Disputes that aren’t properly managed can be fatal to businesses – draining time, money and resources like an open tap. So if you can’t avoid them (see our previous article on avoiding disputes), at least make sure you’re fully armed.
Here’s 10 steps to manage a dispute without crippling your business:
- Get your facts straight – First you need to gather all the information you can find: copies of relevant contracts, documents, emails, a list of who’s involved (both in your business and externally). Without the facts you can’t make an informed decision about what to do next. Don’t panic or be too hasty – if you go in all guns blazing you could make matters worse.
- Have a plan from the start – Whether you’re at the negotiation stage or actually in the litigation process know where you want to get to and what your bottom line is for a settlement, whether it’s an amount of money or a new deal. But also make sure your legal strategy is flexible, so you can adapt to the other side’s moves, and any new facts or information as they come up. Also ensure you have clarity on how much each stage of resolving the dispute will cost you in time, money and resources.
- Negotiation – Be clear on what it would take for the issue to be resolved – providing a replacement service or product or compensation for loss? You’ll need to know your position before you open negotiations. If you’re trying to settle then you may want to negotiate ‘without prejudice’, so if you end up in court the other side can’t use what you have offered against you.
- Expert help – If you can’t agree on a solution consider getting an independent third party mediator to help. If that doesn’t work or it’s inappropriate then you’ll need expert legal help to advise you on the strengths and weaknesses of your position. [You may want to involve the legal expert at the start then go to mediation?] Take time to choose the right expert who has experience with the area of law relevant to the dispute and is also experienced in dealing with disputes.
- Know your options – Should you wait before you take action or are there time limits in place that dictate when you have to do something? Or timescales that prevent you from doing something about it? Is there something else you can do to avoid litigation? Do you need to preserve an ongoing business relationship? Make sure you’re clear on all the options out there for you.
- Exhaust all avenues – If you have a contractual dispute then your contract may dictate how it could be managed through mediation or arbitration. These avenues may be less costly and more flexible than litigation and more suitable for the type of dispute. Your legal expert can help you identify the best method of dispute resolution.
- Be clear on cost – Without a doubt you’ll need to make provision for legal advice and possibly make financial provision for exposure to liability and the other side’s legal costs. You should also consider possible knock on effects like loss of business or increased insurance premiums.
- Be on it – Don’t underestimate the resources you’ll need to get through a dispute or litigation. This will involve management time and effort, it may require a project manager as well as people to collate documents, get witness statements, etc. Get a good team in place and make sure your staff know what their obligations are when it comes to document management and retention.
- Manage the outside world – There may be unwanted media coverage or damage to reputation with your customers. You should plan for this and manage it properly. Think carefully about communication to your customers but watch out for any confidentiality restrictions.
- Learn your lessons – Once the dispute is resolved – whether by negotiation, settlement or in litigation – it’ll be tempting to shut the book and forget what happened. What you should be doing is reviewing what happened and learning from your mistakes. Where necessary, make changes to your business process to stop the same thing from happening again. You should also think about what you would have done differently in managing the dispute, as valuable lessons can be learnt there too.