Why and How Businesses Use Planned Early Dispute Resolution

Abstract

This article reports the results of an empirical inquiry analyzing why some businesses adopt “planned early dispute resolution” (PEDR) systems when most other businesses probably do not do so. PEDR systems enable parties and their lawyers to resolve disputes favorably and efficiently as early as reasonably possible. They involve strategic planning for preventing conflict and handling disputes promptly as they arise rather than dealing with them ad hoc.

One might assume that using a PEDR system should be a “no-brainer” for businesses that regularly litigate because litigation-as-usual undermines many business interests such as efficiency, protection of reputations and relationships, control of disputing and business operations generally, and risk management, among others. Although this seems like a plausible assumption, this study indicates that is it problematic for multiple reasons. Yet some inside counsel, who are key players in developing PEDR systems, have been able to overcome common barriers to adoption of these systems.

This article uses in-depth interviews to tell the story of inside counsel at major corporations who designed PEDR systems to satisfy the interests of key stakeholders. It describes elements of PEDR systems and the processes for developing them. Interview subjects emphasized that it is especially important to build support for the systems, change the corporate disputing culture, designate individuals to manage the process, and use early case assessments. The article offers recommendations for more widespread use of PEDR systems, including development of resources to help companies implement PEDR systems, use of dispute system design methods, designation of PEDR counsel to manage the process, and making PEDR a valued part of the corporate culture.

Keywords: planned early dispute resolution, dispute system design, business disputes, corporate disputes, corporate culture, legal culture, inside counsel, in-house counsel