Conflict Resolution

You Gotta Wonder, Sometimes….

I gave my first class in the ADR Survey course at New York Law School last night, and when presenting the “ADR Continuum” it struck me anew — why do so many experts in commercial dispute management urge early identification and management of conflict within enterprises, and yet so few enterprise managers invest sufficient resources to accomplish that goal, and continue to waste money in legal spend?

The “ADR Continuum” is a sort of number line, usually with negotiation at the left extreme and mediation to its right, then arbitration, then litigation on the extreme right.  Usually you see a vertical line at the midway point to designate the boundary between consensual and imposed outcomes.  When I teach it, I extend the left side to include pre-conflict “paradise,” then I progress to problems, then conflicts, then disputes, and then negotiation.  And I extend the right side to include “self-help” or war.  So it looks like this:

Obviously, the goal of commercial enterprises is to be as far to the left as possible for as long as possible.  I doubt that any serious observer of organizational conflict would question the principle that disputes are most cheaply handled early in their cycle, so that the maximum resources can be devoted to the profit-driven mission of the enterprise instead of to unprofitable transactional “friction” like dispute resolution. 

It works.  Again and again, employment systems specialists have presented compelling metrics that less money is spent, less time is allocated, fewer lawyers get involved, and higher morale is maintained when systems concentrate on pre-dispute dissatisfactions and conflicts rather than on mature dispute resolution processes like mediation and arbitration.  Managers like Phil Armstrong of Georgia Pacific have maintained statistics on the money they’ve saved through ADR policies, and are pleased to share the numbers with anyone who asks.

This principle cuts across industries and across legal practice areas.  Product liability: Toro Company doesn’t wait to be sued — it maintains a clipping service to learn as early as possible whether one of their customers has suffered an injury through their lawnmowers, and pre-emptively contacts them to determine their loss and make them whole through direct discussion.  So does Covenant Transport with accidents on the highways.  Same in medical malpractice: a growing number of hospitals deal directly and early to make the patient whole when an injury occurs through medical error.

Yet these are still exceptions.  Most enterprises wait to be sued and then start a process of defense with (in some but not all cases) a parallel process of “alternative” resolution of the claim.  Even more ironic. more than 98% of these claims do, in fact, voluntarily resolve — but usually after very substantial outlays.

Firefighters don’t just put out fires; they advocate prevention techniques such as sprinkler systems and fire codes.  Doctors don’t just treat disease; they study the causes of infection and teach us how to avoid illness.

What is it about interpersonal conflict, or commercial endeavors generally, such that we still do not look to the causes of conflict in order to avoid or control them, but instead spend all our time and money on “putting out the fire” once the flames come through the roof?

2 Comments
  1. Peter is again pointing out the truth. It is in fact almost laughable that it is such a challenge to get commercial entities – be they large corporations, law firms, educational institutions or hospitals to look at conflict management as a wise investment. Numbers like Georgia Pacific’s are indeed helpful. We have CONSERVATIVE evaluation data of several ombuds programs in corporations saving in excess of $20 million dollars PER ANNUM. Think of that . Two thirds of what Georgia Pacific saved in a DECADE saved in one year.

    But numbers like this seem to not be enough to “shake” leaders and lawyers from the fight first mentality, whether the issues is employment, torts, or other venues.

    So I am left with the very simple question for all who read Peter’s blog:

    How do we motivate leaders of all kinds to MOVE LEFT on the continuum above? and manifest meaningful conflict management / dispute resolution in the form of actual offices and people not just policies and positions?

    John

  2. Peter, as usual, a very perceptive post – many thanks. If you will permit me one comment on the spectrum you present and the comment that sensible enterprises want to be as far left for as long as possible. Not sure I agree. Being too easy or quick to settle can, in some cases, have equivalent or higher long-term costs to the alternative of litigating. So where we want to be is at the optimal location on the spectrum, which will depend on the type of business and the circumstances of any given case or type of cases. But you are absolutely right in that we would not have any clue as to where optimal might be located unless (1) we do hard work at the beginning of a dispute (as soon as or even before it truly arises) to understand the risks and costs of the conflict, and (2) we remain open to the broadest possible range of available means of resolving the conflict (whether negotiation, mediation, or some form of binding dispute resolution).
    Mike

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