At a time when disputes are becoming all too common it’s vital to know how to manage them without destroying your company
In a credit crunch every party strives for value for money. This applies particularly to dispute resolution. Whether you are adjudicating, arbitrating or mediating, you want the right decision at the minimum cost. So, how do you achieve that happy state? The answer is to have a clear strategy from the outset, not just from the beginning of the dispute, but from when you first get involved in the project. Here is a five-point checklist to point you in the right direction.
1 Avoid a dispute
When you negotiate the contract, think about things that are likely to go wrong. Is the specification clear enough? Do you understand the work scope and standards required? Are the terms clear and fair? Are you using a standard form you are familiar with? Avoid tinkering with the terms: a minor change in one clause may have an unexpected knock-on effect on others. Has risk been allocated to the party best able to deal with it? Have you got the money, people and machinery necessary to fulfil your obligations? At times when work is scarce, it is tempting to put in an unrealistically low price to “buy” the work. Resist it – it will end in tears.
2 Tiered dispute clause
Does the contract contain a dispute resolution clause that offers a range of techniques for resolving disputes? Modern clauses usually start with negotiations between chief executives, then progress to mediation, followed by adjudication, with the possibility of expert determination for specific technical or financial issues. Finally, there will be arbitration or court litigation. For big projects there may be provision for a dispute board. From the outset, know what is available and make the best use of the options. Observe the time bars. You may need to give notice within short periods before you are able to use certain techniques.
3 Strategic decision-maker
As soon as there is an inkling of a dispute, appoint someone who will manage the dispute in the way you would manage a construction project. Often the money and time you spend on the dispute will equate to what you would expend on a sizeable project. Don’t try to run the dispute using a junior member of staff without the necessary experience and political clout within your organisation.
Once appointed, this person will be your strategic decision-maker, responsible for project managing the affair from cradle to grave. The buck will stop with this person, so they must be up to it and know their way around the construction dispute world with its lawyers, experts, tribunals and appointing bodies. They must also have direct access to the top management in your organisation.
Don’t try to run the dispute using a junior member of staff without experience and political clout
They will have to take serious decisions about matters such as expenditure on outside professionals and settlement offers. They must be sufficiently senior to do this promptly and confidently. If the worst happens, they must know when to throw in the towel and move to plan B (there should be a plan B).
The person must be forceful enough to keep a firm restraining hand on costs. Above all, they must be focused on the dispute and what they want to get out of it, while also looking for an opportunity to extract your company from the dispute by negotiating a deal or, if things go wrong, withdrawing.
4 Legal adviser
One of the first challenges for your strategic decision-maker will be identifying and appointing the right legal adviser. If you do not have an
in-house lawyer who can handle the pleadings, submissions and the advocacy, an outside lawyer will need to be appointed. Use guides such as the Chambers Directory or the Legal 500, which list and comment on the best solicitors and barristers in each field. You can often find these in public libraries. There is also help on the internet.
When choosing a tribunal, it is better for parties to agree a specific tribunal in which they have confidence than to leave the choice to an appointing body. Are you in an adjudication about some heating, ventilation or air-conditioning? Then go for someone who knows that field. Often the best guide is personal recommendation.
In conclusion, a dispute is not to be entered into lightly. It can make or break a company. Give it the attention it deserves.
Robert Gaitskell is a QC based at Keating Chambers
Original print headline: Break it up!