The dynamic and evolving nature of all partnerships make it inevitable that disputes will arise at some point during the lifetime of a collaboration. What matters is not that they occur, but how they are dealt with.
It is important to work towards a resolution in a way that manages the business risk, human risk and legal uncertainties associated with the dispute. Considersation must also be paid to the broader impact on the partnership and the partner company so that any damage to the relationship between the two is minimised.
Three sources of dispute (and how to avoid them):
There may be clauses that are open to interpretation or the contract may go silent on certain points; certain areas may be points of contention. A positive step in risk reduction is to ensure that the contract explicitly states which partner is the decision maker on any potentially-contentious areas. The escalation process should also be clearly documented.
2) Financial and operational documentation
As collaborations and alliances progress, goals and project scope may shift, and operational decisions have to be taken. Risks arise where no clear record of decisions taken, and the rationale behind them, exists. Ensuring that decisions are captured in a clear and unambiguous way is key to reducing dispute risk.
3) External factors
Examples include changing governmental or regulatory requirements; emerging competitor data or shifts in one partner’s corporate strategic priorities. Regular contract review and update is crucial to ensuring that the contract remains current and relevant to the ongoing situation.
Disputes may arise from several sources, but the aim is always to resolve them in an objective way that minimises damage to the partnership. It is essential that the problem is assessed from both parties’ viewpoint and the impact to each party understood along with potential compromise positions.
The key role of an alliance manager at this point is to co-ordinate discussions in a way that reduces any tensions between parties by avoiding emotive or biased language and to take a dispassionate view of the challenges for both partners. Alliance managers are uniquely placed to act as an advocate for the overall partnership and to drive objective conversations. They can do this by following a few simple principles:
- Build a focused resolution team that includes appropriate cross functional experts and a key stakeholder (e.g. legal, finance, technical expert), and is mirrored by their counterpart
- Ensure the issue is clearly, dispassionately and concisely defined
- Identify and assess the potential business impacts and risks for each partner
- Drive objective and open discussion between the parties on options for the way forward and ensure next steps and potential outcomes are clearly documented and agreed in writing.
Timely engagement of legal advice is key
The instinct with any dispute that arises at a sub-committee or workstream level is to seek resolution between the technical teams at that level of governance; in these early stages exploring the issue differences and options is a valuable way to stimulate ideas for a way forward. As an issue moves into the dispute resolution governance process, clarity on contractual positions is essential; legal counsel can provide insight on the relative strengths of your position and help identify documentation to give a different perspective on the issue.
Where resolution between the parties cannot be reached, the final stage of dispute resolution is typically arbitration or mediation with the support of external parties. Usually this is a step that both partners would prefer to avoid. If all other means have been exhausted though, this may be the only means to reach resolution and at this point internal legal counsel will be invaluable for briefing the external parties involved.
Moving forward constructively
Once the parties have reached resolution, a solid communication plan jointly agreed between the respective dispute resolution teams can help to move the team forward on a positive footing with the joint objective of securing executive stakeholder approval of the resolution before implementation.
The impact of a dispute on a collaboration and the relationship of the partners can be far reaching. Building in time to assess this through alliance health checks and learning reviews can be a valuable step towards supporting future working and is one of the key services that an alliance manager can perform.