+Avoiding and Resolving Disputes in the Outsourcing Context

Lisa Renee Pomerantz, Attorney at Law 80 Orville Drive, Suite 100 Bohemia, NY  11716 Tel: 631-244-1482 Fax: 631-567-0611 lisa@lisapom.com www.lisapom.com

+Agenda

  What developments have led to the outsourcing phenomenon?

  What factors contribute to the prevalence of disputes in this context?

  What can be done to avoid and resolve disputes in the outsourcing context?

+Issue 1- The Information Asymmetry Problem

  Nature of the problem: the vendor has more information than the customer

  What types of information may a customer lack?

  How can this result in conflict?

  How can such conflicts be avoided or minimized?

+Issue 2- The Relationship Will Be a Process, Not a Transaction

  Why is outsourcing a process, not a transaction?

  Why can this lead to conflict?

  What kinds of conflict are likely to arise?

  What mechanisms can be implemented to anticipate and resolve conflicts?

+Issue 3-Conflicts of Interest

  Why do conflicts of interest arise in outsourcing arrangements?

  How can the parties address such conflicts and align incentives?

+Issue 4- Measuring Progress

  Why is measuring progress important in avoiding and resolving conflict?

  Why might progress be difficult to measure in the outsourcing context?

  What dispute resolution mechanisms might be appropriate for resolving conflicts over performance?

+Issue 5-Internal Confusion and Dissension

  How might internal confusion or dissension arise on either the customer or vendor side?

  What are the potential consequences of such confusion or dissension?

  What steps can be taken to avoid confusion or dissension?

+Issue 6-Obtaining Internal Client Cooperation

  Why might this be a challenge for both the customer project manager and the vendor?

  How can this be addressed?

+Issue 7-Inflated Expectations

  Why might expectations be inflated in the outsourcing context?

  How might expectations be inflated?

  What can and should be done to manage expectations?

+Issue 8-Dealing with the Unexpected

  Why should the unexpected be expected in outsourcing arrangements?

  What kinds of disruptions can be anticipated?

  What conflict resolution mechanisms are appropriate to help parties deal with forks and bumps in the road?

+Issue 9-Avoidance of Conflict

  Why might the parties want to avoid conflict at the contract negotiation stage?

  At the implementation stage?

  Why can conflict avoidance be problematic?

  What kinds of problematic issues are likely to be bypassed?

  How can the parties avoid conflict avoidance?

+Issue 10-Prolonging the Inevitable

  When outsourcing arrangements do not work out, why are the parties reluctant to terminate them?

  What are the consequences of delayed termination?

  What dispute resolution mechanisms can help the parties achieve “graceful exits”?

+Conclusion

  What have you learned that will be helpful to you in avoiding and resolving conflict in the outsourcing context?

  Questions and comments?