Harvey Specter from the USA series Suits has a philosophy of always-settle-never-go-to-court. Why? Because going to court is expensive, stressful, and a waste of time.
Unfortunately, the systems of litigation and arbitration make it difficult to negotiate a fair settlement before going to court or starting arbitration.
According to an American Bar Association article, before the start of a lawsuit, when the parties are negotiating a settlement, and I quote, “the party that obtains relevant information without the other side having it gains leverage in negotiation.” Parties will not disclose information that hurts their position. As a result, the parties’ only opportunity to avoid costly litigation or arbitration is potentially hindered by both parties lacking information that would tell them the likelihood of their winning or losing, and the likely value of a judgement. Lacking that information, the disputing parties may go through an expensive trial or arbitration because they are unable to agree on a settlement that makes mutual economic sense given what they know.
On the other hand, with Smarter Contract’s expert determination clause, before the expert gets involved, both parties must choose between (a) disclosing an already-determined list of documentation to the other party and (b) automatically forfeiting the dispute. As a result, before settlement negotiations, both parties will disclose their documentation. They will negotiate with a greater likelihood of success, because both parties will have the same information. They will both have better knowledge of the result expected from proceeding with the dispute, which will help them to avoid the dispute altogether.
Get a copy of the expert determination clause for your own use.