The main challenge of a business is to be viable and therefore, in most cases, to be profitable. For answer, it must be keen to control two aspects of its activity: the satisfaction of its customers and the reduction of the risk of non-payment. However, these are two fundamental notions in the management of disputes which require, for companies, on the one hand to identify the risks of disputes and then to implement effective strategies to avoid them. Marie-Hélène Gostiaux, business law lawyer, details the best practices to adopt for the early resolution of disputes.
The different types of customer disputes
A corporate dispute management policy begins with identifying the most frequent types of disputes. This census allows companies to begin a process of protection both for themselves and for their customers.
Customer disputes can take different forms:
- imprecise wording or missing element on the order form, quote, etc. ;
- delivery problem: non-receipt by the customer or late delivery compared to the dates initially planned;
- lack of payment or partial payment by the customer;
- late payment by the customer;
- delivered product contested by the customer for non-conformity;
- poor quality/level of service according to customer.
All of these types of disputes have different implications for the business. Indeed, disputes relating to late or non-payment by customers have a direct visible impact on the company's cash flow, while any other dispute can have a lasting impact in terms of business. And, if all satisfied customers do not necessarily make positive comments, any dissatisfied customer is nevertheless likely to make a negative comment on one channel or another (the company's Google Business profile, social network, intermediation platform , etc.). Several customer disputes can very quickly impact the image and e-reputation (online reputation) of the company.
Four steps to successfully managing a dispute
Disputes impact not only turnover, but also the image of the company, especially in the digital age. Thus, “old-fashioned” word-of-mouth and e-reputation should not be neglected.
Implement an effective procedure
- rapid identification of problems (whether identifying an unpaid bill or collecting customer complaints via different communication channels);
- great responsiveness on the part of employees in the processing chain with short turnaround times;
- transparency which facilitates the feedback of information between collaborators but also transparency towards the client regarding the monitoring of his claim ;
- flawless internal traceability of actions carried out;
- the introduction of a clear escalation procedure, enabling employees to know how much room they have for negotiation or to identify the right contact person to respond to the dispute.
A large majority of disputes between companies and customers can be resolved by optimizing internal procedures.
Take stock of current procedures
Improving the dispute management process can be an opportunity to carry out an internal control to identify stumbling points and make the necessary corrections:
- review contractual documents with clients (general conditions, quotes, purchase order, etc.);
- but also audit and review contracts with its suppliers and commercial partners (for example: consider a change of carrier in the event of frequently delayed or poor deliveries, formalize its policy of exceptional payment conditions if necessary, review the deadlines negotiated with each supplier);
- implement or improve a procedure for monitoring payment anomalies. Small and medium-sized structures can very quickly be impacted by disputes that undermine their cash flow, due to failure to have formalized and implemented a strict procedure for monitoring payment anomalies (identifying customers who are frequently late in payment, those who have a cumbersome internal invoice approval and payment circuit, practice of telephone and then written reminders, etc.).
Generally speaking, the more the company implements a continuous improvement process, the more it will gain in internal efficiency. It is this same efficiency that will compensate for possible flaws that generate customer dissatisfaction or even disputes.
Mistakes to avoid
We can list a certain number of frequent errors within contractual documents or commercial practices which inevitably lead to disputes. Knowing these errors and understanding them helps limit the risk of litigation. For the different services, this involves paying attention, among other things, to:
- any clause which may be similar to an unfair clause in the T&Cs in B 2 C (art. L. 212-1 of the Consumer Code);
- any clause that could lead to a significant imbalance in the General Terms and Conditions in B 2 B (art. 1171 of the Civil Code and art. L. 442-1 of the Commercial Code);
- aggressive commercial practices, commercial practices considered unfair, whether aimed at consumers, professionals or non-professionals (art. L. 121-1 of the Consumer Code);
- carefully respect the rules for cold calling if applicable (art. L. 223-1 et seq. of the Consumer Code updated by a law of July 2020[1]) ;
- the presence of mandatory information on purchase orders in B 2 C (art. L. 111-1 of the Consumer Code) as in B 2 B (art. L. 441-3 et seq. of the Commercial Code);
- internal processing times for invoices received (reception, verification, validation/rejection) and monitoring the recovery of invoices sent;
- legal and contractual payment deadlines (30 days, 45 days end of month, 60 calendar days, etc.) (art. L. 441-10 to L. 441-16 of the Commercial Code).
