Want to keep learning?

This content is taken from the Deakin University's online course, SMEs and New Markets: Trade, the Chinese Powerhouse and Online Opportunities. Join the course to learn more.

Skip to 0 minutes and 6 seconds BRUCE BILLSON: Donna Ross, thank you for being with us today. You’re an internationally recognised dispute resolution specialist, qualified and accredited in multiple jurisdictions, very active in arbitration, mediation, avoiding avoidable problems. Thank you for being with us today.

Skip to 0 minutes and 22 seconds DONNA ROSS: First of all, thank you for inviting me to speak, and hopefully to sharing some insights with SMEs. What I do is– well, I’m a lawyer on three continents, actually. French, US– New York– and Australia. But what I focus on mainly is dispute resolution and I would say dispute prevention. And I think this is particularly important for small and medium sized businesses that, when they go into contracts– and we’re talking about international trade here– that they get their contracts right from the outset. And that they have proper clauses that will enable them to prevent disputes.

Skip to 0 minutes and 57 seconds Disputes arise inevitably in business and life, and good contracts and good dispute resolution management procedures and clauses help to make for good business relationships. And one of the things I like to do is– and I do this to chambers of commerce– also because I am not everyone’s lawyer, of course, and there are people who use lawyers they’re comfortable with or might have to use lawyers or practitioners in other countries. To try to heighten their awareness, not just from a commercial standpoint, but from a legal standpoint as to what to look for. And what to ask for when they have lawyers drafting their agreements, because very often, the small business owners are not going to be doing that.

Skip to 1 minute and 40 seconds BRUCE BILLSON: So your approach is informed by that experience. Not just dotting the I’s and crossing the T’s in the legal sense, but some commercial considerations that they should be thinking about also.

Skip to 1 minute and 51 seconds DONNA ROSS: Absolutely not to the first, in the legal sense. I think that that’s something that’s often missing. It’s particularly missing in dispute resolution. People go to litigation arbitration. Sometimes that’s necessary. But mediation– and I’ll come back to some of the commercial steps before getting to the dispute prevention or dispute management– but mediation is really the best commercial way of resolving disputes, because it allows the parties to craft their own settlement with the aid of a neutral third party who is a mediator. And that’s very important.

Skip to 2 minutes and 26 seconds And there’s an area that’s even growing– which for small businesses could perhaps be a bit onerous– but is to have mediation as deal mediation or facilitation, because sometimes the negotiations for deals, even with lawyers, are ones where you lose sight of the forest because of the tree. And one of the things that I think is very important in deals is to have good negotiation skills– and maybe we can discuss that a bit more. But also to be able to walk away if it’s not the right deal. And small businesses, especially when the party on the other side is a larger company, tend to want to get the deal done at all costs.

Skip to 3 minutes and 5 seconds And then realise that maybe they would have been better off without the deal. And I’ve seen increasingly– recently, I was speaking to someone– a architectural construction firm from Kuala Lumpur where it was a deal with a government body in another country. And the conditions were just too one-sided, couldn’t be negotiated, and they said no.

Skip to 3 minutes and 25 seconds BRUCE BILLSON: So let’s put all that experience to work. Imagine yourself as a small business, whether it’s goods or services in an international market opportunity. What action steps would you take, how would you walk through that opportunity, knowing what you know, given your experience?

Skip to 3 minutes and 41 seconds DONNA ROSS: Get information. In negotiation, this is what we teach. And in life and in business, this is what’s important– is to get information. So the first thing would be to learn about the country or the market that you’re going into. Or if it’s a joint venture, where the people whom you’re going to be doing business with come from, to learn a bit about their legal system, to learn about their cultural values and differences. That’s the first step and that can be done online. Google is everyone’s best friend. But in addition to Google, you have the chambers of commerce, you have the International Chamber of Commerce. In Victoria, we have [INAUDIBLE].. There’s [INAUDIBLE].

Skip to 4 minutes and 19 seconds You can go to lots of other international organisations. The UN has a wealth of resources. So the first thing is to learn about that, that’s very important. And then to use that in your negotiations for starters. And to be prepared for the negotiations, not just go in and look at the legal aspects of the deal. If you’re going to be doing business in other countries, there are cultural considerations. Relationship building can be important in Asian countries. In France, they prepare a three course lunch with wine, and you’re just saying, can we get back to business with a sandwich? That’s where the deal is going to go wrong from the outset. So that’s very important I think.

