From a failure to provide contracted goods, services or payment to issues with non-disclosure or non-compete compliance, business disputes are common across many different industries. In some cases, litigation may be necessary to recover damages related to contractual conflicts.
Unfortunately, taking a business dispute to court can be both costly and time-consuming. A company may also run the risk of receiving an adverse judgment that may impact its financial and reputational viability. However, there are several types of alternative dispute resolution that business owners may want to consider.
1. Mediation
Under this form of ADR, parties meet with a neutral mediator in a series of confidential discussion sessions. This impartial third party helps both sides to communicate concerns effectively and explore mutually beneficial options for resolution. However, the mediator is a facilitator rather than a decision-maker during the process.
2. Arbitration
As with mediation, during arbitration parties may defer to a neutral arbitrator rather than a judge to decide the dispute’s outcome in a confidential setting. However, unlike a mediator, an arbitrator may have the power to issue a legally binding decision that both parties must follow.
3. Collaboration
During the collaboration, both parties formally agree to forego litigation. Rather, each side and their respective attorneys agree to work together to negotiate an acceptable outcome without the intervention of the court.
Companies may be able to head off the need for potentially costly litigation by including provisions for alternative dispute resolution in their contracts. However, it is important that businesses take care to draft provisions that truly protect their interests and ensure an efficient, low-conflict process for settling disputes that may occur.
