A survey by Eversheds shows that 45 per cent of general counsel in multinationals say they have been involved in two to five large disputes in the last three years, a rise on previous levels. Financial institutions and engineering businesses were the most likely to have been involved. Some 15 per cent of all the 82 GCs polled said they had been involved in six to ten such disputes.  The research, 'Companies in Conflict: How Commericial Disputes are Won,' looked at how companies approach large disputes and found that corporates with a turnover of more thant £1bn typically engaged in between two and five large disputes during that period.  However, around 16 per cent of companies were involved in more than ten disputes.  It also found that the key motivation for pursuing a dispute is to recover financial loss but managing reuptation is also paramount. One in five businesses involved in the study consider managing reputation to be the most important factor in pursuing a dispute. 

Business critical issues 

The research also points out that despite such business critical issues at stake, surprisingly senior management is adopting a remote position in the management of large disputes. Only in half of the cases (55 per cent) did the CEO have long-term insight. Commenting on the findings, Professor Renato Nazzini, professor of law at King's College London and co-author of the study, said: 'With such a high degree of convergence betweent the predicted and actual outcomes of disputes, why do companies litigate or arbitrate if they can forecast the outcome? Typically, when a dispute is not settled, this is either because one party refuses to engage in meaningful negotiations or mediation, or because both parties see the strengths of their respective cases as beign too far apart.'

Finding a solution

He added that the solution to thie 'impasse is not new: insistence on a contractual, multi-tier dispute resolution clause, combining negotiation, mediation and, as a last resort, litigation or arbitration. Such clauses ensure that neither party can initiate proceedings without an attempt to negotiate and mediate the dispute.'