How Does the Pledge Benefit Companies and Their Counsel?

CPR encourages the use of carefully tailored contractual dispute resolution provisions as a part of corporate policy on conflict management. Even in the absence of binding contractual agreements, however, a “Pledge” or other company policy respecting the handling of disputes, clearly articulated and broadly communicated, can be an effective platform for resolving conflicts in straightforward and constructive ways that produce better resolutions while controlling risks and expenditures of time and money.

Our long experience indicates that although companies are not legally bound by signing the CPR Pledge, they often derive significant benefit from it. Here are some of the reasons why:

  • The Pledge sends the message that willingness to negotiate or mediate is not a sign of lack of weakness, but company policy. By conveying a message that a company will routinely consider negotiation, mediation where appropriate, the Pledge makes it clear that the exercise of such choices does not reflect a lack of confidence in the company’s bargaining position. Put another way, the Pledge may be viewed as a mechanism for taking the onus off those who wish to start the ball rolling on negotiations, or respond positively to a similar request from another company. 

  • The Pledge also promotes systematic, early efforts to resolve disputes. Properly communicated in-house, the Pledge also has an important impact on the way problems are handled within a business by encouraging early managerial assessment of the company’s exposure with respect to a given dispute. Before shipping the problem off to the lawyers, line executives who understand key business issues, risks and options are often in a position to nip problems in the bud. As internal policies are articulated, they may also permit a company to develop regular approaches to the handling of different kinds of problems, thus avoiding idiosyncratic approaches motivated by individual agendas or overly emotional responses. 

  • The Pledge establishes a flexible framework for helping to resolve complex multi-party disputes. The greatest value of the CPR Pledge may be as a tool for promoting resolution of complex disputes involving multiple parties. The high stakes often associated with these controversies, including the expense of attendant court process, places a premium on satisfactory settlement. Rarely, however, are all of the parties bound by a single contractual agreement addressing dispute resolution. In such circumstances, the Pledge offers a procedural framework to bring parties to the table.

The information and resources on this website should not be construed as legal advice or opinion, or as a substitute for the advice of counsel.