Let's face it. You don't need to be a Nobel-prize winning economist to know that contracts are inherently incomplete. No lawyer has yet crafted the perfect contract that will anticipate every eventuality. Problems and unexpected events are always around the corner.
Long-term contractual relationships are especially vulnerable to the damage caused by friction in relationships, particularly when this friction turns into a formal dispute. In far too many relationships the parties do not perceive a need to engage in conventional conflict resolution until they begin to experience real pain. By that time, they have blamed each other for their troubles. Unfortunately, this usually means that the parties' relationship has reached a breaking point, which can lead to calling on their respective lawyers who are not typically incentivized or instinctively inclined to resolve conflicts constructively in the way best suited to the preservation of the relationship. And if typical negotiations fail, the next step is calling in a mediator, and perhaps eventually ending up in arbitration or the court system.
To avoid these harmful escalations of conflict in business relationships, this paper argues for the proactive use of a "Standing Neutral" – a trusted, independent expert advisor (or a panel of three advisors) – chosen by the contracting parties at the onset of the relationship with the clear goal to maintain a healthy relationship. A Standing Neutral process can best be described as a proactive, quick, informal, flexible, adaptable, non-adversarial, neutral, expert, preferably nonbinding, process for preventing and achieving the earliest possible solution to problems and preventing potential disputes.
This white paper includes five parts. It will help you understand the why, what and how of using a Standing Neutral for preventing and managing conflicts.
- Part 1 explains why the time is ripe to consider collaborative approaches for resolving conflicts
- Part 2 shares research which supports using a Standing Neutral, suggesting that such preventive conflict resolution techniques are not simply a new fad, but perhaps one of the best-kept secrets that should be widely unlocked and adopted for widespread use
- Part 3 highlights the what and how of using a Standing Neutral
- Part 4 shares examples of the Standing Neutral concept in practice
- Part 5 explores the costs and benefits of using a Standing Neutral
In addition, we provide a comprehensive Appendix on how to design a dispute prevention, de-escalation and resolution system.
The bottom line? It is YOUR bottom line. Using a Standing Neutral is a most effective and efficient way to govern and improve today’s modern commercial relationships.
Department of Management
Original Publication Date
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UNI ScholarWorks, Rod Library, University of Northern Iowa
©2019 Kate Vitasek, James P. Groton, and Daniel Bumblauskas
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Vitasek, Kate; Groton, James P.; and Bumblauskas, Daniel, "Unpacking the Standing Neutral: A Cost Effective and Common-Sense Approach for Preventing Conflict" (2019). Faculty Publications. 2.