Building a Smarter Dispute Resolution Playbook Pays Dividends

Among the most frequently overlooked portions of any contract are the dispute resolution, forum selection, and governing law provisions typically buried in the “miscellaneous” section. Even the most diligent in-house attorneys often skim these clauses. By the time we reach the end of a contract, deal fatigue sets in. If the clause identifies a familiar court, jurisdiction, or arbitration provider, we typically confirm it and proceed—or redline it to conform to our preferred template.

There are exceptions, of course (for instance, when implementing a new employment arbitration program). But in most cases, these clauses receive little strategic attention.

That inattention can be a costly mistake.

Developing a Playbook

It is understandable why in-house counsel would prefer not to dwell on post-dispute scenarios when focused on closing a deal. Yet addressing the downside risk is precisely our role as general counsel. A modest upfront investment in developing a tailored dispute resolution playbook allows your team to protect the company’s interests without compromising negotiations. Importantly, this step can save substantial cost and effort when disputes arise.

Step One: Assess the risk.
The purpose of a dispute resolution playbook is to align the process with the magnitude of the risk. There is no reason to expose your company—or its counterparties—to the full procedural arsenal of litigation when the contract at issue involves, say, a $50,000 purchase order. Conversely, you must preserve flexibility to deploy every necessary tool when the dispute involves a sensitive trade secret, executive employment agreement, or other high-stakes issue.

Picture a continuum, with repeatable/transactional disputes on one end and high-stakes/strategic disputes on the other. The closer a contract is to the former, the more streamlined and cost-effective the resolution process should be. This ensures that internal resources remain focused on matters that truly require their attention. If you have ever spent $100,000 in legal fees to recover a $50,000 debt, or settled a meritorious claim simply to avoid litigation, you already understand why this calibration matters.

Step Two: Ask the right question—which forum?
The classic “arbitration or litigation?” dichotomy is too simplistic. The more precise question is: Which forum best aligns with the nature of the dispute and the company’s objectives?

Modern arbitration providers offer an array of procedural options, from streamlined virtual hearings to flexible fee structures and diverse panels of neutrals. At the same time, certain courts—such as the Delaware Court of Chancery—may provide specialized expertise and well-developed precedent.

An effective playbook might rank preferred forums in order: (1) a specialized court with favorable precedent, (2) a particular arbitration provider, (3) a federal court in the company’s home jurisdiction, and so on.

Checklists can operationalize this analysis:

• If the contract involves repeat vendor relationships or low-value transactions, use Forum X.
• If the matter implicates strategic intellectual property or bet-the-company exposure, use Forum Y.

Each decision point should consider the likely types of claims, the counterparty relationship (commodity vendor vs. key customer), reputational implications, precedent value, and the internal cost of engagement.

Step Three: Which rules—and how much customization?
Once a forum is selected, counsel must decide whether to adopt its procedural rules wholesale or modify them. While customization can seem appealing, it should be used sparingly for two reasons:

• Complexity and negotiation cost. Introducing bespoke procedural terms adds to the drafting burden and potential negotiation friction, undermining the goal of efficiency.
• Enforceability risk. Especially in consumer or employment contexts, deviations from established arbitration rules can compromise the enforceability of agreements. Arbitration providers’ rules have been repeatedly tested in the courts; altering them can create the appearance of bias or unfairness.

Targeted customization can make sense in limited contexts such as industry-specific norms (for example, construction), nuanced subject areas, or negotiated mergers-and-acquisitions indemnification provisions. But restraint is the better rule of thumb. Choose the forum whose default rules best align with your needs rather than reinventing them.

Step Four: Choice of law considerations.
Although this topic merits its own treatment, it bears brief mention. Don’t assume that your state of incorporation or headquarters necessarily provides the most favorable governing law for all contract types.

Employment, IP, and other specialized contracts may warrant exceptions. If outside counsel recommends a particular jurisdiction, require a clear rationale explaining why that state’s law best protects the company’s interests.

Step Five: The remaining provisions.
Additional components of a well-drafted dispute resolution playbook may include:

• Arbitrability determinations
• Fee allocation and availability of attorney’s fees
• Mandatory mediation or informal settlement prerequisites
• Appellate or review mechanisms, if any

Addressing these clauses upfront can prevent “disputes about the dispute” later.

The Payoff

Developing a dispute resolution playbook need not be an overwhelming endeavor. It can be a discrete project completed in a short timeframe—yet it delivers lasting dividends. A well-constructed playbook minimizes wasted resources on routine disputes, preserves firepower for strategic matters, and transforms the legal department from a reactive to a proactive function.

In an era when in-house teams are expected to do more with less, this is one investment that pays for itself, long before the next dispute lands on your desk.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Shane Mulrooney is general counsel and a co-founder of New Era ADR, an online dispute resolution platform.

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