Skip to 5 minutes and 3 seconds BRUCE BILLSON: And you’ve seen lots of examples where things haven’t gone well. What are the most common areas where you see a trip up or a bad outcome based on the cases that you’ve seen?

Skip to 5 minutes and 15 seconds DONNA ROSS: First, poor negotiation– accepting a contract. Small businesses often accept the contract as is. They feel that they have no negotiating power. Obviously, whoever is drafting the contract is going to draft it in their favour. It’s one-sided. They expect some give and take. So small businesses often accept a contract that they realise later on, they can’t perform because the terms are really not in their favour. That’s the first thing. Number two, they don’t look at issues such as IP, intellectual property protection. Those are things that are important. [INAUDIBLE] terms. Passage of risk. What happens if there is a problem on the ship? Who’s responsible, who pays? The applicable law.

Skip to 5 minutes and 57 seconds There’s a convention on the international sale of goods which applies in some countries and not others. The lawyers might not know this, so it’s important for small businesses to realise this. And then, last but not least and most important, their dispute resolution clauses, what’s often called the champagne clause. Because nobody wants to hear about disputes when they’re shaking hands and raising a glass to toast a great deal until the dispute arises. And we all know that prevention is better than cure. And when there’s an ongoing relationship or a project where there are multiple phases– but it’s even important if the contracts finished and you need to resolve payment terms or anything.

Skip to 6 minutes and 41 seconds So, very often, you’ll have lawyers or litigators who will say, oh, well, we just need a litigation clause, and if the parties want to mediate, they will. Generally speaking, once parties are unhappy and in a fight with each other, they don’t. So my first bit of advice is always have mediation. What’s most important is to have mediation, where there’s a third party neutral who comes in and assists the two parties to find a resolution– that’s a commercial resolution, that’s much better.

Skip to 7 minutes and 7 seconds And then you have the third stage– which is necessary– which is either litigation or arbitration– and I think we’ll speak about this in international context– which you have to have, because if mediation doesn’t work, you need some way to give finality to the dispute. And have a decision maker make that decision.

Skip to 7 minutes and 27 seconds BRUCE BILLSON: So, broad experience that you’ve had and many insights you’ve shared. What top three or four tips would you provide someone thinking of expanding their small business markets into offshore areas and the like? What would be the key nuggets of insights that you’d share with them?

Skip to 7 minutes and 47 seconds DONNA ROSS: Learn about the markets, assess the risks, negotiate, don’t be afraid to negotiate, be careful. Having proper contracts dispute resolution clauses, applicable law if necessary. Making sure you get good lawyers who understand what you want. And if your local lawyer doesn’t understand that, find a different one. And I would almost say go with your gut. If there’s something that doesn’t feel right about the contract– if you feel as if you really, really want it, but you’re not sure if it’s going to work, away.

Skip to 8 minutes and 26 seconds BRUCE BILLSON: Donna Ross, thank you for your time today and your wise counsel. We’ve benefited much from it. Thank you.

Skip to 8 minutes and 32 seconds DONNA ROSS: Thank you.

The right advice and preparation

Securing the right advice and being realistic about the challenges you may face may be crucial to your new market entry success.

Negotiation, mediation, conflict resolution.

These are three areas that need to be planned for when entering into any deal or contract as part of trading, whether that’s domestically or internationally.

If a dispute arises, how do you plan to manage it? This is often an area small business owners neglect when preparing to enter new markets.

Are you aware of dispute avoidance practices and their benefits? Disputes don’t only affect SMEs financially, they can also have an emotional toll on SME owners and staff, reducing the likelihood of creative solutions to the dispute due to stress, and risking bad publicity.

Knowing the issues worth pursuing is also important, as is getting the right legal advice.

According to Peter Strong, Chief Executive of the Council of Small Business Australia:

Some small businesses pursue issues they probably shouldn’t because they haven’t had access to the right advice … Or worse still, a good solicitor will say, ‘you’ll probably win this, but you might not and it’s going to cost you $40,000’ (Koehn 2018).

As Ms Ross stated in the video, seek advice early and build negotiations and plans for dispute resolution into your business plan.

Donna Ross, from Donna Ross Dispute Resolutions, represents SMEs in contract negotiations, settlement discussions and mediations and drafts the respective agreements.

Your task

What precautions and risks presented by new markets did Ms Ross identify in the video? In the comments, share the steps you’d take to mitigate new market commercial risks.

Share this video:

This video is from the free online course:

SMEs and New Markets: Trade, the Chinese Powerhouse and Online Opportunities

Deakin University