How to resolve business disputes
One of the most challenging aspects of running a business is dealing with disputes when they arise. Whether it is an internal dispute between shareholders or with employees, or an external dispute with contractors, vendors, or customers, it is extremely stressful for all involved and typically in the best interest of all parties to resolve the dispute as quickly and efficiently as possible.
When you think about calling a lawyer to resolve a dispute, you may picture yourself spending time and money fighting for a resolution in court, resulting in a clear winner and loser, John Grisham-style. While resolving your legal matter in court (also known as litigation) can be very effective, most disputes are settled without ever setting foot before a judge.
Alternative dispute resolution (ADR) refers to methods for resolving disputes without a trial. The three most common methods of ADR are negotiation, mediation, and arbitration. Common goals in ADR are avoiding escalating the dispute and coming to an agreement with the other party.
Negotiating a resolution is practically where most lawyers will start to resolve a dispute. Understanding your position and the facts is typically followed by providing advice regarding your legal position and a strategy to remedy the issue. Negotiation involves both listening and advocating, and results often depend on de-emotionalizing the conflict.
It takes skill, patience, and a genuine interest in finding a resolution. The process can take place in any format and often involves emails and phone calls between your lawyer and the other party’s lawyer. Your lawyer will help you understand your rights and obligations and guide the negotiations with you in control of what terms are negotiable. They can also help by providing suggested solutions and reasonable compromises.
Resolving your matter using negotiation is the most efficient and cost-effective approach – if you can make it work.
A mediator is a neutral third party, often a lawyer, who is trained to bring all parties together and assist in a negotiation process. There is normally one mediator chosen by both parties who presides over a matter with a singular mandate to help the parties come to an agreement.
The mediator may meet with all parties as a group and also individually. Often each party brings their respective lawyer to the mediation, but a lawyer is not required. The mediator does not make the final decision, but emphasizes consensus building and compromise, allowing for flexible solutions that both parties can agree to.
When parties cannot come to a resolution through negotiation or mediation, they may agree to refer the matter to arbitration, a relatively informal process that involves a neutral third party with expertise in the area under dispute who can be granted the power to make a legally binding decision based on the facts they are presented with.
Both mediation and arbitration tend to be less expensive than litigation and allow for greater privacy and more flexible solution-finding, but they require a degree of trust and accountability between parties to be successful. Not all legal disputes and claimants are suitable for ADR.
There are many reasons why parties may not wish to consider ADR and where it makes more sense to turn to litigation to find a resolution. It may be that attempts at ADR have been unsuccessful and court is a last resort. In some cases, the threat of costly litigation is enough to cause one party to settle or at least take negotiations more seriously, expediting a resolution.
Sometimes the lack of trust between parties, or questions about the integrity of one or both sides, make litigation the best choice. In some cases, there is so much at stake, or one side’s claims are so unreasonable, that swift and decisive action must be taken. Or maybe you wish to set a precedent to avoid future similar claims against you or need to protect your intellectual property.
When dealing with a dispute, or if you are anticipating a dispute, it is in your best interests to speak to a lawyer as soon as possible to discuss your options. Doing so will help you avoid making any missteps that could undermine your case in the future. And it will give you the peace of mind that you are doing all that you can to protect your most important asset, your business.
For questions about your legal dispute, please contact our office and we will be happy to assist.