Negotiation is usually the first method of dispute resolution used when a dispute occurs. This is because negotiation has the ability to be quick, inexpensive and provide a binding resolution.
There are two types of negotiating methods commonly used, unassisted negotiation and formal negotiation. The difference between formal and unassisted negotiation is the involvement of lawyers. Unassisted negotiation is when the parties involved in the dispute negotiate directly with one another. In formal negotiations all correspondence will go through the parties’ respective lawyers.
Unassisted Negotiation is an inexpensive option in comparison to formal negotiation as all it costs the parties is their time. Occasionally, lawyers have the ability to polarise the matter and cause the other party to be defensive. Therefore, depending on the nature of the dispute, attempting unassisted negotiation has the potential to be more beneficial than immediately sending the correspondence through a lawyer. However, we do recommend seeking the advice of a lawyer to find out your entitlements in any dispute.
In most cases, we find that parties can resolve the issues themselves via unassisted negotiation. However, if the parties are entrenched in their views or have a sense of grievance, this type of dispute resolution can become ineffective. At this point, it becomes necessary to turn to other types of ADR options, one being formal negotiation.
Pros and Cons of Negotiation as a dispute resolution method
Negotiation in general gives the parties a higher degree of control to create their own process and craft their own agreement that is not required to be dependent on each parties’ entitlement under the law. It can be more time effective than any of the other dispute resolution methods, is generally more informal, and typically less stressful.
A benefit of involving a lawyer and engaging in formal negotiation is the introduction of an objective third party which may improve communication between parties and preserve or enhance the relationship.
One issue is that negotiation, formal and unassisted, is far from guaranteed to succeed before it is necessary to resort to some other more formal and structured method of dispute resolution. This may take the form of mediation or arbitration which are discussed in our previous two articles.
Any type of negotiation regularly requires the parties to compromise. This can cause issues if both parties are uncompromising in their approach. If this is the case, usually another method of ADR is required.
Formal negotiation incurs legal costs. Furthermore, if the formal negotiation does not work, the parties may see it as a wasted cost and time.
We recommend that, if possible, the parties attempt unassisted negotiation first as this will save the parties legal costs. If unassisted negotiation does not resolve the issue(s), we recommend seeking legal advice as to which ADR method would be best suited to your dispute.