Business disputes, especially those that are headed for litigation, are costly and unprofitable. In the past, litigation or arbitration seemed like the only way to resolve serious disputes. Today, however, business people have many more sophisticated tools at their disposal.
An ounce of prevention is worth a pound of cure, especially in important business relationships. When people think of preventing business conflicts and disputes, they usually think about how to protect themselves. While protection, especially through careful legal counseling, is important, it is not always sufficient. I have come to believe that the best way of averting disputes in business deals is to make sure that the underlying business relationship is well-established before the contract is signed. One powerful relationship-building tool is strategic facilitation.
In strategic facilitation, the principal decision-makers and the personnel directly responsible for execution of the deal meet very early in the relationship. A neutral, trained moderator, called a strategic facilitator, guides the group through an interest-based conferencing process. In this process, the participants learn about each other, the history and culture of the companies, and the deeper underlying needs, desires, goals and interests that are motivating the business deal. The facilitator challenges the participants to examine the weaknesses of the deal, as well as its strengths. Through this process, the participants develop a deeper understanding of each other, learn how to communicate effectively, plan for and anticipate future problems, and develop the skills necessary to resolve conflicts and disputes fairly and efficiently.
Many business deals are made without regard to the underlying interests of the parties. Each side "assumes" the other side will know, think, act or otherwise agree with the other. After all, they have a deal, don't they? In truth, failed deals are based on unstated assumptions and expectations left unfulfilled, which lead to frustration and conflict. With foresight, this type of conflict can be avoided. For example, two companies agreed to create a strategic alliance. During a strategic facilitation process, they learned that their actual interests were substantially different from what they had both assumed. As a result, the direction of the deal completely changed. Had they not engaged in the strategic facilitation process, the deal would have collapsed because of unstated assumptions and expectations that each company held about the other.
Strategic facilitation is particularly useful in complex deals such as industrial construction projects. In one case, a city let out a bid to construct a wastewater treatment plant. The bid was awarded and immediately after the award, the city's construction management and design team met with the prime contractor's construction superintendent, managing principals and key subcontractors for strategic facilitation. During the day-long process, the parties identified their respective interests and needs, agreed upon their respective obligations and responsibilities, walked through the plans and specifications, agreed upon procedures for submissions and approvals, identified potential problem areas, defined lines of authority and communication, and agreed upon a dispute resolution process. The facilitation process uncovered some design issues that would have exploded on the parties during the course of construction. Through strategic facilitation, the parties were able to resolve the design issues very early, avoid costly claims, and ensure efficient prosecution of the work. The agreements were incorporated into a memorandum of understanding that governed the course of construction. The multimillion dollar project was completed on time and on budget with minimal conflicts and disputes.
A strategic facilitation is usually an all-day process and consequently may not be appropriate for smaller transactions. Nevertheless, the concept of strategic facilitation can be used in mini-conferences to the same effect. The key is building business relationships, uncovering unstated assumptions and expectations, and learning to communicate clearly. If you can develop this tool in your business, you will find more deals working well and very few ending up in costly litigation.
Noll is a lawyer trained as a peacemaker. His new book, "Peacemaking: Practicing at the Intersection of Law and Human Conflict," is now available. He may be reached at firstname.lastname@example.org. His Web site is www.nollassociates.com.