Learn to resolve disputes before they occur.
and other forms of alternative dispute resolution have become a
favorable choice in today’s commercial real estate market. While ADR can be
helpful, the involved parties often don’t realize the expectations
of the process, which can make it a very expensive course of action for
commercial real estate disputes. An alternative approach is dispute avoidance,
which is essentially the art of avoiding a dispute before it arises.
In real estate litigation,
the involved parties can usually identify actions that, if managed differently,
would have avoided or lessened the litigation. For example, poorly chosen terms
in a letter of intent or a verbal promise that goes undocumented can quickly
lead to misunderstandings, disputes, or even legal action between two parties.
After the fact, the basis of the conflict may be easy to recognize, but
recognizing these issues as they occur is the essence of dispute avoidance.
The dispute avoidance
approach is novel yet practical: Commercial real estate professionals should
approach everyday business dealings with an eye toward building a strong case.
The concept is based on a seeming paradox— by acting to build a strong
case, you can avoid a dispute in the first place. Understanding and
implementing this approach does not require a legal education; rather it simply
requires a basic understanding of how litigation works and what makes a
Building a Winning Case
At its most fundamental
level, success in litigation depends on the ability to persuade a third party,
whether it is a judge or a jury. The persuasive winning case has four elements.
First, the story — or your version of the facts — must be cohesive and believable.
Second, you must be perceived as reasonable and in the right. If a jury
perceives that you are trying to take advantage of the other party, even the
most favorable facts may not save your case. Third, you and your witnesses must
be honest and credible. If you are caught in a lie or half-truth, your entire
case may be harmed. Finally, thorough documentation is critical. Documents
created before the dispute arises that support your case are the most
persuasive of all.
Trial lawyers often win
cases by using these four elements to put together the most persuasive story.
Attorneys evaluate cases using these elements to determine how solid a case or
defense is. The stronger these elements are, the more likely the other party’s counsel will advise
against suing or, if a lawsuit is filed, the sooner the case will be resolved
to your advantage. Ultimately, these elements create leveragethat can
lead to a faster and better resolution in your favor.
Techniques to Try
How can a commercial real
estate party build a case before a dispute arises? First, learn the dynamics of
a winning case so that all of your actions and documents are believable,
honest, and verifiable to avoid disputes. Second, learn and use the many tools
that create a winning case. The following steps can assist in building a
• Ensure that purchase agreements, leases, or other contracts are
clear and comprehensive. If contracts are drafted in this way, the other party
generally cannot create a dispute, even if it becomes dissatisfied with the
• Know and comply with the terms of the contract to avoid breaching
its terms and to be aware if the other party breaches the contract.
• Never use verbal agreements, understandings, or representations.
All agreements should be documented in writing before taking any action.
• Make effective use of clarification or confirmation letters and
e-mails. A prompt e-mail clarifying a misunderstanding or stating there is no
agreement until all the terms are delivered in an executed writing helps to
build a winning case. It is very difficult to credibly testify to facts that
are different from those stated in a contemporaneous document. It is equally
important to promptly correct in writing any misstatements made in letters or
e-mails received from the other party.
• Conduct daily business with an eye toward how a third party, such
as a judge or jury, would view the conduct. Do not misrepresent or overstate.
Do not take actions that would not be deemed ethical. Do not take undue advantage
of a situation.
Real estate deals and
projects can be fraught with dispute minefields. The dispute avoidance approach
can help parties in a transaction prevent disputes, and in situations where
disputes occur, parties can actively use tools to build a strong case. When
managed strategically, real estate disputes can be resolved, whether
pre-litigation or in litigation, in your favor.
Thomas E. Gibbs, JD, is an attorney with Allen
Matkins Leck Gamble Mallory & Natsis LLP in Orange County, Calif. Contact
him at email@example.com.