Emerging ADR trends – KPMG Forensic

Forensic accountants are seeing an increased focusing on implementing preventative mechanisms to manage and avoid conflicts from the very beginning

As concerns about disclosure of information in domestic and international court litigation or arbitration increase, Alfonso Bravo and Marisa Yepes, both Directors at KPMG Forensic, are seeing an emerging trend for preventative Alternate Dispute Resolution mechanisms to avoid such disputes arising.
Yepes is also seeing a trend for preventative mechanisms being deployed at the contract stage, as companies realise it is not only the first step of any single transaction or relationship between two parties – there are many pieces to a contract that come into play at around the same time. “What we are seeing is stronger, more accurate contracts from different perspectives, as parties are seeking the right expertise.” Also, companies increasingly involve not only commercial but also litigation lawyers and economic experts to avoid situations that could give rise to disputes.
Yepes also refers to a trend for companies to use dispute resolution boards to properly monitor a project from the outset in order to anticipate any potential disputes or differences between the parties. Therefore, if litigation arises, you won’t need to wait until the discrepancy is so huge and the procedures so diverse that there’s nothing to do but enter into a huge litigation or arbitration.
“One such preventive mechanism consists of performing corporate intelligence procedures that enable us to obtain critical information on the other party sufficiently in advance,” explains Bravo, “such as, the financial situation of a company we wish to invest in, its standing or whether it is blacklisted, the reputation and professional capability of management personnel we intend to hire, etc.”
Bravo highlights the increasing use of mediation between companies, as the common interest to move forward is becoming a big enough reason alone to avoid litigation. Increasingly, companies are resorting to mediation in order to avoid litigation, and it is becoming ever more important to anticipate problems and avoid future litigation by making use of corporate intelligence.