Avoiding and Resolving Disputes in Outsourcing Arrangements
Lisa Renee Pomerantz, Attorney at Law
Outsourcing arrangements have become increasingly common. Companies prefer to focus on their core businesses and outsource more peripheral functions to vendors that specialize in those services. At the same time, technology has permitted more efficient outsourcing.
The customer’s relative lack of knowledge about the services to be outsourced lead to disputes in a number of ways:
- The customer may lack the information necessary to make the best selection of vendor or solution;
- The parties may not know the precise nature of the services to be delivered;
- The vendor may propose solutions that are easiest or most profitable for rather than most suited to the customer's needs and priorities; and
- The vendor may over-promise in order to win the bid.
To counteract these risks, the customer can ensure that it makes an informed decision. Options for doing so include obtaining proposals from multiple vendors and hiring a consultant to conduct a needs assessment and to assist in evaluating vendors and proposals.
Disputes can also arise during the implementation phase, in part because of inherent uncertainty about the nature and scope of deliverables. These can be manifested in:
• Internal confusion or dissension within the customer and/or vendor organizations;
• Difficulties measuring progress;
• Lack of customer cooperation and commitment of resources to the project; and
• Unanticipated changes in circumstances.
The parties can plan the engagement to minimize such disputes, by:
- Identifying milestones and deliverables;
- Defining standards and procedures for acceptance of the work;
- Specifying change order procedures; and
- Structuring compensation arrangements, including progress payments, holdbacks, bonus provisions and liquidated damages, to encourage efficient, timely and full performance.
Communication mechanisms should also be specified. For example,
- Authorized decision-makers and liaisons for both parties should be identified;
- Methods for tracking and communicating progress should be specified; and
- Regular project meetings should be scheduled.
Finally, methods for resolving disputes should be identified. The parties may designate a neutral subject matter expert to resolve questions about whether deliverables meet specifications. They may also call for escalation of disputes to senior management or the use of a standby mediator or arbitrator to resolve disputes as they arise.
Mediation Program Highlights: IOLA Grant ProjectsAlison Ritchie, Director of Contract Administration
Each year, NYSDRA submits a proposal to receive funding from the Interest on Lawyer’s Account. IOLA helps low income people in New York State obtain help with civil legal problems affecting their most basic needs, such as food, shelter, jobs and access to health care. Since its inception in 1983 IOLA has provided more than $228 million in grants for providers of civil legal services or those who improve the administration of justice, furthering the goal of equal access to justice for all.
A portion of the funding NYSDRA receives is distributed to Community Dispute Resolution Center (CDRC) members through a RFP process. In 2012-2013 many excellent and innovative programs were supported by these funds; following are just a few examples:
Community Mediation Services in Queens County launched a Veterans Mediation Program designed to assist veterans in resolving disputes with family members, co-workers, neighbors, landlords, businesses and employers. The program was developed jointly by the CDRC staff and a court employee who is also a Veteran, and who recently completed basic mediation training. He has been helping to recruit other Veteran mediators who can relate to the problems that their fellow veterans face. CMS and NYSDRA plan to help other CDRCs to replicate the program.
In Orange County, Dispute Resolution Center is working in collaboration with the City of Newburgh to provide mediation training to individuals living in an area challenged by poverty, crime, sub-standard housing, and unemployment. These challenges are further complicated by widespread addiction and gang violence.
Innovative mediation training was developed at Mediation Matters, which serves Albany, Rensselaer, Saratoga, Warren and Washington Counties. When families experience financial strains, the other issues for families - such as teens struggling to stay in school and focused on good choices - are even more difficult to manage. The curriculum in development is designed to equip mediators with skills to work with all families regardless of where they find themselves or the issues with which they struggle. A mediator involved in the program commented, “The families we are working with are struggling with many more layers and we, as mediators, are navigating new challenges.” The training will help the mediators provide more access to a broader process that will impact families struggling with managing their teen's issues.
IOLA funding has also helped support Coalition on Elder Abuse in Dutchess County, a project the Mediation Center of Dutchess County is involved with. Funds have supported staff salaries, outreach initiatives and space rental. For more about this initiative, visit http://www.dutchessmediation.org/coalition-on-elder-abuse-in-dutchess-county.
For the second year, IOLA funding has supported ACCORD, a Center for Dispute Resolution’s Community Education program in Broome and Tioga Counties. In collaboration with the Binghamton Police Department and Family Violence Prevention Council, this program educates vulnerable populations about alternative forms of dispute resolution and how they may help resolve conflicts over the need for adequate shelter, jobs and protection for their children.
NYSDRA just submitted a proposal for the IOLA 2013-2015 grant cycle. By collaborating with UCS ADR/CIP we were able to use statistical information from data submitted by the CDRCs, expand the scope of relevant services, and strengthen our proposal. If we are successful, we hope to provide even more direct and indirect assistance to CDRCs and to low income residents in New York.