Anticipate disputes and include a way to deal with them

Contract Language. By Steven M. Harris, AMNews contributor. Aug. 5, 2002.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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If your first instinct is to think about a lawsuit when you run into an intractable professional conflict, think again -- suing is not as easy as it looks.

Fewer than 10% of all civil suits ever go to court; the others are resolved through settlements negotiated by the parties. No matter how a case is settled, litigation can be time-consuming, expensive and unpredictable.

With that in mind, it might be in your best interest to include a contractual alternative dispute resolution method in your contracts. ADR methods tend to be faster, less expensive and less formal than litigation.

Physicians have used ADR to resolve many types of disputes, including conflicts between: medical staff and hospital boards; physicians and hospitals/medical staff; physicians and ancillary service vendors; and patients and hospitals/physicians.

There are three ADR methods that you should consider including in your contracts:

• Internal administrative determinations or appeals as a prerequisite to any further process.
• Nonbinding, conciliatory dispute resolution, such as mediation.
• Binding adjudicatory alternatives to litigation, such as arbitration.

Internal administrative processes and mediation are more likely to permit the parties to control the identity and qualifications of the decision-maker, and in some situations to limit outcomes to the extent that the parties are not bound by a result they do not like.

Arbitration results in a binding, non-appealable decision, with few exceptions. Witness preparation time and discovery can be as comprehensive and costly as litigation. You also should consider the laws of the jurisdiction governing the contract. Some state laws may place limitations on the use of arbitration, specifically when the dispute involves professional liability. [...]