Avoid Litigation: A Better Way for Businesses to Resolve Disputes

July 29, 2014     / / / /

No matter how hard you try, in any business disputes will invariably arise. These disputes can develop with customers, suppliers, employees, creditors or even coworkers.  Consequently, all business managers at some point have to think about the most efficient way to deal with dispute resolution. Litigation is usually the worst alternative since for any business or individual litigation can be devastating. It is costly, time-consuming, stressful and disruptive to ongoing relationships. Few businesses who have experienced the litigation process have found it productive or a good use of time.

Careful advanced planning can help avoid all of the complicated and expensive cost of the litigation process. Over the past several decades many new dispute resolution techniques have evolved which should be considered by all small to midsize businesses in all of their contract and customer relationships.

What are these new techniques and how can they be helpful?

First, there is mandatory negotiations generally between the CEOs or top level people with authority to bind. Many contracts call for this as the first step in any dispute resolution process. If negotiations are unsuccessful, then mandatory mediation is the second alternative. Mediation is a voluntary process where the parties meet before a neutral trained mediator. Having gained widespread popularity over the last couple of decades, mediation is now a favored technique in resolving disputes both before and after the anger level has escalated. Mediation has many advantages: it is voluntary, the parties control the process, and unless both parties really want to settle and agree to the terms, nothing is final.

And mediation is fast and cost-effective; it is confidential and generally much cheaper than either litigation or arbitration. The parties remain in control throughout the process. Agreements reached in mediation or enforceable in the courts in Alabama. Because there are many skilled attorney and non-attorney mediators throughout the state, it is generally easy to find a skilled mediator who has particular knowledge and expertise in the area of dispute. This is particularly beneficial because technical aspects of a dispute can be difficult for even a skilled Judge to understand and juries usually have great difficulty with technical issues.

If you are in a business that has technical aspects such as the computer field, engineering, healthcare or the like, mediation should be a particularly attractive alternative for you to consider. The mediation process is relatively simple. The parties meet with a skilled mediator usually beginning in the morning. A brief opening statement and/or explanation of the process is the first order of business. Next the mediator breaks the parties into separate rooms and begins a shuttle diplomacy to discuss the pros and cons of each person’s claim and to exchange offers. Not only are the merits of each side’s case discussed, but the parties’ interest and psychological and emotional aspects of the dispute are also reviewed. In many cases the emotional aspects of the case are harder to resolve than the economic issues.

We often recommend that contracts call for negotiation first to be followed by mediation. And we prefer to name possible mediators with knowledge of the subject matter in advance to make sure that the dispute is analyzed by a knowledgeable person. The mediation process is generally fast and efficient. Few mediations last longer than one day.

If mediation is unsuccessful, a third alternative is to resolve disputes by mandatory arbitration. Many of the same benefits present in mediation are also available in the arbitration context. The principal advantages would be cost-effectiveness, confidentiality, the ability to select a skilled arbitrator with knowledge of your industry in advance and the ability to resolve the dispute faster than litigation. There are private arbitrations as well as the arbitration institutions such as the AAA in Atlanta that can, for a fee, appoint an arbitrator. Particularly if a party is doing any business internationally, arbitration is clearly called for since the international area involves particular hazards and in local jurisdictions.

The best way to deal with disputes is some careful planning in advance to cut down your cost and exposure and to avoid litigation. Careful advance planning using the techniques described above can be helpful for a successful business.

Frank M. Young, III
Young Law, LLC



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