Disputes led by heart not the head according to survey published by leading law firm Field Fisher Waterhouse

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 impact.

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 and management.

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:

Methodology

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.