The use of alternative amicable dispute resolution methods
It should be noted that since January 1, 2016, a professional must offer any consumer (in B 2 C therefore) the possibility of accessing a consumer mediation system with a view to the amicable resolution of a possible dispute (art L. 612-1 et seq. of the Consumer Code.[1]). Only the consumer can take advantage of this and decide to contact the mediator. The consumer can also choose not to contact the consumer mediator. In this case, if the parties do not find an amicable solution on their own, the matter may be referred to the judge.
Thus, after the first step consisting of the parties discussing amicably the subject of the dispute, a good number of professionals send a formal notice in the event of failure before referring the matter to the competent court, whether in B 2 B or in B 2 C.
Some alternative dispute resolution methods
You should know that it is still possible at this stage to propose an alternative mode[1] amicable dispute resolution:
- referral to a justice conciliator[1] ;
- the use of the collaborative process[2] ;
- the use of the participatory procedure[3] ;
- referral to the business mediator in B 2 B[4].
We voluntarily exclude arbitration from our discussion here. This is indeed an alternative method of dispute resolution but not amicable. Arbitration is similar to private justice where an arbitral tribunal settles a dispute with a decision which can be binding on the parties.
According to certain preconceived ideas, these alternative methods of resolving a dispute would ultimately be expensive, not very accessible and little known without guarantee of a conclusive result, only delaying legal action; which is not necessarily the case, especially since the duration of legal proceedings tends to lengthen, without taking into account the possibility of appeal (or cassation), and without taking into account the risk of insolvency of the convicted party at the end of the procedure.
Mistaken preconceptions
A common misconception is that recourse to an amicable dispute resolution method is costly. However, recourse to a judicial conciliator (conventional or extrajudicial conciliation, before any legal proceedings), a voluntary auxiliary of justice, is possible in particular for neighbourhood problems, consumer disputes, disputes between merchants, disputes relating to rural law or even industrial tribunal cases, and is, contrary to popular belief, free of charge.
An inaccessible mediator
Another common misconception is that the Business Ombudsman is not very accessible. However, any company or professional group, regardless of its size or sector of activity, can apply to the ombudsman. Generally speaking, any contract can also provide for referral to a mediator if there is a dispute over the application of a contractual clause, or relating to the subject matter of a contract or its performance (disputed delivery, infringement of an intellectual property right, breach of confidentiality, etc.).
Inconclusive collaborative law procedures
And what about collaborative law procedures (procedures involving the parties and their lawyers) for which we often hear that they bring few conclusive results. However, these procedures lead to an agreement in more than 90 % cases among the professionals who implement them, with the satisfaction of ending the dispute under conditions acceptable to both parties; unlike the legal procedure, which is often win-lose.
Furthermore, it must be taken into account that for legal claims not exceeding a certain amount[1], the parties have the obligation to demonstrate an amicable attempt to resolve the dispute prior to referral to the judge, through conciliation, mediation or an attempt at a participatory procedure, under penalty of inadmissibility . The magistrates refer the parties to mediation when the parties do not justify having carried out a specific amicable resolution procedure before their referral.
The last tip
Finally, it is appropriate to compare the cost of using a mediator or the collaborative process with the estimated cost of legal proceedings, including the duration and outcome (possible appeal, risk of insolvency of the other party, etc. .) are often more uncertain.
Dispute management is a real challenge for companies: they must above all consider them as areas for improvement. Managing them well allows you to learn about the processes inherent to the company but also to identify consumer expectations and anticipate them.
Footnotes
[1] https://www.legifrance.gouv.fr/loda/article_lc/LEGIARTI000038310293/2020-11-01
[1] https://www.service-public.fr/particuliers/vosdroits/F1736
[2] https://www.avocat.fr/processus-collaborative
[3] https://www.avocatparis.org/la-procedure-participative?utm_source=dlvr.it&utm_medium=twitter
[4][4] https://www.economie.gouv.fr/covid19-soutien-entreprises/mediateur-des-entreprises-en-cas-de-conflit
[1] We voluntarily exclude arbitration from our discussion here. This is indeed an alternative method of dispute resolution but not amicable. Arbitration is similar to private justice where an arbitral tribunal settles a dispute with a decision which can be binding on the parties.
[1] The name and contact details of the consumer mediator(s) to which the company reports must be written in a visible and legible manner on the general conditions of sale and purchase orders, and on the website if the company has one (generally on the page dedicated to the General Conditions). https://www.legifrance.gouv.fr/codes/section_lc/LEGITEXT000006069565/LEGISCTA000032223333/#LEGISCTA000032224821
[1] Law No. 2020-901 of July 24, 2020 aimed at regulating telephone canvassing and combating fraudulent calls.
