Dispute resolution tips for a small business

Running a small business successfully is no small challenge. Business owners need to split their attention between the day to day operational commitments and developing medium and long term strategies for success and growth. It usually seems that there are not enough hours in the day, and so the last thing anyone needs is a dispute with a customer, supplier or some other third party.

However, we never enter into a personal relationship wanting to get into a dispute either, but sometimes bad things happen. In business, it might be down to a misunderstanding, an inability to make good on a commitment or the simple fact that someone, somewhere messed up and made a mistake.

If there is a commercial contract or service agreement in place, then this will set out the agreed terms for dispute resolution. However, if these simply say a particular court in a particular jurisdiction, it is in everyone’s interest to come up with an alternative solution.

ADR

The old saying is true – the only winners to come out of a court case are the lawyers. Preparing for court is immensely expensive in terms of both time and money. Also, it carries no guarantee of success and every likelihood of adverse publicity. Whatever the nature of the dispute, and however intense or emotional it might get, one thing both parties will usually be able to agree on is that alternative dispute resolution (ADR) makes more sense. Aside from that, most courts will insist you at least give it a try before they will hear the matter.

Mediation

The most cost-effective form of ADR is mediation. This is, in essence, sitting around a table and agreeing on a compromise solution, but in a formal setting. A mediator will be present as a facilitator and will spend time with each party, both separately and all together, with a view to bringing them together. Mediation is relatively inexpensive, and although it requires some preparation, you will find that only a small amount of time is spent discussing the dispute, and it soon comes down to a negotiation over numbers. In a successful mediation, nobody really comes out a “winner” or “loser” it is all about reaching a solution that everyone can live with.

Arbitration

Arbitration is the next step up, and requires the parties to place the matter in the hands of a third party to decide. Unlike the mediator, who will remain neutral and offer few opinions on the merits of the case, an arbitrator will weigh the evidence and make a ruling. Often, the matter is referred to a panel of three arbitrators to ensure fairness. Each party nominates one arbitrator, and the two then get together to appoint a third.

Nobody benefits from disputes

Legal disputes consume time and money, while causing stress and potentially damaging reputations. Crucially, this is the case whether you are the claimant or the defendant, so one thing everyone should agree on is that any dispute needs to be closed out and consigned to history as quickly and painlessly as possible. ADR is the perfect way to achieve just that, provided both parties go into the negotiations with the right mindset.