“Litigation is bad way to resolve disputes,” if for no other reason than it takes an excruciatingly long time to achieve resolution, commented Conna Weiner, an experienced biopharma industry mediator, in her opening remarks to the audience attending “Preventing Disputes from Becoming Lawsuits,” a jam-packed morning session at the 2014 ASAP BioPharma Conference in Boston USA. The lament that “justice delayed is justice denied really is true,” Weiner added.
Weiner—joined on the presenters’ panel by Jeremy Ahouse, CSAP, PhD, Novartis, and Matt Hurley, trial attorney for Mintz Levin—discussed a broad continuum of dispute resolution approaches ranging from negotiation to litigation. Their framework emphasized that negotiation is the most collaborative and least costly approach, and provides more control to the parties. At other end of continuum are arbitration and litigation, which are adversarial, cost more money, and give the least amount of control.
“The number one thing I see that gets litigated is who gets to make the decision,” explained Hurley in response to an audience question. “The dispute gets escalated, eventually it’s a CEO discussion, and if that doesn’t work, it becomes ‘collaboration by litigation.’ Instead of companies making the decision, you can get three former federal judges handling that dispute.”
Early involvement of alliance managers—and alliance management principles—is the unsurprising solution to avoiding the three-judge-panel outcome. However, what is surprising, Ahouse commented to me after the session, is how many companies (and even alliance managers) still think that partner disputes are the sole domain of the legal department.
That’s changing, however, as savvy alliance managers build closer relationships with legal teams and instead of having contracts “thrown over the fence” to manage after signing, alliance execs have purview over relevant portions of the contract as it’s being negotiated.
“Over the years we’ve moved ourselves into the process, so that now we review certain parts of contract language, governance, milestone definitions, and so on,” Ahouse noted. Up-front involvement in the contract allows for two things—making the contract more specific in ways that can reduce the incidence of disputes, and providing a dispute resolution process that’s more effective thanks to inclusion of proven alliance management principles and processes.
“Good process leads to good contracts, which leads to deliberate, planned dispute and alliance management,” Ahouse explained. “It’s hard at the beginning to talk about disputes because it seems like such a downer—but it’s the grownup thing to do.”
Hurley advised alliance managers to pay attention to the boilerplate portions of the contract that often get picked up and replicated from one deal to the next without much re-examination. “As attorneys, one of the first things we do, whether in prep for negotiation or for litigation, is we go to the back of the contract. Often that language is just boilerplate provisions, and doesn’t get a lot of revision from contract to contract—it has no mandatory mediation and there should be, for example.”
Ahouse advised alliance managers who worry about being welcome at the table to step up and empower themselves, even if their input is not formally required by the contract process. “You are in the position to speak from your experience—say I’m concerned about how this might play out.”
The panelists discussed a number of tips for avoiding lawsuits after the contract is signed, key among them:
- Select a point person
- Educate your team
- Don’t deviate from contract, but when you do …
- Document agreements and disagreements
- Avoid internal emails about controversial topics
- Consult your attorney
Panelists reviewed numerous options on the path to litigation. Weiner noted, for instance, that “arbitration has gotten a bad name,” but actually offers many advantages. “You can hire a private judge with expertise in your area, for instance. And a well-run arbitration is much better than litigation. You can get to a decision in six to 12 months” versus years in court.
Ahouse emphasized that escalating disputes often can be the wrong approach, especially if skilled alliance managers possess the greatest insights into the relationship and how the dispute might be resolved in a streamlined fashion.
“As alliance managers, it’s really important to do what you can to inform your team and other parties where the wisdom is in the group,” he explained. “Is it really at the next level, or is it something better taken on by the [alliance management] team?”