This is part of the “virtual book club” discussing readings for the symposium at the University of Missouri on October 7:  Moving Negotiation Theory from the Tower of Babel Toward a World of Mutual Understanding.

Chris Honeyman suggested several readings for the symposium, which he describes as follows:

Following the 2007 Honeyman et al. “Next Frontier Is Anticipation” article in Alternatives to the High Cost of Litigation magazine, there was a CPR initiative for a while, which produced a set of recommended best practices and a background paper.  The background paper (“practice materials”) documented a series of techniques that had actually proved to be workable in one huge industry – yet remained an object of indifference in all other industries, not to mention government.  The SAGE Handbook of Research Management also incorporates a suitably tailored version of some of these ideas.

But in nine years, that’s surprisingly little, especially considering the widespread evidence of failure to plan ahead for inevitable conflict.  It’s even possible to argue that this form of myopia was a central factor in the near-meltdown of the economy in 2008.

This paragraph from the CPR conclusions reached in 2009 seems still relevant:  “Research inquiry: Why are business leaders so willing to fund dispute resolution efforts but reluctant to fund dispute prevention efforts?  Is it because dispute resolution is tangible, something they can feel and touch, while dispute prevention, whose objective is to create “nonevents,” is intangible, less real?”

John: Thanks for raising these issues and sharing these resources, Chris.  Although I have focused on these issues for several years, I wasn’t aware of the materials you suggested for our reading.  Relevant to these issues, I wrote two editions of a book on lawyering with planned early negotiation, chaired an ABA task force producing a planned early dispute resolution (PEDR) user guide for businesses, and co-authored with a study Peter Benner on why businesses do and don’t use PEDR, including short articles in Alternatives with summaries of the findings and recommendations in the April and May 2016 issues.

Your 2007 article (which you co-authored with luminaries Julie Macfarlane, Bernie Mayer, Andrea Schneider, and Jeff Seul) begins by pondering why businesses often are “blindsided” by disputes that they might have anticipated.  You note that a lot of expertise in conflict management has developed in recent decades, though it has mostly focused on dispute resolution rather than dispute prevention.

Organizations often fail to see the potential for constructive conflict engagement for several reasons including myopia, overconfidence, fear of incurring the wrath of leaders by bearing bad news, assumptions that problems can be handled through public relations or political efforts, avoidance of responsibility for problems that cut across different internal units, and denial of the significance of problems.

You suggest that there may be three reasons for this.  First, it’s human nature to ignore things and hope they go away.  In fact, sometimes they do.  A second, related, reason is that managers don’t think in terms of conflict systems and that problems may not become apparent until the managers have moved to other positions (and thus avoided responsibility).  Third, there is no one who affirmatively has responsibility for managing conflict generally.

You write that “the internal politics, overlapping hierarchies, disparate cultures, and key players’ individual ambitions . . . aren’t easily reduced to spreadsheets and budget projections, and there often is real resistance to disclosing them.  For both reasons, anticipating and preparing for these critical dimensions of a merger, or the equivalent in other organizational changes, tends to receive less attention than the hard technical or financial information.”

You suggest that management may be ready to use more sophisticated and integrated conflict management strategies borrowing from work in strategic planning, risk management, preventive lawyering, management consulting, partnering in construction projects, and union-management collective bargaining.  You recommend that organizations use “conflict anticipation specialists” to work with others in their organizations to better plan for conflict.  While this may sound radical, you argue that it really isn’t (or shouldn’t be).

The CPR Conflict Prevention Initiative begins with a preamble about many corporate interests in conflict prevention that seem obvious to readers of this blog – but not so obvious that many corporate leaders would adopt conflict prevention initiatives.  It recommends the following conflict “prevention best practices”

During the initial negotiation and drafting of a business-to-business agreement or a corporate governance document, all parties should

(a) proactively and realistically think ahead about the future conduct of their business relationship,

(b) realistically anticipate the possibility that problems and unexpected events can occur, and that they can generate disputes; and

(c) incorporate appropriate processes into their agreements and documents to reduce and avoid disputes.

Processes recommended for adoption are designed to:

(a) solve the underlying problem when an unexpected event occurs,

(b) prevent the problem from escalating, and

(c) achieve the immediate and low-cost resolution of any imminent disputes.

It notes that the construction industry has pioneered prevention techniques through processes like the use of standing neutrals.

