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Where to start?

Corporations aiming to reduce exposure to the negative consequences of conflicts should start with the basics. Better conflict management practices, designed to assist in either avoiding conflicts or mitigating their effects, are built on better understanding of what can and what should be managed.

After the turn of the new year we find ourselves working in a one-year-old firm. Many have inquired about the experience so far, so here are a few words on that before focusing on the topic at hand.

On the advocacy front, last year was an especially good one. Although it feels nice to win cases for clients, good results are rarely possible without proper support. Experienced and highly skilled in-house teams were the guarantors of our biggest successes last year. In addition, we managed to settle some cases away and, admittedly, in one case we only got what we expected – not what we wanted. This year we will again focus on providing our clients the service they seek and expect to receive – in an uncompromising manner.

On a side note, Project Iquja has proceeded according to plan. We have had the privilege to review the conflict management practices and processes of prestige corporations and discuss with extremely smart individuals about how their organizations address conflicts. The interview work will continue for a few months still. For Project Iquja, year 2018 will be an interesting and decisive one. It is an ongoing struggle to find the time necessary for the project and we have had to force it by saying no to attorney assignments. As anyone can understand, it will be a relief to reach the point of making the actual decisions.

I conclude by expressing a sincere gratitude to our clients and all contributors of Project Iquja.

On to the main topic:

Let’s assume that a corporate representative (e.g. director, manager or in-house lawyer), for one reason or another, concludes that the corporation’s conflicts may not have been addressed properly.

Let’s further assume that, despite scarce resources, addressing a corporation’s conflict management practices and processes has reached to the top of the agenda. There’s an internal aspiration and drive to find ways to manage conflicts better and momentum to proceed. So, how should one start the project?

In short, I would suggest starting by mapping where you are and where you want to be.

The suggested mapping exercise takes some effort. This blog post intends to give some pointers as to what to ask in order to define the current position (where you are). First, however, it is good to understand the general framework.

The term conflict management does not have a generally accepted definition. It has been and is constantly being used with different meanings – usually in correlation with the profession, industry and/or commercial agenda of the individual or entity using the term.

As a result, when someone uses the term conflict management, my first reaction is to try to understand what they mean by the term.

In my previous blog post, I defined conflict as any controversy or dispute a corporation has with someone else (customer, supplier, joint venture partner, competitor, governmental authority, municipal authority, multi-national authority, employee, etc.). If not settled, the conflict will be resolved through some kind of a formal proceeding.

I also suggested that corporations should pay more attention to conflict management because it pays off. So, how do I define conflict management?

When illustrating conflict management opportunities to a corporate audience, I usually start by showing a slide introducing a categorization where corporate conflict management is the main concept encompassing avoidance, conflict management and case management as the three sub-concepts.

Corporate conflict management categorization

Avoidance refers to all measures, practices and processes intended to reduce general conflict exposure. The aim here is to avoid conflicts. Thus, a wide range of measures fall under this sub-concept – from rather clearly defined efforts, such as development of contract templates, to fairly extensive initiatives, such as reviewing a corporation’s internal and external processes to identify and correct areas triggering conflicts.

Conflict management refers to conflict specific measures and pre-designed processes aiming at resolving actual conflicts, as efficiently as possible. In a commercial setup, sooner or later a conflict emerges. The outcome depends largely on how well the situation is managed. Do well and you at least gain control over the situation. Fail and you have an expanding mess on your hands.

In the chosen terminology, a conflict turns into a case once a formal dispute resolution proceeding (e.g. arbitration or court proceeding supposedly leading to an enforceable judgement) starts. At that point, representation (as a sub-concept to case management), which refers to work typically done by external legal service providers as formal representatives of corporations in dispute resolution proceedings, becomes relevant. But although a corporation may have engaged an external professional to a case, case management should, for example, follow-up with the case and see that the representation gets the support it needs. More importantly, case management should (always) maintain a bird’s eye view of the overall progress, pondering how far it really makes sense to go. After all, the aim is to come out of a proceeding with as little damage as possible.

Conflicts are an excellent, but often overlooked, source for learning. Understandably, when a conflict has finally been resolved, the aspiration is to move on and to forget the negative experience. Stepping back for a while to consider whether there is something you can learn, and taking the necessary measures to pass learnings forward, may very well save the organization from further negative experiences. Learnings should influence, if not dictate, the measures, practices and processes in each of the three sub-concepts.

When I, as a general recommendation to all corporations, suggested paying more attention to conflict management, I was referring to conflict management with the above definition – and thereby partially to corporate conflict management. I was, though, not referring to the other two sub-concepts of corporate conflict management because investments under avoidance or under case management do not bear fruit for all corporations.

I want to emphasize, however, that if you are addressing your corporation’s conflict exposure, you should not overlook any of the three sub-concepts of corporate conflict management. Corporations and businesses differ, so it may be that for one corporation it would be beneficial to put some attention to avoidance, whereas for another company the right focus area might be case management.

So, what are the questions to proceed with? I would suggest asking the following:

  • What kind of conflicts and cases has my corporation faced in the past?
  • Are some of the conflicts / cases recurrent?
  • Is the conflict / case history showing an increasing or decreasing volume trend?
  • What kind of conflicts is my corporation exposed to in general?

It does not take long for someone familiar with the corporation’s business to give an approximate answer to the first three questions. The fourth one may require the involvement of someone with legal expertise but should similarly be relatively straightforward for an experienced in-house lawyer to assess. For all four, the chances of getting everything covered are greater if you have more than one person answering the questions.

I recently had an ICC arbitration with a client for whom the conflict was the first one of any significance in at least 25 years. If your corporation does not have conflicts, it does not really pay off improving the corporate conflict management practices and processes. But if your corporation has a less fortunate conflict exposure and the corporation, thus, faces conflicts, conflict management should be addressed.

Then, the relevant follow-up question is:

  • What happens in my corporation after someone in the organization becomes aware of a potential conflict?

Answering can take a while and one usually ends up recognizing areas where one can assume something but does not really know the answer.

If your corporation is or has been a party to a court proceeding or arbitration, you should consider what happens in your organization while the court case or arbitration case is pending. You may want to ask:

  • Do we have practices or guidelines in place for the purpose of case management or are the measures taken more or less dependent on the skills, knowledge and experience of the individual handling the case?

Recurring conflicts may indicate that a corporation should consider measures falling under avoidance. The potential solutions to problems are usually tailored. What works for one company may or may not work for another. The process, however, always starts by asking why:

  • Why are we facing these recurrent conflicts?

There usually are more than one answer, and one person can rarely give all the needed answers.

While doing the exercise, try not to think too much what the answers should be – just concentrate on the current status. I would conclude the effort by asking:

  • How does my organization learn from conflicts?

My next blog post will try to give some pointers as to what to ask in order to define the aspired position (where you want to be).

We wish you all a successful year 2018!

Contact

Harri Jussila

Founder, Attorney at law, EMBA

+358 50 577 4088

harri.jussila@iquja.com

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Huopalahdentie 24
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Tel. +358 50 577 4088

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Iquja’s office is located at Menuetto Business Center in Munkkivuori, Helsinki (20 minutes from the Helsinki Airport [HEL/EFHK]).

Business ID, VAT code

2801483-4 / FI28014834

E-Invoicing address

EDI-Code: 003728014834

Operator ID: 003721291126