Using Data and Dispute Analytics to Move From Dispute Resolution to Prevention

Make the shift to prevention using your data

Welcome to the beginning of a groundbreaking shift in how businesses approach disputes. Business conflicts have long been seen as inevitable challenges that are addressed reactively, and most often in court litigation. This traditional paradigm, centered on resolution, will soon be overtaken by a more proactive and economically-rational approach: prevention.

As business executives and government leaders plan their strategies, one critical question arises: how can an organization be positioned to take advantage of this shift?

The pivot from resolution to prevention hinges on the ability to understand and interpret conflict, and to anticipate potential disputes.

At the heart of this paradigm shift is data.

Every dispute, every disagreement, every negotiation, and every mediation leaves behind a trail of data that, when analyzed, can be a goldmine of insights.

A Paradigm Shift in ADR

Historically, Alternative Dispute Resolution (ADR) served as an improvement over drawn out court litigation. ADR can be, depending upon the provider, a mechanism to resolve disputes much more quickly and inexpensively.

However, ADR methods such as mediation and arbitration remain as inherently reactive approaches. Instead, envision a setting where organizations with a large number of disputes can anticipate and preempt potential conflicts.

Dispute prevention is not a distant dream but the logical next phase in the trajectory of conflict management.

Why Prevention Over Resolution?

The financial impact of business disputes is staggering. Here are just a few examples:

• E-discovery costs in a single mid-sized lawsuit average $3.5 million.
• Large American companies spent an estimated $22.8 billion in litigation expenses in 2021.
• Estimated worker hours lost to workplace conflict costs a total of $359 billion annually.

The broader implications—missed opportunities, damaged relationships—are even more daunting.

Pivoting to prevention redirects these substantial resources towards progress, innovation, and growth. It’s common sense to maintain good health rather than treat a serious ailment only after it appears.

The Roles of Artificial Intelligence and Historical Data

Machine learning and AI are revolutionizing sectors from finance to healthcare. In the context of ADR, these technologies, combined with historic dispute resolution data, can serve as a powerful predictive tool.

It is crucial to understand key data collection principals and how they apply to your organization:

• Depth over breadth, look beyond simple occurrence counts;
• Examine the nature, recurrence, context, and outcomes of disputes;
• Are specific sectors or geographical regions more prone to certain types of disputes?;
• What about the time duration required for resolution?; and
• How frequently do the same parties find themselves in disputes?

These questions can be answered using data analytics, and can provide deep insights into the root causes of conflicts.

Best Practices in Dispute Analytics

Benchmarking and Comparative Analysis:

Comparing claim and dispute data year over year, or even against industry standards, can reveal emerging patterns. For example, if a particular type of dispute is on the rise, is it due to internal company processes, external market developments, or evolving legal frameworks?

Predictive Analysis for Dispute Prevention:

• Scenario Modeling: By analyzing historical data, companies can model potential future disputes. For instance, if a particular standard contract term has produced specific claims and then disputes in the past, it might be time to reconsider the term’s function, wording or interpretation.
• Risk Profiling: Just as financial analysts create risk profiles, claims and dispute analysts can determine which business processes, contracts, or relationships are most ‘at risk’ of leading to a dispute.

Streamlining Data Collection and Decision-making:

Nationwide Analytics: Modern ADR programs can produce standardized data elements across numerous regions and legal jurisdictions. This facilitates efficient data acquisition in a way that aggregating data from disparate legal files across various courts and outside counsel law firms simply does not. Collection of standardized data is critical to facilitate meaningful analysis.

Customized Interventions:

With a clearer understanding of dispute patterns, interventions can be more targeted. Instead of a one-size-fits-all approach, ADR and other claims and dispute resolution strategies can be fine-tuned to address specific, recurring issues.

Feedback and Continuous Improvement:

The analyzed data shouldn’t only be used for immediate interventions. It should feed back into the organization’s ongoing training, policy-making, and strategic planning, ensuring a continuous cycle of learning and improvement.

What Can the Future Look Like?

By embracing data analysis based upon programmatic ADR, businesses are not merely looking to solve problems; they are aiming to forecast and prevent them. This is profound change, marking a shift from a reactive approach to a proactive one.

In this evolving landscape, the question for organizations becomes clear: Is your use of ADR just helping you navigate the storm, or are you strategically and programmatically using ADR and then crunching the numbers to predict and avoid it?

The latter is the future, and it’s a future built on standardized and readily-available data.

Rethinking the Role of ADR Providers

An effective ADR program does more than just resolve claims and conflicts as they arise. It is also a source of invaluable data that holds the keys to the prevention of future disputes.

To harness the true potential of predictive prevention, organizations need a robust, consistent ADR program that captures standardized data from every dispute. The richness of this collected data, aggregated over time, becomes the foundation for predictive analytics.

As dispute data accumulates over time, the predictions produced by analytics become more and more precise. However, organizations must first ensure they have an ADR framework in place that diligently records dispute data and makes it readily accessible.

It is of paramount importance that the ADR provider uphold the highest standards of confidentiality and data security. Each party’s data must remain confidential at all times, with only the concerned party having access to their own information. Data must be kept secure, with data security procedures backed up by appropriate industry-standard verification and certifications.

This compendium of past disputes will empower organizations to anticipate and avoid potential conflicts, shifting from a reactive stance to a proactive one. But the journey begins with choosing an ADR provider that understands the dual importance of individual dispute resolution, programmatic data capture, and the utmost preservation of confidentiality.

For instance, an innovative ADR provider, by making a decade’s worth of dispute data available to a retail giant, enabled the retailer to discover that an outsized number of conflicts arose during holiday seasons due to staffing shortages. Armed with this insight, the retailer proactively adjusted its staffing model, leading to smoother operations and fewer disputes.

If your ADR provider is stuck in yesterday’s thinking and offering only traditional, reactive solutions, a reevaluation is in order. Seek a provider prepared with both the technology and expertise to usher your organization into this new era.

Conclusion

Business and government organizations should demand more than mere reactivity. With increasing complexities and the high stakes of ever larger and higher-volumes of disputes, business must focus the spotlight on anticipation and prevention.

To gain this focus, businesses and other organizations should seek out ADR providers who are ready to innovate, adapt, and strategize. Forthright and Forum understand this imperative and are ready to build dispute resolution programs with dispute analytics in mind.

FORUM

FORUM is a premier alternative dispute resolution provider, expertly specializing in mediation, arbitration, and online dispute resolution programs. With a legacy of excellence, they are dedicated to efficiently and fairly addressing a diverse array of business to business disputes. If you’re seeking expertise in mediation, arbitration, or online solutions, look no further than FORUM. Their dedicated team stands ready to assist.

FORUM’s Corporate Office
6465 Wayzata Blvd., Suite 480
Minneapolis, Minnesota 55426
contact@adrforum.com
952-516-6400 or 800-474-2371
www.adrforum.com