CPR’s prevention practice materials include:

  • A Practical Introductory Exercise for Business Leaders and Managers and Their Inside Counsel
  • “Thinking Ahead:” A “New Paradigm” in Business Relationships
  • Preventing and Resolving Corporate Governance Disputes
  • The Case for Including Prevention Processes in Business Agreements
  • A Menu of Prevention, Control and “Real Time” Resolution Processes and Examples of Contract Clauses for Implementing Those Processes
  • CPR Construction Prevention Monographs
  • Background Papers, Research Studies and Exploratory Materials

This includes a flow chart comparing typical and strategic practices in dealing with problems and a graphic on dispute resolution stages and steps.

Chris, you asked why are business leaders so willing to fund dispute resolution efforts but reluctant to fund dispute prevention efforts?  Is it because dispute resolution is tangible, something they can feel and touch, while dispute prevention, whose objective is to create “nonevents,” is intangible, less real?

This was a central question that Peter Benner and I grappled with in our recent study I mentioned above.  Our conclusions were consistent with your 2007 Alternatives article.

“This study illustrates that key stakeholders have their own interests, which often are satisfied by continuing with the status quo of [litigation-as-usual] LAU rather than switching to a PEDR system.  The C-Suite often does not want to ‘get into the weeds’ of managing litigation.  Inside counsel and middle-level employees may feel that they currently handle disputes effectively and they may resent efforts to reduce their autonomy.  Outside counsel may worry about interference with their professional responsibility to produce the best legal results and their ability to generate substantial revenue that generally flows from LAU.  Although general counsel have the formal authority to direct inside and outside counsel to use PEDR processes, they may not do so for various reasons such as their temperament, background, training, or reading of internal business priorities.  Even if they implement a PEDR system, the system is unlikely to be as effective as possible if key stakeholders resist.

“More generally, what may seem irrational to outside observers may seem quite rational to individual stakeholders.  Although the status quo may not seem optimal to some stakeholders, doing something different may seem risky, possibly subjecting them to criticism if things do not work out well.  Business people normally do not get involved in dispute resolution and they may not be interested in PEDR processes unless it ‘hits them personally.’  One lawyer said that the biggest barrier to adopting a PEDR system was simply agreeing to change.  ‘People get set in their ways. Teaching an old dog new tricks is very tough.  Change is upsetting the apple cart and people don’t want to hear it.’  So, although adopting a PEDR system may seem like a no-brainer at first blush, proponents of this approach often face significant barriers that make it difficult to adopt and sustain this innovation.”

The good news is that some businesses do use PEDR systems.  We mostly focused on planning for early dispute resolution, not prevention, though a PEDR system can be a stepping-stone to prevention efforts.  (Our study does describe one company’s impressive conflict prevention initiative.)  We found that several elements seemed particularly important including building support within the organization, development of an early case assessment system, use of what we called a “PEDR manager” (akin to your conflict anticipation specialist), and changing the internal culture.  We made the following recommendations.

  • Develop technical assistance resources
  • Encourage law firms and neutrals to advise clients about PEDR
  • Develop a clear, flexible concept of PEDR
  • Use dispute system design methods
  • Designate PEDR counsel to coordinate PEDR systems
  • Create appropriate incentives to use PEDR
  • Plan for PEDR to survive the departure of initial champions
  • Make PEDR a valued part of the business culture
  • Conduct additional research

CPR recently created a new Transactional Committee with an Advancing Dispute Prevention Task Force.  It will be interesting to see what it does.

Of course, this all has important practical significance, which you may want to discuss.  Since this symposium focuses on negotiation theory, what theoretical insights can we gain from the analysis of why various organizations do or do not engage in systematic conflict prevention or PEDR activities?

Chris:  Well, just as John was unaware of the earlier work (modest in scale as it was) that Andrea Schneider, Bernie Mayer, Julie Macfarlane, Jeff Seul and I had done, as well as the CPR committee of a couple of years later, I was unaware until now of John’s more recent researches.  The not-yet-published 56-page law review article in particular is a typically John Lande thorough analysis of its data set, a series of confidential interviews with more than a dozen senior corporate counsel.  I’m glad that John has reached conclusions broadly consistent with our earlier surmises.

In starting to look into this area again, I have also been made aware — particularly by Jim Groton, who chaired the 2008-2010 CPR effort — of some even more recent developments.  In particular, it appears that in the context of the International Mediation Institute-led Global Pound Conference series, there is fresh interest in this area.

