Three basic steps will ensure your stakeholder relations weather the storm of litigation.
We've already seen the critical role good corporate governance plays in an organisation being Dispute Ready, not just generally but in developing a second key element of Dispute Readiness – a sound document management system.
In the final part of our series, we'll focus on key stakeholders within an organisation that are relevant to any significant dispute, and how you can develop and maintain your relationships with those stakeholders to ensure that you are Dispute Ready.
Stakeholders – who are they and what is at stake?
A stakeholder is a person or an organisation who can affect or, is affected by an organisation, its strategy or projects.
All organisations depend on a variety of stakeholders – some internal, and others are external, to the organisation.
It is important to understand the different stakes a person or organisation may have. Once you understand the stake the stakeholder has, you can manage the relationship to the mutual benefit of the organisation and the stakeholder.
Some of the different stakes a person or organisation may have are:
- impact or influence; and
Which stakeholders are critical to an organisation being Dispute Ready?
There are three key internal stakeholders in any organisation that are critical to it being dispute ready:
- Employees: Those employees with day to day responsibility of the operation of the organisation's business. It is this stakeholder that will be able to provide the factual background to any dispute and give the necessary evidence to enable the organisation to form a view about how it ought to proceed with any dispute.
- Executives: Directors and/or the Board. It is important that those individuals with decision-making power within an organisation are fully briefed and have a thorough understanding of operational matters that may pose risks for the organisation, as well as insight into how risks and disputes will be dealt with by the organisation.
- Legal: The internal legal function (if the organisation has one), whether it be an individual or a team of people, are central to preparing for and dealing with disputes arising in an organisation.
The three key external stakeholders that are critical to an organisation being dispute ready are:
- Legal team: This is the organisation's preferred external legal services provider. The legal team may be briefed directly by the business (if the organisation does not have an internal legal function) or briefed by the organisation's in-house legal team. Part of this stakeholder group is Counsel. Subject to the complexity of a dispute, an organisation will need to engage a barrister to assist in the ongoing conduct of the dispute. An organisation may need to engage both Junior and Senior Counsel.
- Experts: Often it is necessary to engage an expert to give his/her opinion regarding issues arising in a dispute. Subject to the area of expertise, experts can be few and far between. It is therefore important to ensure that an organisation has the ability to secure an expert (in its key niche areas) of its choosing if and when it needs to.
- Media: Subject to the nature of a dispute and the extent of an organisation's presence in its given market, it is important that an organisation has some control over the messages that are being published to the broader public either prior to a dispute being made public or after that occurs.
How can you enlist the stakeholders to ensure an organisation is Dispute Ready?
You need to consider the different stakes held by stakeholders of an organisation and develop a plan to manage the stakeholders. That plan should recognise the need to manage competing organisational imperatives and the negative effects that significant disputes can have on an organisation.
There are three simple and easy steps that an organisation can take to enlist internal and external stakeholders to ensure that it is Dispute Ready. These are set out below:
Step 1: Create a Risk Team. In part 1 of this series we discussed six steps that an organisation should take from a corporate governance perspective to identify historical risk factors within the organisation and identify ongoing risk areas.
The Risk Team should be made up of key personnel responsible for compliance with the six steps (this would ideally include the Contract Manager and Compliance Manager) as well as an executive and legal function. In that way, any risk/dispute for an organisation should be identified early.
Step 2: Identify the dispute. This should occur as a natural consequence of the formation of the Risk Team.
Step 3: Create a Project Team. As soon as a dispute is identified, create a Project Team to deal with the dispute. That team should ideally include all of the internal and external stakeholders mentioned. The Project Team should be responsible for:
- Controlling dissemination of information/ documents within the organisation regarding the dispute.
- Creating a collection of all of the relevant facts and documents relating to the dispute.
- Creating a privileged record of the strengths and weaknesses of the organisation's present position in relation to the dispute.
- Obtaining early strategic advice from the external legal team. As part of this process, preferred Counsel should be included in the provision of the advice. If it is deemed unnecessary, then at the very least Counsel should be briefed about the dispute thereby ensuring that the opposition cannot brief them, securing a tactical advantage.
- Obtaining early advice from experts. Again if it is deemed unnecessary, then at the very least the expert(s) should be briefed about the dispute thereby ensuring that the opposition cannot brief them. Another tactical advantage.
- Controlling the internal and external message that the organisation wants to send to its employees, shareholders, customers, suppliers and the general public. The organisation also needs to ensure that it complies with any regulator demands and does so in a manner which is coordinated with the more general This aspect of a dispute is often overlooked and can impact significantly the effect that a dispute has on an organisation. external messages.
The earlier that an organisation implements the three steps recommended above, the better placed it will be in any dispute. Implementation of the recommendations will ensure that an organisation has the upper hand in a dispute on many fronts. Even if an organisation has the weaker case or is destined to lose a dispute, being Dispute Ready will give it the best opportunity (and a significant advantage) in negotiating a resolution on the best possible terms.
You might also be interested in...
- Check yourself before you wreck yourself: Good corporate governance and being Dispute Ready
- Check yourself before you wreck yourself: Document management systems and being Dispute Ready
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.