Business relationships are prone to a variety of disputes across an equally broad range of parties. For example:
- A franchisor may disagree with a franchisee over how a business is run.
- Business owners may be unhappy with the quality of a recent shipment from the supplier and not want to pay until the matter is resolved.
- Business partners may strongly disagree about the future of the company
- Customers may feel that their rights were violated or disregarded during a recent visit to a business.
Although many of these cases end up in court, litigation is not the only means of resolving a dispute. There are different types of Alternative Dispute Resolution (ADR) that allow both sides to come to an agreement without getting a judge involved. Two of the most common are mediation and arbitration.
- Mediation is a process by which all parties to a dispute meet with a neutral mediator who guides the discussions and helps everyone reach a resolution. Although the mediator has no legal authority, a legally binding agreement is the desired outcome of the session.
- Arbitration is a process overseen by a single arbitrator or panel empowered to make legally binding and enforceable decisions. As with mediation, all disputants work out the terms of their agreement.
ADR offers a number of important advantages over litigation. Five of them are explained below.
- Less expensive
Litigation is expensive. Filing a claim may not be too costly, but when the opposing side files a countersuit or motion, it adds up. In many cases, the outcome is not really justified by the cost. In contrast, ADR is more affordable, as it takes less time and the mediator or arbitrator’s fee is usually split between the parties. Those who have retained an attorney often pay less in legal fees compared to litigation because the attorney tends to act in an advisory role.
- Not as time-consuming
Depending on how busy the court docket is, it can take more than a year for a case to go to trial. ADR can be started and finished within weeks or even days, which means less stress and lower legal costs.
- More control over the outcome
The moment that a business dispute is taken before a judge, the parties involved have lost control over the outcome. They will be bound by the court’s decision. With mediation, no one has to agree to any outcome they don’t accept and with arbitration, they control the information that the arbitrator must work with.
- Less stressful
Any kind of legal conflict is stressful. Litigation has the potential to drag on for months, which extends the time that everyone has to deal with stress and uncertainty. ADR resolves disputes more quickly, allowing all parties to get on with their lives sooner.
- Business relationships can be saved
Litigation is an adversarial system that can end relationships. ADR offers a chance to restore a damaged but important relationship. Both sides have a better opportunity to hear and understand the other party’s point of view, and when the outcome is universally acceptable, everyone may be willing to forgive, forget, and work together again.
At Rosen Law LLC, we recognize the value of Alternative Dispute Resolution in affecting lasting and positive endings to business disputes. Our business litigation team can represent you during mediation or arbitration proceedings and even take your case to court if ADR fails to result in a fair and reasonable agreement. For more information or to speak with a business law attorney in New York or Florida, call (516) 437-3400.