Disputes led by heart not the head according to survey published by leading law firm Field Fisher Waterhouse
29 October 2007
In a survey of UK companies recently involved in disputes, two
thirds admit that emotion and personal pride adversely affect their
chances of reaching a commercial solution to disputes and nearly
half concede that a personal dislike of the other side has led them
into expensive litigation.
The research, published today by leading law firm Field Fisher
Waterhouse LLP, also uncovered a reluctance on behalf of senior
management to take the necessary tough decisions to resolve
disputes, with 69% of respondents revealing that senior management
in their company actively disengage from disputes.
The survey looks at the problems associated with dispute
resolution and in particular the role of emotion and the impact
this can have. 79% of respondents believe that dispute
resolution is still not handled very well in many organisations and
it is clear from the survey that much of this is down to
non-commercial concerns driving companies into disputes and acting
as a barrier to effective resolution.
73% said that parties focusing on points of principle
contributed to the escalation of disputes and 77% agreed that
parties lack of focus on the weakness of their case had a negative
88% believe that unrealistic expectations are often a barrier to
resolution of a dispute. The survey showed that it is generally the
party on other side that is perceived to be unrealistic and
antagonistic, leading to ‘glasshouse syndrome’ where each party
blames their opponents for the escalation of a dispute.
Peter Stewart, head of Commercial Litigation at Field Fisher Waterhouse
said: “One of the major factors contributing to the escalation of
disputes is the emotion involved. Whether it’s personal pride,
dislike of the other side or a point of principle these emotions
will inevitably distract from rational decision making.
Deciding whether or not to embark on litigation should be objective
and be approached in the same way as any investment decision.
The risks and rewards should be weighed up as soon as a dispute
arises to decide on an acceptable outcome and the legal likelihood
of achieving this. It is clear that the emotional factors
which affect management when disputes arise need to be addressed to
enable businesses to focus on rational and logical decisions.”
The survey examines the roles of management, in-house
counsel and external legal advisers in relation to disputes.
Most strikingly the survey showed that management tend to become
emotionally involved and entrenched or as 69% of respondents
revealed, actively disengage from the dispute.
76% of companies surveyed had an in-house lawyer at their
organisation, with their role in disputes seen to be to
provide a pivotal role, bridging the gap between external lawyers
The rise of alternative dispute resolution is reflected by 100%
of respondents agreeing that lawyers need to be flexible and to be
able to fight a case or negotiate with diplomacy depending on the
circumstances. Clients were less keen for lawyers to take an
aggressive approach and in fact over half of respondents think
lawyers taking a too adversarial stance contributes to the
escalation of disputes.
Peter Stewart concludes: “Lawyers
need to understand the impact that emotion can have on decision
making. They should provide an accurate assessment of the facts and
give confident advice on the real merits of the case. A good
result for the client won’t always simply be a win in court – often
that can be a pyrrhic victory. Although it is unrealistic to expect
parties to approach a dispute entirely dispassionately both
internal and external advisers are often best placed to introduce
objectivity and commerciality to decision making. External advisers
can give advice and solutions unaffected by internal political
considerations whilst in-house advisers can help mould the strategy
to take into account the particular sensitivities of the
organisation - team work is key.”
If you would like to see a copy of the survey, or for further
press information, please contact:
Louise Eckersley, PR
Manager on +44 (0)20 7861 4120
Scarlett Yianni, PR Assistant
on +44 (0)20 7861 4795
Notes to editors:
The research and analysis was conducted by Lighthouse Global
Limited. Lighthouse is an independent business research consultancy
that specialises in the legal sector.
The research is based on 75 telephone interviews which took
place in March 2007. The interviews lasted around ten
minutes. The interviewees were in-house lawyers or senior
executives who had been involved in at least one dispute in the
last three years. All of the business people questioned had
first hand experience of involvement in disputes with 61% involved
in five or more formal disputes in the last three years.