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 when left unfulfilled 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 than 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 insure efficient prosecution
of the work. The agreements were incorporated into a memorandum of
understanding that governed the course of construction. The multi-million
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.
Douglas E. Noll, Esq. is a lawyer specializing in peacemaking and mediation
of difficult and intractable conflicts throughout California. His
firm, Noll Associates is based in Central California. He may be
reached through his website
and email at
doug@nollassociates.com