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.