Cutting The Costs of Dispute Resolution Law
When dispute resolution was introduced in the 1980s, it was toasted as a cost-effective way of settling disputes quickly and correctly. It wouldn’t be long before the reality hit home that alternative dispute resolution (ADR) rarely has any winners.
Each year, US companies pay around $20 billion in litigation fees to attorneys and the US legal system. In most cases, the money spent on litigation resolution could be have been put to better use. Disputes that find their way to a courtroom are costly, unpredictable and rarely satisfactory.
The recent scandal involving Monsanto weedkiller causing cancer is a prime example. Bayer, the German company that took over Monsanto, agreed to pay $10.9 billion to settle almost 100,000 lawsuits in the US during the mediation process.
If Bayer had chosen to go to trial, the pharmaceutical firm would be responsible for paying the legal bills of the defendants – and maybe damages in excess of $10.9 billion.
The Steps of Dispute Resolution
Dispute resolution is typically a multistep process; meditation, arbitration and litigation. Each process has a characteristic that offers a beneficial outcome to every dispute.
Where there is a good relationship between the claimant and the defendant, mediation typically has the best tools for resolving disputes. For mediation to work, there has to be a willingness for one or both sides to admit a mistake or wrongdoing has been made.
In the Monsanto weedkiller case mentioned above, Bayer has not admitted any liability or wrongdoing. However, they chose to settle at the mediation stage because the evidence against them was insurmountable. In the words of the mediator, Bayer didn’t want to “roll the dice” in court.
If initial negotiations have not been successful, arbitration is generally a better alternative to court litigation. It is less expensive than a court trial, decisions can be reached sooner, schedules are more flexible, and proceedings are held in private.
However, the issue with arbitration is that it can foster a disproportionate balance of power. The “take-it-or-leave-it” nature of settlements gives corporations a bargaining chip against claimants that do not have the funds to pay litigation fees.
The Secret to Dispute Resolution
In America, and other western cultures, the preliminary stages of negotiation are overlooked too quickly. Interaction and an effort to reach a satisfactory conclusion are kept to a minimum.
Litigation lawyers that specialize in dispute resolution will tell you the secret to negotiating a successful outcome is to understand the interests of both parties from the outset.
Dedicating more time to the front end of negotiations can lead to greater rewards for less investment – a better ROI in business terms.
Lawyers have more control over the outcome in mediation. Judges and juries are unpredictable. The role of a mediator is to reach a decision that both parties can agree on.
The financial costs, and the costs of stress involved in dispute resolution litigation, often means there are no winners and losers in the court system. The smarter choice is to cut the costs of dispute resolution procedures and reach a fair decision.