When running a business, it’s possible that at some point of another, the business owners or managers will find themselves involved in a dispute of some sort. Disputes can range from suppliers alleging a breach of contract to an employee feeling that they have been wrongfully terminated. When these disputes arise, the parties involved have several options for how to try to resolve their issues, including mediation, litigation, and arbitration. Each approach has its own advantages and disadvantages, but what’re the real difference? And how do you know which approach is best for you and your business?
Mediation
Mediation is a process that uses a neutral third party to help negotiate a dispute between two parties and reach a resolution that both can be comfortable with. Mediation can occur in conjunction with litigation, and some courts even require parties to attempt mediation. Meditation is an alternative to try before proceeding with a legal complaint in court. Information provided in mediation cannot be used in later court proceedings, and thus mediation presents a safe and neutral ground for hashing out the details of a case. Mediation typically involves the informal presentation of facts and arguments to a mediator before and if a resolution is decided upon. Mediation is typically more popular with small businesses and independent owners rather than large corporations though mediation is also common with divorce.
Litigation
Litigation is one of the most frequently used forms of dispute resolution. It involves going before a judge or jury to resolve claims that one party has against another. For small businesses, this may take place in a small claims court involving only the parties and a judge. For larger corporations, litigation can involve retaining lawyers to navigate the dispute, which can often result in months or even years of court proceedings and significant time and cost. If your business is involved in a highly contentious dispute worth a large amount of money, litigation may be your best and only avenue for relief if it’s unlikely that a compromise can be negotiated. However, because this option is typically the most costly and time consuming, it’s important to assess your damages and the possibility of success to find out if it’s truly worth the expense.
Arbitration
Arbitration is considered legally binding on both parties and is a process in which the parties can handle the dispute outside the courtroom. It usually is more formal than mediation as it involves a formal presentation of an argument along with specific rules for evidence and procedure. Arbitrations are typically conducted by three arbitrators; one arbitrator is selected by each party, and then those two arbitrators select the third, creating a three-member panel. Decisions are then made by a majority vote of the panel. The panel’s decisions are often designated and confidential which makes this option popular among the larger companies.
Mediation, Litigation, and Arbitration each have their own advantages and disadvantages. They are all different in their requirements, cost, and progression. Before making decisions involving business disputes of any nature, it’s wise to consult an experienced attorney. A licensed attorney will be able to provide you with professional guidance on the legalities of each process and can offer advice on the best way for you or your party to proceed. Contact the legal professionals of Rieger, LLP today to learn more.