Disputes

Commercial disputes can be costly, time-consuming and stressful. Minor disputes can escalate, damaging relationships or even threatening the survival of your business. But you can help minimise the risks, by taking a pragmatic and positive approach to avoiding unnecessary disputes and resolving disputes effectively.

Avoiding commercial disputes

Clear, written agreements minimise the risk of disputes. Written contracts should set out exactly what has been agreed. Shareholder or partnership agreements can be used to anticipate potential conflicts and deal with them in advance.

Equally, you need to understand the key legal responsibilities and regulations affecting your business and put in place appropriate procedures. For example, appropriate disciplinary and grievance procedures are essential for employment disputes. Understanding consumer rights is vital if you market to consumers.

Bear in mind, too, that you could be held responsible for the actions of employees. For example, the Internet has increased the risks of employees sending defamatory emails or misusing online content. You should ensure that employees are trained in the key issues and how to follow the right procedures.

At the same time, you need to recognise that disputes are inevitable. There will be times when mistakes are made or when you need to fight for the right deal rather than accept an unfair outcome.

Negotiation, dispute resolution and litigation

Aim to negotiate a constructive resolution to any dispute, rather than to punish or triumph over the other side. Key objectives might include maintaining a working relationship and minimising costs and disruption, as well as any financial settlement or agreement. Take into account practical negotiating issues, such as the strength of your argument and what the other side is hoping to achieve.

If firm but fair negotiation does not succeed, alternative forms of dispute resolution include mediation or arbitration. Well-planned agreements will include dispute-resolution clauses, setting out how any dispute will be dealt with. For example, a lease might specify that rent reviews are subject to arbitration by the Royal Institution of Chartered Surveyors (RICS). Litigation in court should be a last resort

Legal advice and expertise

A long-term relationship with a firm of solicitors can underpin your approach to avoiding disputes. For example, your solicitor can advise you on drafting standard terms and conditions and ensuring that they apply to any sales, or help you set up and review employment procedures and so on. Preventative measures like these can be a highly cost-effective use of legal expertise.

A long-term relationship may also be a cost-effective approach to recurring disputes – for example, chasing payment of overdue debts. Specialist advice may be needed for particular types of dispute: for example, if you want to take action against a professional adviser for negligence.

Bear in mind that legal disputes can be expensive, particularly if they reach court. You may want to consider legal insurance to cover your legal expenses as part of your strategic approach to managing disputes.