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Resolving Business Disputes Through Collaboration

Collaboration is essential for many things, from day-to-day tasks—getting dinner on the table and picking up kids from soccer—to long-term business goals, such as expanding your team and growing your company. When confronted with issues, whether in your professional or personal life, collaboration often leads to the best solution. But what about when issues become problems, and then disputes, where the involved parties are now adversaries?

In North Carolina, collaborative law procedures have been an alternative means to judicial resolution of certain family law disputes since the adoption in 2003 by the North Carolina Legislature. Formalized collaborative principles in family law disputes are believed to have first been implemented in 1990 by a family law attorney in Minnesota, Stuart Webb. He proposed to the court a process in which the parties and their counsel met, conferred, and explored problem solving and resolutions, with goals that included reducing expenses and delay, as well as preserving, or at least not doing further harm to, the relationships of the parties.

Hallmarks of the collaborative law process include:

There has been a growing initiative in North Carolina to make collaborative law available as an alternative means of dispute resolution in areas other than family issues, including business disputes. So, what are some of the benefits?

Preserving Relationships and Furthering Common Interests

Collaboration works well in family law disputes because of the interests of children and the need for civility—just because a marriage ends does not mean that future associations will. Considering the benefits of preserving relationships past a point of conflict, there are parallels in a number of industry and business associations.

In the construction industry, disputes often involve parties with prior relationships and where there may be future profitable ventures. Owner-architects, owner-contractors, and general contractor–subcontractors are just a few examples of parties who might commit to future, profitable ventures. Yet the structure of our civil judicial system is adversarial:  it is one party versus another, putting parties on offense and defense. This can be destructive to relationships, and isn’t typically conducive to future business between what may have become a form of “warring” parties. Preservation of relationships could be enhanced through collaboration.

The construction industry is not the only world where parties benefit from preserving relationships. In any business, if beneficial relationships are in place, there likely are good chances of continuing and expanding business opportunities in the future. Disagreement or conflicts do not have to automatically eliminate future opportunities. Collaborating to resolve disputes does not guarantee future good will, but it may enhance the prospects for it because its methodology does not directly pit one party against the other. Rather, it pits both parties against the problems they are facing and tasks their counsel to guide them through those problems to find mutual solutions.

Saving Time and Money

Benjamin Franklin is credited with the phrase “time is money,” from his 1748 Advice to a Young Tradesman.

Remember that time is money. He who idly loses five shillings’ worth of time loses five shillings, and might as prudently throw five shillings into the sea.

That advice certainly remains true, and is applicable to the time spent in all forms of dispute resolution, be they litigation, arbitration, mediation, or collaboration. Direct costs of litigation are often substantial, and the indirect costs of time and focus away from business and lost opportunities may be even greater.

While good efforts can be made to expedite decisions and to minimize fees and expenses, it is often the case that parties cannot meaningfully limit the time or costs in court or arbitration because the parties themselves are not in control of the process. Collaboration’s methodology puts the parties in control of the process and the outcome—and in a better position to save time and money.

In some circumstances, the amount in controversy may be significant enough on its own, but when considered in the context of potential litigation costs, turning the dispute over to a judge or jury could be cost prohibitive. In collaborative law proceedings, because all discussions and decisions remain within the authority of the parties, they are in positions to more reasonably control costs, allowing them to resolve, rather than abandon, important-but-relatively small matters. That is not to say that collaboration is limited to small disputes. In Allen, Texas, a school system, contractor and architectural firm collaboratively reached a resolution leading to $10 million in repairs to a $60 million football stadium.

Privacy

For the most part, court filings and proceedings are public, with many court documents and actions available online. Media coverage often follows high-profile cases and lawsuits, but real and potential customers and clients may only hear of allegations and never dismissals. Collaborative resolution of disputes, however, is done privately, and no public record of the proceedings or the outcome is required.

A Way Forward for Business Relationships

Disputes and disagreements are often part of doing business, and may occur despite reasonable efforts and good intentions. If it becomes necessary to involve others in resolving these disputes, collaboration can be an appropriate alternative to litigation or arbitration. This approach provides a unique roadmap for resolving a dispute, giving parties a chance to work together instead of against each other.

While collaboration may not resolve every dispute that arises in business, it does offer an efficient alternative that can be economical and beneficial to the goals and interests of both parties. 

About the Author:

D. Anderson Carmen is a director and attorney at the Winston-Salem law firm of Bell, Davis & Pitt, P.A. His principal areas of practice are construction law matters, creditor representation, and mediation and arbitration. Andy is trained in the Collaborative Law Process and is part of a Civil/Construction Collaborative Law Planning Group of the North Carolina Bar Association. Andy acknowledges John Sarratt for his leadership, teaching, and writing in support of collaborative dispute resolution.


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