Survey says IT chiefs have a key role to play in the
formation of a dispute-resolution policy.
Over the past two years, 96% of the UK's top 500 companies have
been involved in some form of dispute, according to the results of
the Dispute Resolution Survey published in November by law firm
DLA. Of these, just 35% have a formal dispute-resolution policy
that covers the management of risks in this area.
The first statistic is perhaps unsurprising, given the size of
the UK's leading companies by market capitalisation, and the fact
that disputes are an unavoidable aspect of commercial life.
However, that about two-thirds have no formal policy for the
resolution of disputes provides cause for concern. It may go some
way towards explaining why, on average, 21% of cases end up in
court, despite the pain and suffering often associated with the
litigation process.
Disputes that could arise in the IT area of a business
include:
- A dispute with an IT supplier about whether software supplied
meets a specification
- A dispute over service levels and relating financial
compensation related to an outsourcing contract
- A dispute over the terms of a software licence
- A dispute over the time it has taken to perform a website
development contract and whether compensation should be paid
- A dispute with an internet service provider over getting access
to information, such as an IP address, to enable a security breach
to be traced.
Forming a dispute policy
A dispute-resolution policy outlines the approach that a
business takes in seeking to avoid, manage and resolve disputes. It
will combine procedures to manage risks, best practice and an
approach to the management and resolution of litigation,
arbitration and other forms of adjudication.
IT directors have an important role to play. They will have an
interest in developing the approach to the avoidance, management
and resolution of disputes that concern their department, for
example, a dispute with an IT supplier over system performance and
any resulting financial compensation.
In many organisations the IT director will be responsible for
ensuring that electronic documents have been retained and
centralised in an orderly manner.
The IT director will also be the main point of contact when
those documents are required in connection with disputes and legal
proceedings. They should therefore ensure they are happy with the
policy and that it ties in with the business's overall approach to
document management.
The first step will be to get board approval for the preparation
of a formal policy. Next, responsibility for the preparation and
implementation of the policy needs to be allocated. This is likely
to involve IT, finance and commercial directors, as well as
in-house lawyers.
An examination of the business as a whole should be carried out
by all concerned and the policy formulated. It should cover areas
such as pre-contract due diligence, dispute-resolution clauses in
contracts and project management and document retention.
Once agreed, the policy should be implemented and kept under
constant review. It will need to evolve in line with the growth and
development of the business as well as external factors such as
changes in the law.
Michael Bywell is a partner at law firm DLA