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Use These ADR Management Tools

Use These ADR Management Tools
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We’re now going to discuss some alternative dispute resolution tools, very practical ADR tools that you can use in resolving disputes and specifically we are going to look at these four tools. First of all the corporate pledge, and we’ll look at screens, and then contract clauses, and finally online dispute resolutions. The corporate pledge is a pledge that you can adopt or your company can adopt as a matter of corporate policy. This pledge has become very popular, has been adopted by over 4,000 operating companies as a matter of corporate policy. Probably adopted at the board of directors level and this document is a little bit difficult to read but the key language in the document reads as follows.
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In the event of a business dispute our company and another company which has made or will then make a similar statement. We are prepared to explore with that other party resolution of the dispute through negotiation or ADR techniques before pursuing full-scale litigation. So let’s take a look at screens. Screens, are basically a list of questions designed for people in business, non lawyers, and based on the answers to those questions, the screen will advise you, for example, whether to use a binding ADR process or a non-binding process. Now quick question, what do we mean by binding processes and what do we mean by non-binding processes? Hit pause or just take a second to write down your answer.
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What is a binding process and what is a non-binding process? The non-binding processes are negotiation and mediation. When you enter into those processes you’re not bound to anything, as opposed to litigation and arbitration, which are binding processes. So basically the way screens are used. You first of all will answer these questions, and then the screen will advise you to use either the binding process or the nonbinding process. And if it advises you to use a binding process then you use another screen that will advise you whether to use litigation or arbitration. So, very useful tool for managers. Contract clauses, are very important. And, in determining whether to use an ADR clause, there are two basic scenarios.
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The first scenario is, where you include the clause, in a business contract. And I’ve never seen it in empirical studies, but I think that this by far is the most common use of ADR contract clauses. The second possibility is not to include the clause in a contract and wait until a dispute arises. This is a little more dicey because once you are in the middle of a dispute it’s going to be more difficult to persuade the other side to agree to mediation or arbitration. It’s better, I think, to bake it into the original business contract. And there are a variety clauses that you can use, you can find these easily on the internet.
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One possibility is to simply state in the contract, we agree to go to mediation in the event of a contract dispute. Second possibility, simply we agree to go to arbitration. But, then you can have an escalation clause where basically you say we agree to go to mediation first and if the mediation fails then we will move to arbitration. Or you can have a three part escalation clause. We’re going to start with negotiation, if that fails we’ll move to mediation, and if that fails then we will move to arbitration. So lots of possibilities. And again, you can find many examples on the Internet. Finally, there’s increasing use of online negotiation and dispute resolution.
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There’s been a pile of research on whether using online resolution is effective or not. I’ve got a huge stack of research studies. I’ve tried to summarize the pros and cons of using online negotiation and dispute resolution. And you can see here some of the basic conclusions. A lot of reasons on the left-hand side. To use online negotiation and dispute resolution a lot of reasons on the right hand side not to use it and these are fairly self explanatory but I think the bottom line on the right hand side is the online negotiation and dispute resolution is less effective. However, the bottom line on the left hand side is it’s cheaper and more convenient.
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It’s a lot cheaper to use online than flying to various locations and having face to face meetings. One compromise that you might consider is that one of the reasons why online negotiations are not as effective is that it’s more difficult to build rapport. That’s the very first item under con. Hard to build rapport. So one possibility to think about is, is there some way that you can develop rapport at the beginning of a negotiation especially through the use of a face to face meeting and then you can move to the online negotiation and dispute resolution after developing a relationship with the other side. Here’s some examples of online dispute resolution. Some of these involve everyday situations.
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Landlord bills me and my roommates for damages we didn’t cause. Broken window, broken screen. We live in a bad neighborhood. The landlord insists we caused the damage and then had to be us. So we got a dispute basically between landlord and tenant. Another online dispute is a little more exotic.
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Person wants a Harley Davidson tattoo on his left bicep. Problem is, the tattoo artist misspelled Harley Davidson. According to this person, in filing this complaint, this is a permanent typo. I either take a belt sander to my arm, wear long sleeved shirts for the rest of my life, or this person has to pay to have the thing lasered off, now. So that’s the tattoo dispute, and then some of these disputes are fairly romantic. Here’s an example. For the last year, my boyfriend of three years and I have been having sex, using only the pill for contraception. I want him to pay half the cost, he refuses. I’m asking the jury to resolve this before it becomes ugly.
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We agreed to let you decide. I’m suing him for $11.75 per month for as long as we’re sexually active. So the examples of online dispute resolution, and that concludes our look at ADR tools.
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