Resolving Business Conflicts - Options Beyond the Court Room

By Nicole D

Heading to court to resolve business conflicts can be costly, time consuming, and even damage your business's reputation. If you're facing disputes with an employee, customer, vendor, or partner, you have conflict resolution options beyond litigation. 

Alternative dispute resolution, or ADR, is a popular method of settling differences through arbitration or mediation. Depending on the severity of your situation, you may choose to consult a small business lawyer and proceed through the courts or go with one of the alternative options below.


Binding Arbitration

Arbitration is an out-of-court legal solution for resolving business-related disputes. Usually, arbitration entails using a fraction of the time and money normally used in litigation proceedings and is closed to the public.

Arbitration is very similar to a trial in that both parties agree to present their case to a neutral panel, or arbitrator, and accept their decision as legally binding.  In arbitration, there generally is not an appeals process.  If the losing party fails to pay the award amount, the winner can transfer the decision to a court where the award can be enforced judicially.

Visit the American Arbitration Association (AAA) or the Global Arbitration and Mediation Association (GAMA) sites for more information, or to find an arbitrator in your area.


Non-binding Arbitration

In non-binding arbitration, neither party is legally bound to an arbitrator's decision.  As a result, non-binding arbitration is less common as an ADR because the losing party is not required to concede and carry out the arbitrator's request. 

Tip: Many contracts now state that binding arbitration will be used to settle disputes that may arise while carrying out the terms of the contract.


Mediation

Mediation is another ADR, and slightly different from arbitration.  In mediation, a neutral third party attempts to bring the disputing parties to the table for negotiations. The mediator facilitates communication between the parties by determining mutually-acceptable rules for negotiation, but does not deliver a decision as an arbitrator would.

While no legal decisions results from mediation, the disputing parties often come to a compromised agreement that may be ratified as a contract amendment. 

Tip:  FTC.gov guidance on how to find the right dispute resolution program.