[By NBC-1TV H. J Yook]A new study from global law firm Eversheds has revealed a significant increase in the number of large commercial disputes, and despite the fact that large corporates do not want to resort to litigation, the majority of conflicts are being resolved in court. According to the findings, whether a company wins or loses in court is determined by the calibre of the professionals involved in the case.

The study, entitled Companies in Conflict: How Commercial Disputes are Won, was undertaken by Eversheds, together with academics at King’s College London and the University of Surrey, to examine the way such companies approach large disputes*. It reveals an increase in the number of commercial conflicts during the last three years. Corporates with a turnover of more than £1bn typically engaged in between two and five large disputes during that period, but 16% of companies were involved in more than ten.

The key motivation for pursuing a dispute is to recover financial loss, but managing reputation is also paramount. One fifth of businesses involved in the study consider managing reputation to be the most important factor in pursuing a dispute.

With such business critical issues at stake, it is perhaps surprising that senior management is adopting a remote position in the management of large disputes. Only in half of the cases (55%) did the CEO have long-term oversight. However, this could be explained by the finding that in 90% of cases the business felt it was able to accurately predict the outcome.

Commenting on the findings, Professor Renato Nazzini, professor of law at King’s College London and co-author of the study, said:

“With such a high degree of convergence between the predicted and actual outcomes of disputes, why do companies litigate or arbitrate if they can forecast the outcome? Typically, when a dispute is not settled, this is either because one party refuses to engage in meaningful negotiations or mediation, or because both parties see the strengths of their respective cases as being too far apart.

The solution to this impasse is not new: insistence on a contractual, multi-tier dispute resolution clause, combining negotiation, mediation and, as a last resort, litigation or arbitration. Such clauses ensure that neither party can initiate proceedings without an attempt to negotiate and mediate the dispute.”