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Items to Consider in Dispute Resolutions During the COVID-19 Outbreak

April 14, 2020

Overview

Disputes arise out of ambiguity and money. With our circumstances changing on a daily basis during the COVID-19 outbreak, there is no shortage of ambiguity in this current business atmosphere. Ambiguity creates uncertainty and, therefore, opportunity. One opportunity is to constructively end an ongoing or simmering dispute. Litigation can be a tool for such resolution, but litigators do not operate merely in the courtroom context and can help seize the opportunity to resolve an ongoing dispute.

Businesses that successfully resolve disputes do so by achieving their objectives in the dispute resolution. Those objectives may be relational, market-based, or financial. Often, all three of those objectives are present to some degree.

Relational objectives to dispute resolution acknowledge that this is a small world. A litigation opponent today can be a friend tomorrow. Few businesses can accurately declare that they have too few enemies and too many friends. Resolving a disagreement can be necessary for a business relationship to productively continue. Finally in this vein, the approach taken during dispute resolution is memorable. A litigation adversary has an elephant’s memory for overreaching or opportunistic behavior, on the one hand, or an effort to sincerely resolve a dispute, on the other hand.

Businesses also view dispute resolution through a market-based lens. A lender that does not enforce loans and or a property owner that does not ever enforce property rights are examples of businesses that may signal to the market that they do not intend to enforce their agreements. This could have a large compliance impact. Businesses use litigation to signal that they expect their agreements to be enforced.

A third objective is purely financial. The cost of litigation and risk of an uncertain outcome can be approximated against the financial reward. The financial imperative must be measured against the likelihood of collecting a judgment that results from successful litigation. Suing a turnip for money is unlikely to lead to happy results.

Most businesses approach dispute resolution with each of these factors in mind. Dispute resolution is an opportunity to speak truth into a relationship that has gone sideways. It can also signal strength and resolve to the market. And successful litigation can restore losses that should not have been sustained.

In uncertain time such as now, these factors can help to inform how litigation is likely to be managed. Businesses facing financial pressure may be unwilling or unable to compromise on a payment dispute. Others may use litigation to signal to the market their resolve. Disputes that could be solved by favorable terms on the next contract may not have the same easy resolution in a stalled economy. And parties can have an easier time dragging their feet toward litigation at the moment because of the present environment.

But while there will be parties who cynically or honestly move slowly because of the present challenges, the litigation process is not dramatically slower than its typical deliberate pace. This is because the vast majority of litigation work occurs outside of the courthouse. Although courts are appropriately expecting parties to show patience with each other, electronic tools are available to push litigation forward even while social distancing. Witness interviews can occur by phone or video platform, documents can be shared electronically, and arguments can be developed remotely.

Litigation can also occur privately, through the arbitration process. Arbitration is a private trial typically conducted by an experienced and respected attorney rather than a judge. The advantage of arbitration at a time like this is flexibility. An arbitrator has more flexibility than a court to tailor a dispute resolution process to current circumstances.

These remote methods are not always as fast as in-person litigation tactics, but they are not dramatically slower. Nor are they substantially more expensive. In short, dispute resolution processes remain robust and available.

The current environment does not change the tools available, but it may change the objectives that are in play for dispute resolution. Parties will remember those who manipulated a challenging time as opposed to those who worked to resolve a dispute. On the other hand, a negotiated workout or firm but gentle enforcement of rights can marry the relational, market, and economic interests of a business. Our skilled litigators remain available to help craft a dispute resolution process that fits your relational, market, and financial objectives.

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