How can you analyze the financial impact of dispute resolution strategies?

1 Identify the costs

The first step is to identify the direct and indirect costs of each dispute resolution strategy. Direct costs include fees, expenses, and damages that you have to pay or receive as a result of the process. Indirect costs include lost time, productivity, reputation, relationships, and opportunities that may affect your current or future business. You can estimate these costs by researching the average duration, rates, and outcomes of each strategy, as well as considering the specific characteristics of your case.

2 Compare the benefits

The second step is to compare the benefits of each dispute resolution strategy. Benefits include the value, satisfaction, and certainty that you gain or retain as a result of the process. Value refers to the monetary or non-monetary benefits that you can obtain or preserve, such as revenue, assets, or goodwill. Satisfaction refers to the emotional or psychological benefits that you can experience or avoid, such as peace of mind, trust, or respect. Certainty refers to the degree of predictability and enforceability that you can expect or achieve, such as a binding judgment, a voluntary settlement, or a clear agreement.

3 Evaluate the risks

The third step is to evaluate the risks of each dispute resolution strategy. Risks include the uncertainty, volatility, and exposure that you face or create as a result of the process. Uncertainty refers to the lack of information or control that you have or need, such as the evidence, the law, or the parties' preferences. Volatility refers to the variability or unpredictability that you encounter or cause, such as the changes, delays, or appeals that may occur. Exposure refers to the potential or actual losses or liabilities that you incur or impose, such as the costs, damages, or sanctions that may arise.

4 Weigh the trade-offs

The fourth step is to weigh the trade-offs of each dispute resolution strategy. Trade-offs include the advantages and disadvantages that you accept or reject as a result of the process. Advantages include the positive aspects or outcomes that you prefer or favor, such as the speed, efficiency, or confidentiality that you enjoy. Disadvantages include the negative aspects or outcomes that you dislike or avoid, such as the complexity, hostility, or publicity that you endure. You can weigh these trade-offs by using a matrix, a scorecard, or a decision tree to compare and rank the different criteria and scenarios.

6 Choose the best option

The final step is to choose the best dispute resolution strategy for your situation. The best option is the one that maximizes your benefits, minimizes your risks, and aligns with your interests and the other parties' interests. You can choose the best option by using a cost-benefit analysis, a risk-reward analysis, or a interest-based analysis to assess and compare the different options. You can also use a contingency plan, a fallback position, or a BATNA (best alternative to a negotiated agreement) to prepare and adapt to the possible outcomes.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?