “win” for the company. We’ve heard clients say that bringing a dispute to their legal department is like jumping off a cliff toward litigation, but when strategic counsel is involved sooner, there is less chance of litigation down the line. Many companies would benefit from having a conversation about how litigation or avoiding litigation fits in with their broader goals.
4. Insist on an early meeting
Many matters can be settled through early dispute resolution. Provide such clauses in your contracts, which should have as the first step a negotiation between the parties who initially developed the contract or relationship. If the conflict is not resolved at this stage, the dispute resolution process in the applicable agreement should provide that the parties can escalate the issue to those with the power to make decisions. The more frequently executives are involved at this level, the more they can learn to resolve matters. The next step in a dispute resolution clause in an agreement would be a mandatory mediation. At the very least, mediation can help clarify the issues that end up being the focus of litigation. At this stage, we recommend having a clause in the applicable agreement that states all disclosure provided during mediation is for purposes of settlement only and that no evidence will later be used in court.
5. Develop trust within your team
Companies have the best chance to resolve disputes early when they share all pertinent documents and background materials with in-house and/or outside counsel. This allows attorneys to fully understand the company’s strengths and its potential exposure at the outset of a conflict—so that they can effectively advocate for the client. Their obligation, in turn, is to be forthright about the strength of the case. Even when outside counsel tells companies what they don’t want to hear, they typically appreciate our transparency, and they are more likely to trust us to be straightforward when the next case arises.
While the tips we’ve described above can assist in early dispute resolution, attorneys can also help identify opportunities to head off conflict before it occurs. For example, outdated form documents like distribution or data processing agreements may fail to cover situations common today. Revising these forms—or creating new ones where none existed before—may prevent disputes from arising later.
Finally, though we believe early dispute resolution often yields the best outcomes for both parties, litigation is sometimes unavoidable. It can be very difficult to overcome a plaintiff’s perception that they have been wronged—and that nothing but a complete win is acceptable. Some parties want retribution, or feel they need to defend their reputation in court. But when conflicts can be resolved before a lawsuit is filed, companies can save enormous amounts of time, energy, and money.
TERRI KRIVOSHA specializes in helping businesses grow, succeed, and scale as a corporate & securities group partner at Maslon LLP. Terri is also a qualified Rule 114 mediator, bringing her transactional experience, creativity, and high energy to the mediation table. TERRI.KRIVOSHA@MASLON.COM
MELISSA MURO LAMERE is a partner in the litigation and labor & employment groups at Maslon. She focuses on a broad range of employment counseling and litigation matters in addition to disputes involving non-competition agreements, trade secrets, and unfair competition. MELISSA.MUROLAMERE@MASLON.COM