Author: Jeff Rankin, Senior Instrument & Controls Specialist, Principal
September 9, 2015
My last blog was about contracts. This is about …ATE. The contract should identify a dispute resolution process if a problem arises. This could include any or all of the following …”ate” such as, negotiate, mediate, and arbitrate or litigate.
When you negotiate, the parties involved have the best, easiest, least expensive way to resolve a problem. This does require that the parties communicate directly with each other. The time required to negotiate is..as long as it takes.
If negotiation fails, lawyers and a mediator get hired to mediate the problem. The mediator is agreed to by the parties, and usually has experience in the problem area. The mediator conducts what I call ‘shuttle negotiation’ between the parties. Hopefully the dispute can be resolved in a timely, somewhat less costly manner. There are two costs to consider; the cost of the mediation (usually about 6 months), and how to mitigate the cost if the parties can’t resolve the problem and go to the next step. There may not be any clear winner as a result of mediation, but both parties are still in control of the outcome.
To arbitrate means to turn the outcome of the dispute over to an arbitration board. This board usually consists of three people, which could be quadruple the cost of a mediator. The arbitrators may not have any experience in the type of issue between the parties. The case is presented by the lawyers, which also increases the cost. The time to arbitrate is usually 6 – 12 months, also increasing costs. The arbitration board dictates the outcome. This outcome is binding.
To litigate means to turn the outcome of the dispute over to a judge. Like the arbitrators, the judge may not have experience in the problem area. The case is presented by the lawyers, which also increases the cost. There are other costs to consider such as the public relations cost and the time to litigate can be 3 – 5 years. The judge dictates the outcome. This outcome is binding.
So make sure you communicate with your clients on a daily basis. This will help mitigate the need to get …’ate’ up.