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Dispute Prevention: It's A Good Idea, Right?

by Larry Susskind
January 2010

From Larry Susskind's blog on the Consensus Building Approach

Larry Susskind
I was recently asked to join a panel at the annual meeting of CPR (the international institute for conflict prevention and resolution). (www.cpradr.org) This is an organization that has worked for more than 30 years to convince law firms and in-house corporate counsel to take dispute resolution seriously. They are the ones who came up with the idea of adding a "dispute resolution clause" to all kinds of contracts so that parties don't resort to litigation at the first sign of disagreement. Our assignment was simple enough -- make the case for dispute prevention, not just appropriate dispute resolution. We were motivated by a simple cartoon showing someone peering down from the top of a very high hill to a waiting ambulance below. The ambulance driver is dash off to the hospital with the latest victim injured in a fall because no thought to build a fence around the edge of the precipice. We were talking about building a fence to avoid disaster, not just arrange to have an ambulance ready when the inevitable occurs.

It turns out, that in the construction industry, dispute prevention has been the norm for years. With CPR's help (decades ago), that industry has learned to initiate "partnering agreements." Companies entering into construction contracts may have to work together for several years to complete a project. Delay at any point during the construction of a large building can kill a project -- time is money! So, at the beginning of a project, the financial sponsor, the architect, the builder and sometimes others (like the construction union) sign an agreement promising to meet regularly (whether there's trouble or not), keep lines of communication open, monitor progress jointly, and put a standing panel of neutrals (i.e. mediators or arbitrators) in place so that small disagreements are addressed and resolved quickly before they escalate. By putting a carefully designed dispute handling "system" in place, it turns out that most disagreements or misunderstandings can actually be avoided. There are unambiguous findings from numerous studies to support this.

Why, then, are dispute prevention measures so rare in other sectors? We speculated that it might be because industry leaders just don't know about the idea of partnering agreements or standing dispute resolution panels (with very quick timetables for airing and resolving disagreements). But, that seems unlikely since the same law firms and in-house counsel, trained at the same law schools, work in these other sectors. So, we explored other obstacles or barriers to using these dispute prevention techniques. Our best guess is that law firms (or lawyers in general) might be the problem. What glory is there is being the person responsible for avoiding a dispute? And, how can a legal services provider make any money if they succeed in avoiding most litigation?

I suggested that we ought to add a provision calling for "dispute prevention bonus" to all legal services contracts. So, in fashioning a business deal, for example, the law firm involved in writing or reviewing the contract would add a provision calling for a financial bonus (set, perhaps, as a percentage of the expected value of the deal or the transaction) to be paid to the lawyers involved IF there is no litigation throughout the life of the contract. Deductions from the total might be made to cover the cost of arbitration if the standing panel needs to use it (but not for rapid-fire mediation). Imagine, all the lawyers working like crazy throughout the life of a project or a contract to be sure that parties stay in close contact, communicate effectively, smooth out their misunderstandings quickly and take the pre-agreed steps to resolve minor disagreements! I have no doubt that lawyers would become skilled in dispute avoidance if they had sufficient incentives to do so.

At the conference, we talked about the four prerequisites for dispute prevention. The first is a written dispute avoidance/dispute handling agreement that spelling out appropriate step-by-step procedures. The second is a requirement that the most senior managers on both (or all) sides of a contract or a working relationship must be called in at the first sign of trouble. [This seems to motivate everyone below them to do whatever is necessary to keep things under control.] The third is the inclusion of a standing neutral (or panel of neutrals) so that the parties don't have to scramble to find someone acceptable to everyone -- and who understands their business -- when small problems arise. Finally. an explicit financial disincentive or a dispute prevention bonus is required to keep everyone motivated.

My own take on this is that "clients" of all kinds must demand that legal service providers emphasize dispute prevention before the idea will spread as rapidly as it should.

Biography


Lawrence Susskind was born in New York City in 1947. He graduated from Columbia University in 1968 with a B.A. in English Literature and Sociology. He received his Masters of City Planning from MIT in 1970 and his Ph.D. in Urban Planning from MIT in 1973. 

Professor Susskind joined the faculty of the MIT Department of Urban Studies and Planningin 1971. He served first as Associate Head and then as Head of that Department from 1974 through 1982. He was appointed full professor in 1986 and Ford Professor of Urban & Environmental Planning in 1995. As head of the Environmental Policy Group in the School of Architecture and Planning at MIT, he currently teaches four courses (Negotiation and Dispute Resolution in the Public Sector (11.255), International Environmental Negotiation (11.364) taught jointly with the Fletcher School of Law and Diplomacy at Tufts University, Multi-party Negotiation (11.257) taught jointly with Harvard Law School, and Use of Joint Fact-Finding in Science-Intensive Policy Disputes (11.941)), oversees a research budget of approximately $250,000 annually, and supervises more than a dozen masters and doctoral dissertations a year.

From 1982-1985, Professor Susskind served as the first Executive Director of the Program on Negotiation at Harvard Law School-- an inter-university consortium for the improvement of theory and practice in the field of dispute resolution. He currently holds an appointment at Harvard as Vice-Chair for Instruction, and Director of the Public Disputes Program at Harvard Law School. Professor Susskind is responsible for an extensive series of action-research projects, the training of senior executives, and serves on the Editorial Board of Negotiation Journal and as head of the Clearinghouse at the Program on Negotiation. He has developed more than fifty simulations (distributed by the Clearinghouse at the Program on Negotiation) that are used to teach negotiation, dispute resolution, and consensus building throughout the world. 

Professor Susskind is one of the country's most experienced public and environmental dispute mediators and a leading figure in the dispute resolution field. He has mediated more than fifty complex disputes related to the siting of controversial facilities, the setting of public health and safety standards, the formulation and implementation of development plans and projects, and conflicts among racial and ethnic groups -- serving on occasion as a special court-appointed master.

 



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Website: www.lawrencesusskind.com

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