Disputes are often perceived negatively; however, they are essential for the growth of organizations. A conflict over a subject matter helps in identifying loopholes and discovering alternative solutions for a problem. Thus helping in selecting the best option for the company and eventually resolving the conflict.
However, not every dispute is flavorful. Sometimes situations get so out of control that they might even lead to lawsuits.
According to the statistics, small companies spend approximately 3 million U.S. dollars every year on legal disputes. Moreover, as per the reports of SBA (Small Business Administration), around 35 to 55% of the small companies and 90% of all businesses are involved in litigation.
Although, it is always better to resolve the issues at ground level. It is even better to take proper measures so that such a situation doesn’t happen at all. Now the question is- What are your corporate dispute resolution options?
Read more to find out!
Generally, there are three options available to the disputants. Depending on the seriousness of the issue and cooperation level, you can select any one of the options. Nonetheless, it is essential that you take advice from your business attorney before finalizing the decision.
Having said that, let’s learn about the dispute resolution options.
The first and well-known dispute resolution option is litigation. Generally, corporations use this option if they fail to come up with a solution on their own. Or if the dispute is of high level and can damage the company’s reputation. In such a scenario, the plaintiff brings a case against the defendant. The case is taken to court, where either the judge or the jury, or both, will decide for both the parties.
Needless to say, unlike mediation and arbitration, you need to hire an attorney to represent your case in front of the judge. However, remember that the rules and laws of the different cities are different. For instance, let’s say your business is in Houston (Texas). You need to look for the best Business Attorney in Houston Texas, with experience and expertise in corporate disputes. It will ensure that your rights are protected. Not to forget, the knowledge of the attorney will also make your case strong.
Reasons to select litigation:
- It is a formal process conducted in the public courtroom.
- The decision of the judge or the jury will be final and legally-binding. It will be based on all the documents and taken after considering every aspect of the case.
- The court will follow the federal rule of evidence, which is generally absent in the other dispute resolution options.
- Even though the decision is final, the parties, if not satisfied, can appeal at various levels.
As the name suggests, it is a method of resolving issues with the help of a neutral third party or person, a.k.a. Mediator. The person selected for the process will talk with both parties separately or bring parties together to discuss the problem.
Understand that the work of a mediator is not to provide a solution. It is because, legally, they don’t have any authority to impose a decision. Instead, they work with both parties, listen to their case to understand their interests and the root cause of conflict. It helps the parties to explore all their grievances, eventually coming up with a voluntary and nonbinding decision.
Generally, corporations use mediation methods when the conflict arises due to misunderstanding and can easily be resolved at ground level.
Reasons To Select Mediation:
- Unlike the trials or litigations, the issue is kept confidential.
- The mediator will guide the discussion to come up with the best solution for both parties.
- It helps create an understanding between the parties, which might be beneficial at the later business stages.
- It is quick, less formal, and also cost-effective.
Just like mediation, arbitration also includes a third party. However, instead of guiding the discussion, the arbitrator will work as a judge to provide a binding decision. That’s why many corporations include arbitration as a compulsory dispute resolution.
The reason being is that the arbitrator may ask the parties to submit the documents relevant to the disputes and give an opinion after a thorough review of the whole case (just like a trial.) This gives both parties an unbiased and equal opportunity to present their case.
The parties can negotiate at any point during the arbitration process. If necessary, they can also take the help of lawyers to present their case and the evidence.
Reasons To Select Arbitration:
- The decision of the arbitrator is confidential yet final and binding. Thus it ends the disputes once and for all.
- You have the option to take the help of your lawyer to present your case. It ensures that you don’t forget about any crucial evidence. Moreover, you can take help from the good negotiation skills of the attorney.
- The decision will be based on the documents and evidence submitted by both parties. Therefore, there is zero possibility of biases.
- It is also cost-effective as compared to litigation.
Note: In case your company is involved in a conflict with a different country, you need to settle it with the help of international arbitration. These cases are generally handled online and involve the International Chamber of Commerce (ICC) to ensure proper communication between the parties.
To Sum It All Up!
These are the three options that are available to you for resolving the conflicts. All three have their own benefits; depending upon the conflict your corporation is having, you can select the one that meets your needs. Even so, if the conflict is more than a mere misunderstanding, and the dispute could affect your company to a great extent, you must seek help from your lawyer.
And not just any attorney, but the one who knows the business law of the country and the city. They can help you come up with a solution that is in the best interest of both parties. Nonetheless, to avoid a similar situation in the future, you must take every step very carefully.