Mr. Groton advises me that at the opening conference in Singapore this spring, when those in attendance were queried as to a number of different possible areas of priority for future work in the field, every occupational subgroup represented voted first and foremost for more “upstream” work  of just the kind discussed in these prototype efforts. That’s heartening.

Less heartening is that, despite CPR’s repeated if not constant interest and its status among the top echelons of business lawyers with a general interest in ADR, nearly a decade after we began to write in this area, John and his co-author still found all of the “resistance sources” within big corporations intact.

At one level this is quite startling, given evidence that failure to do even a modest job of conflict anticipation can be argued to have been at the heart of the 2008 near-meltdown of the economy (for all of the reasons which have caused major banks to have to pay very large fines more recently).

At another level, I’m starting to think that there may be a very basic explanation, related to role identification within business groups.

Only in the construction industry has there been widespread adoption of conflict anticipation methods along with robust PEDR tools.  Even though every business needs some construction work and some need a lot of it, construction is typically not at the heart of most firms’ business models (unless of course they are centered on that business).  It’s an ancillary function, largely contracted out, and even the people within a big firm who deal with it generally are specialists.  Perhaps this helps to explain why “line” managers seem so unaware of the successes construction has had with conflict anticipation and PEDR.  Other reasons might include all of the concerns which we laid out in 2007, of course.

But now, perhaps we should add yet another. The fact that interest in this area has been led primarily by attorneys (three out of four of my writing colleagues in 2007, as well as Jim Groton, John Lande, and their other co-authors) hints at a different kind of organizational roadblock.  This seems particularly so now that Jim Groton has pointed out to me that not one of the prevention and de-escalation processes advocated by the CPR Prevention Initiative was invented by lawyers — all of them were invented by business people.

My data set for this proposition is admittedly minuscule.  I am recalling a personal experience, when shortly after the Negotiator’s Fieldbook was published, I was invited by Georgetown University’s law school to sit in on a conference simply in order to acquaint myself with the concerns of its denizens.  The conference in question was of in-house corporate counsel. I was a fly on the wall. What sticks with me in memory has to do with the conversations in the hall more than the presentations.  I tried to have lots of these.

My overwhelming recollection is of the frustration that one in-house lawyer after another expressed at the degree to which they were left out of business decisions at a moment at which they felt their advice could have been maximally useful with minimum disruption.  In effect, business executives were choosing whom even to tell about any impending merger, contract, plant-siting decision or other business move, in ways which reduced the potential for the attorneys to be helpful – but also, perhaps, maximized the executives’ own comfort level.

One of the attorneys I spoke with had developed consistent and creative ways of demonstrating to his in-house clientele that consulting with him was not quite as bad as a visit to the dentist; but most, I suspect, had not.

If executives are (consciously or subconsciously) leaving their own lawyers out of the early-stage discussions that fit our profile, focusing our efforts on groups and entities who see legal expertise as the key avenue into organizational decision-making may amount to digging a deeper and neater hole in the wrong place.

Here, as in so many other respects, I see potential for cross-disciplinary work.  Perhaps this approach might be of interest to folks who recognize that the job really isn’t getting done within any particular silo.  One possibility might be for interested law, planning etc. faculty to partner with business school faculty in new writing and investigation in this area, and even – dare I say it? – in some joint teaching.

One possible starting point for such collaboration is represented by a chapter in the Negotiator’s Desk Reference by Adrian Borbely and Andrea Caputo, “The Organization as Negotiator.”  This chapter uses their previous studies of certain corporations as background for an argument that businesses stand to benefit if they stop regarding negotiation as the individual province and duty of individual managers for individual instances, and instead establish a consistent policy, tone, and set of parameters throughout the organization.

It does not seem to me a very large jump from there to the notion that the organization might even train all of its executives to plan ahead for inevitable conflict, and adopt in every initial contract a suitable set of tools, designed – and, by now, validated – for reducing its frequency, severity and cost. It’s a guess, but I think not an unreasonable one, that such training (especially if it takes hold at a basic level in business school courses) might be more warmly accepted by executives if they associate it more with business faculty than with lawyers.

John Lande is the Isidor Loeb Professor Emeritus and former director of the LLM Program in Dispute Resolution, at the University of Missouri, School of Law. He received his J.D. from Hastings College of Law and Ph.D in sociology from the University of Wisconsin-Madison. He is also an avid writer and contributor to Indisputably.org