Advantages of ADR in Workplace Disputes: Earlier the Better

At some point in the life of every business, its officers or senior employees develop a sense of an impending 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 before 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. Employees take their cues from senior leadership, and if not managed carefully, the workplace can begin to reflect hostility, unhelpful gossip, and tension. Early intervention and dialogue with the complainant, as well as the preservation of a workplace atmosphere focused on business as usual, promote 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 must 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 arises from someone’s inappropriate or unlawful conduct, negligence, or an innocent mistake. Getting to the bottom of the causes is best done early.

This requires the intervention of litigation counsel and access to those employees and business records that can fairly present the anatomy of the dispute. Sometimes the necessary information resides only in an opponent’s files or with their employees. Nonetheless, every business can assess the culpability of its own agents and employees through candid interviews guided by litigation counsel. In either case, the assessment of fault should be developed based on the available information.

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

The Ongoing Evolution of Business Dispute Resolution

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

Similarly, the cost of litigation, the burden on employees and executives, and the limitations of solutions achieved through court proceedings have made companies wary of quixotic legal battles. Dispute resolution practices have moved toward a negotiation style that relies more on facts and shared interests than on demands and threats. The business world hasn’t gone soft—it has simply 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 to consider and pursue settlement objectives that serve the enterprise. They should be involved as early as any litigation counsel and hold the same level of reporting responsibility.

This model works particularly well for in-house general counsel, as it is relatively inexpensive, provides excellent management access, and easily incorporates an ADR (alternative dispute resolution) orientation into every significant corporate dispute. The use of “settlement counsel” by outside firms has been attempted with mixed results. Cost considerations and competitiveness between outside counsel have been cited as reasons. Because general counsel and their legal staff are—or can be—effectively trained in ADR and are ideally positioned to identify creative and constructive settlement options, their early involvement in 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 shared 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 many benefits of ADR.