How to Design a Conflict Management Procedure That Fits Your Dispute

IN ANCIENT GREECE, a tale was told of a roadside inn where a traveler might find lodging for the night, and although the traveler might be tall, short, fat, or thin, the inn’s bed fit all just the same. The innkeeper, of course, was Procrustes, a giant who tied travelers to the bedstead and either stretched them or chopped their legs to make them fit. Many business disputes seem to be approached this way today: no matter how diverse the parties, issues, or stakes, litigation is the answer. And even those managers or counsel who, unlike Procrustes’ guests, perceive a choice among several available “beds”—litigation, arbitration, or even mini-trials—rarely make further attempts to tailor the dispute resolution process to the conflict at hand. Instead they allow the parties to be realigned, the issues reframed, or the stakes redefined.

Managers must deal with a broad range of conflicts, many of which involve parties external to the organization: valuable business partners, threatening competitors, or inquisitive regulators. But scorched-earth litigation followed by an on-the-courthouse-steps settlement is clearly not the answer to every dispute. Dealing with a competitor turned potential alliance partner whose third-level subsidiary may be infringing on a patent calls for a different approach than does responding to a “professional plaintiff” who has filed a frivolous shareholder derivative suit. Both of these may be different still from how one might want to manage the plausible antitrust claim of a disgruntled distributor.

Sensing the need for a better approach to process selection, both in-house and outside counsel have begun, with the help of academics and specialized professionals, to serve up a choice between traditional litigation and ADR—alternative dispute resolution. But that either-or choice is hardly confidence inspiring: expensive and disruptive litigation on the one hand, and an enigmatic acronym on the other.

Those who do opt for ADR face another vexing choice: should we go into arbitration, mediation, or a mini-trial? The standard, if somewhat unfair, criticisms of each process are well known: “arbitrators split the baby in half; “mediators never resolve really difficult cases”; “there is more “trial’ than “mini’ in mini-trials.” At the other end of the spectrum, ADR partisans indiscriminately and somewhat disingenuously extol the virtues of all ADR processes as uniformly cheaper, faster, and more confidential than the litigation strawman.

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References

1. Based on their experience with labor-management disputes in the coal industry, Ury et al. have come up with a useful and somewhat different checklist of steps that should be included in systems for managing recurring conflicts within an organization. See:

W. Ury, J. Brett, and S. Goldberg, Getting Disputes Resolved (San Francisco: Jossey-Bass, 1988).

2. This diagnostic approach to designing a dispute resolution process is based in part on the Circle Chart described in:

R. Fisher and W. Ury, Getting to Yes (Boston: Houghton Mifflin, 1981), pp. 68–71.

3. The seven elements of the framework have been described in different forms in a variety of published and unpublished papers. The use of this framework for designing alternatives to litigation is, to my knowledge, original to this essay. For a brief definition, see:

R. Fisher, “Negotiating Inside Out,” Negotiation Journal 5 (1989): 33–41.

4. O.M. Fiss, “Against Settlement,” Yale Law Journal 93 (1984): 1073–1090.

5. These inquiries have evolved from a related set of considerations outlined in

S. Goldberg, E. Green, and F. Sander, Dispute Resolution (Boston: Litde, Brown & Co., 1985), pp. 545–548;

H. Raiffa, The Art and Science of Negotiation (Cambridge, Massachusetts: Belknap Press, 1982), pp. 14–19; and other works that attempt to identify the “ADR potential” of a dispute or to produce a classification scheme for disputes.

6. Raiffa (1982);

M. Raker, “The Application of Decision Analysis and Computer Modeling to the Settlement of Complex Litigation” (Cambridge, Massachusetts: ILP Symposium, MIT, 1987).

7. D. Lax and J. Sebenius, The Manager as Negotiator (New York: The Free Press, 1986), pp. 88–116.

8. R. Fisher, “He Who Pays the Piper,” Harvard Business Review, March–April 1985, pp. 150–159;

P. Mode and D. Siemer, “The Litigation Partner and the Settlement Partner,” Litigation, Summer 1986, pp. 33–35.

9. S. Shavell, “Suit, Settlement, and Trial: A Theoretical Analysis under Alternative Methods for the Allocation of Legal Costs,” Journal of Legal Studies 11 (1982): 55–81;

J.C. Coffee, Jr., “Understanding the Plaintiffs Attorney: The Implications of Economic Theory for Private Enforcement of Law through Class and Derivative Actions,” Columbia Law Review 86 (1986): 669–727.