This is a 3-part guest post by a friend and business acquaintance of mine, Roxann Smithers. – TW
Fighting Smart: A Guide to Dispute Resolution Provisions
by Roxanne Smithers
Most parties to a contract or construction project go into the enterprise with the hope and expectation that the contract or project will proceed without controversy or dispute. For the most part, contracts and projects do proceed to completion without problems rising to the need for a decision from the county Supreme Court or a panel of arbitrators. However, the law of averages is little consolation when it is your performance on a construction project or liability under a contract that is being decided by a jury or arbitrator. For that reason, it is important for companies to pay attention to the terms of any dispute resolution provisions when negotiating a contract. The dispute resolution provisions provide the parties with a road map to solve a problem and can even serve to extinguish a party’s claim.
Dispute resolutions procedures fall into three (3) phases: (1) party level negotiations; (2) nonbinding third party intervention; and (3) binding third party intervention. At the party level, most contracts require that the parties make a good faith effort to resolve the dispute before the matter escalates. That may involve preliminary discussions between the project managers or it may involve higher-level executives who can approve a specific settlement plan. The parties have an opportunity to exchange relevant documents and information. The parties can also get a better idea of each party’s position and theory of the dispute should the matter not be resolved. Shadow involvement of counsel can be beneficial and help the parties identify relevant documents, facts, and arguments. The parties should make good use of this phase as it may be the last time they have full control over the outcome of the dispute. At this phase, the parties’ only additional costs may be the man-hours spent by the company representatives.
Nonbinding third party intervention comes in the form of mediation. Depending upon the terms of the contract, the parties can set up the mediation on their own or go through an Alternative Dispute Resolution (“ADR”) entity such as the American Arbitration Association (“AAA”), Henning Mediation, or Malow Mediation. Either way the parties will have to agree upon a neutral mediator to broker a settlement between the them. In most cases, it is advantageous to select an attorney. However, for disputes that are heavy on technical details, a mediator with specific professional expertise may be preferable.
Check back Friday for Part II!
Roxann S. Smithers, Esq. provides commercial, construction, premise liability, and contract review/negotiation services at her SMB-focused firm, The Law Offices of Roxann Smithers, LLC in Atlanta, Georgia. Ms. Smithers’ practice includes both litigation and transactional work. Ms. Smithers can be contacted at rsmithersLORS@yahoo.com or (404) 981-7928.