If you are facing some type of commercial dispute, you might be the president of a large company dealing with a business deal gone wrong, or an entrepreneur facing issues with a supplier.
You might be surprised to know that resolving commercial disputes is often not so different from resolving conflict with your spouse or loud neighbour. It’s hard to decipher the ‘real’ issues, what the other party actually needs and wants, and how to begin talking about the conflict, let alone problem-solving together. We say there is a lot of ‘noise’, distracting us from the real issues to be resolved. Both sides are often resistant to sharing information and lock themselves into positional bargaining stances.
The causes of commercial disputes are also similar to those in basic interpersonal disputes. Conflict might have emerged due to poor communication and then becomes increasingly difficult to resolve due to trust issues. Even though we are dealing with supposedly rational actors; being profit seeking corporations, they are run by people, people who make all of the decisions. This is both the problem and the solution.
On the other hand, commercial disputes are unique in that companies often have more resources to hire lawyers and take things to court, which can quickly increase conflict escalation and make things much more complicated. The internal dynamics of the company itself can also play a role in how the conflict is dealt with. At the same time, we believe that conflict resolution both within a company and with others externally can increase productivity and innovation.
Similar to good business practices, resolving disputes in a commercial setting requires 1) careful preparation, 2) strategic thinking and 3) collaboration to ensure that your business needs are met and that both parties are able to achieve the best outcome possible. In order to do this, we recommend the following steps and resources.
Careful Preparation. Being well-prepared to resolve a commercial dispute means that you have talked to all parties involved within your own company, you have a deeper understanding of your previous relationship with the other party, how and why things likely went wrong, how both sides were impacted by the event(s) that caused the conflict and lastly what moves could be made to repair trust and improve the likelihood of increased communication and resolution. An integral part of preparation is training in negotiation and conflict resolution. Commercial problems come up when you least expect them, and most can be prevented with the constant maintenance of relationships and improved communication. This is worth investing in.
Strategic thinking. It is critical to think strategically when dealing with commercial disputes, especially when the stakes are high. Disputes are not only about money; they are also about reputation, which can mean the survival of your business. You need to be aware that your next move could have a significant impact on, not only your relationship with the other party, but also your relationship with others in the industry. This is why companies might settle out of court to avoid negative media attention. A confidential mediation process is especially appealing for this reason. Being strategic is also about making sure that you do not concede in negotiation unless your business is comfortable doing so. If you feel ‘pushed into a corner’, as a business, you need to rethink your strategy and find better ways of increasing your power in relation to the other party, which might mean being prepared to walk away.
Collaboration. Collaboration is important not only with the other party when you are at the negotiating table, but also with your team. If you have fostered an environment where employees and managers are able to effectively collaborate with one another, they are more likely to find creative resolution to issues that might eventually escalate into disputes. When you look at it this way, investing in conflict resolution training is a small price to pay to prevent exorbitant legal fees. Reminding yourself and the other party about the potential costs and damage of resorting to litigation might also help temper the emotions of all parties and improve collaboration. Collaboration is also important when it comes to preparing for conflict resolution with another party. If you are able to begin to discuss the issues with the other side and communicate in a way to gain their trust, it will be easier for both of you to resolve the dispute. This doesn't mean you need to give in.