Contracts Need a Phased Dispute Resolution Clause so Your Time Is Not Managed by the Dispute

Disputes are best managed before they even begin. Too many executives write contracts that only focus on the day-to-day deliverables, leaving the off-ramps vague or relying on a boilerplate "go straight to litigation" clause.

The most effective risk management strategy is drafting a clear, staged escalating dispute resolution process into every commercial agreement.

A well-structured clause requires parties to exhaust peaceful avenues first:

𝗦𝘁𝗲𝗽 𝟭: 𝗘𝘅𝗲𝗰𝘂𝘁𝗶𝘃𝗲 𝗡𝗲𝗴𝗼𝘁𝗶𝗮𝘁𝗶𝗼𝗻: Compel both sides to get in a room together. Require representatives or CEOs to sit down 𝘄𝗶𝘁𝗵𝗶𝗻 𝗮 𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝘁𝗶𝗺𝗲𝗳𝗿𝗮𝗺𝗲 𝘁𝗼 𝗴𝗲𝗻𝘂𝗶𝗻𝗲𝗹𝘆 𝗮𝘁𝘁𝗲𝗺𝗽𝘁 𝘁𝗼 𝗿𝗲𝘀𝗼𝗹𝘃𝗲 𝘁𝗵𝗲 𝗶𝘀𝘀𝘂𝗲.

𝗦𝘁𝗲𝗽 𝟮: 𝗙𝗮𝗰𝗶𝗹𝗶𝘁𝗮𝘁𝗲𝗱 𝗠𝗲𝗱𝗶𝗮𝘁𝗶𝗼𝗻: If executive negotiations fail, bring in a neutral third-party mediator to facilitate a structured conversation, also within a specific timeframe - you don't want to let it linger on.

𝗦𝘁𝗲𝗽 𝟯: 𝗔𝗿𝗯𝗶𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗼𝗿 𝗟𝗶𝘁𝗶𝗴𝗮𝘁𝗶𝗼𝗻: Only after collaborative efforts are exhausted should the parties escalate to binding arbitration or court.

𝗧𝗵𝗲 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆: 𝗔 𝗽𝗿𝗼𝗽𝗲𝗿𝗹𝘆 𝗱𝗿𝗮𝗳𝘁𝗲𝗱 𝗱𝗶𝘀𝗽𝘂𝘁𝗲 𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻 𝗽𝗼𝗹𝗶𝗰𝘆 𝘀𝗵𝗶𝗳𝘁𝘀 𝘁𝗵𝗲 𝗳𝗼𝗰𝘂𝘀 𝗳𝗿𝗼𝗺 𝗯𝗹𝗮𝗺𝗲 𝘁𝗼 𝗽𝗿𝗼𝗯𝗹𝗲𝗺-𝘀𝗼𝗹𝘃𝗶𝗻𝗴, 𝗽𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗻𝗴 𝘆𝗼𝘂𝗿 𝗰𝗼𝗺𝗽𝗮𝗻𝘆'𝘀 𝗿𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲, 𝗿𝗲𝗽𝘂𝘁𝗮𝘁𝗶𝗼𝗻, 𝗳𝗼𝗰𝘂𝘀 𝗮𝗻𝗱 𝗰𝗮𝗽𝗶𝘁𝗮𝗹.

Originally published on LinkedIn.