Avoiding the nightmare: a collaborative approach

On Monday 31 October the CPR Institute of New York and CEDR cooperated on a Corporate Counsel event at Eversheds at which they announced their new collaboration agreement, which will give access to users of CPR’s International Arbitration Rules in Europe, joint training in New York and Brazil and promotion of CEDR’s training.

A common objective behind two organisations is the promotion of Alternative modes of Dispute resolution, and the development of best practice and knowledge in ADR. It was fitting therefore to have General Counsel from major international organisations, MasterCard, Lloyds Banking, Shell, BP and Travelers, speaking about their experience in Dispute Resolution and how ADR has come as the best road to avoid a nightmare.

The General Counsel Nightmare

Disputes are a part of any business life, but what does a General Counsel nightmare look like? Several points were been raised by the panel:

Costs: Claims and complaints arise all the time and in many major organisations, so the cost of litigation is estimated and budgeted at the beginning of the year, but when disputes get out of hand, it becomes difficult to control cost.

Reputation: When you are not in charge of the story reported anymore, it becomes a nightmare. You need to be able to tell your side of the story. Today with technology and social media, communication can quickly get out of hand and influence general opinion. Saying “no comment” is the worst thing to do because it leaves the “truth” of the story in the hands of the other party.

Unpredictability: Not to be able to properly inform your stakeholders can have terrible consequences for a General Counsel. A late case assessment for example leads to litigation where the team is not prepared and so the control over the dispute can diminish.

Entrenchment: A dispute is often very commercial. The General Counsel must ensure that the parties do not become entrenched, letting their emotions take over, and taking the claim personally. Otherwise, the loss of time and the cost can quickly go very high. And as such, you must have the right team. You need to get the culture right.

Awakening from a bad dream

The most important point raised by the panel is to educate the business to the reality of litigation, in order to shift their approach to Dispute Resolution. Too often business people think litigation just means half a day in court. But the amount of money and management time lost before and after the trial is huge. The feeling of the panel was we must educate business on when Litigation can be avoided and when it is necessary – for example when a precedent is needed – to develop best practice at all level.

Companies should also develop efficient case management processes in their legal department rather than risking disputes get out of control. When building such processes, the legal team must ask itself what they are looking for, what they want to get out of it. There is no one-size-fits-all process. Stepped provisions to manage claims before court can be a solution, allowing the case to be reviewed by various levels of authority and through different negotiation processes, but can also be a lengthy and unhelpful process if not appropriate to the contract.

Disputes getting out of control are nightmarish, but there are ways to avoid it, especially since Alternative Dispute Resolution has come to the fore. It has places an emphasis on dialogue, right to be heard and need for the business to continue, allowing for better, faster and cheaper processes to be put in place. The CPR Institute in New York and CEDR in London have worked for decades to advocate best practices and educate businesses to alternative methods of dispute resolution. We are proud to see that today arbitration, mediation and other ADR processes have become a normal part of legal systems, and both organisations hope that with this new collaboration agreement we can lead more organisations to successfully use alternatives to litigation.

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