Canadian “conflict management” institute could prevent costly litigation

It might sound strange that a commercial lawyer wants companies to spend less on legal fees – but that’s exactly what Paul LaBarge hopes to accomplish by starting the Canadian Institute for Conflict Management.

In his more than 30 years of practicing law with LaBarge Weinstein Professional Corp., LaBarge now recognizes a certain pattern of behaviour sparked by business disputes – a pattern that he says leads to no good.

“With this programmed approach, you get into a form of self-abuse,” he says. “Someone else (re: a lawyer) takes control and you’re turned into a bystander while enormous costs are incurred and you have to write the cheques.”

LaBarge isn’t naive enough to believe that businesses can all just get along. But he does think there are other ways to resolve a dispute besides a lawsuit.

As a lawyer who caters to Ottawa’s high-tech sector and a co-chair of the Canadian Advanced Technology Alliance (CATA), LaBarge is kicking off his new organization with a focus on tech companies.

The Institute has launched an online discussion group, hosted through Google Groups to share best practices for conflict resolution. It also has released a downloadable guide book offering tips.

If you’re looking for a place for a Beachhead, you look where you can get some good traction, the lawyer says. “I’ve been involved in every kind of dispute short of a shooting war and what’s amazed me is the amount of resources we’ve diverted from useful application to adversarial application.”

Many tech companies have accepted lawsuits as a cost of doing business, a December 2007 survey shows. The CATA survey asked 90 businesses about their involvement with litigation over a three year period.

About two-thirds of companies had been involved in at least one dispute in that time, and more than one-fifth felt litigation had a “substantial impact” on their business. Another third described litigation as having a “moderate impact” on their business.

Stats like that show legal conflict is one area tech companies can be more efficient and save some money, says CATA CEO John Reid.

“Many companies get involved in costly litigation that could be settled at an early stage,” he says. “I was surprised by the [huge] legal fees incurred by tech companies.”

One third of companies spent more than $100,000 on legal fees in three years, according to the survey. For 13 per cent of the companies surveyed, legal fees totaled more than $800,000 over three years.

LaBarge advocates a more “business-like approach” to dealing with conflicts. For instance, in one dispute between a software provider and a purchaser, he set up a “software test” to avoid a lawsuit.

When a client found the software provided to them wasn’t behaving as described, it wanted to sue. The software provider claimed that their product did exactly what it had been described to do. So LaBarge got the two parties to agree to put the software to the test. If the software passed, the company would be stuck with the cost. If it failed, the company would be refunded the cost of the software.

“It took us some fairly live discussion to get to that point,” he says. “But doing the same thing through litigation process would’ve taken two more years and cost another $150,000.”

Business litigation can often be a recourse when a company feels a supplier has not met contract obligations.

But when things go awry, resorting to lawsuits is often counterproductive, says Andy Woyzbun, senior research analyst at Info-Tech Research Group in London, Ont. There are better courses of action to take in order to be sure that an objective is met when a supplier falls short.

“Litigation, because it takes time and creates confrontation, is very unlikely to result in getting the original supplier to resolve the initial problem,” he says. “Litigation should be limited to situations where the organization has lost faith in the supplier, believes that they have a strong case and that the resolution will be financially favourable.”

The Canadian Institute for Conflict Management’s online forum will be used as a general resource for members to learn about best practices and alternate dispute resolution methods. The forum will have an academic flavour to it – with published experts taking some of their work and placing it into the forum to spark a discussion.

The Institute will also offer its services directly to businesses involved in a dispute situation that requires a non-lawsuit solution.

“In a business community as small as Canada, you can’t afford to permanently alienate people you do business with over a misunderstanding,” LaBarge says.

Better that companies learn to just get along.

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