If you own a business, you know that time and money are extremely valuable to its success. When a conflict or dispute arises, spending your time and money on litigation can jeopardize everything you have worked hard to build. Fortunately, businesses have other options available.
When a dispute arises, businesses can turn to alternative dispute resolution methods, such as arbitration or mediation, to help them resolve conflicts. Alternative dispute resolution (ADR) allows both parties to work outside the courtroom with a mediator to find solutions to even the most complex business issues.
Types of Alternative Dispute Resolution
Businesses often have ADR clauses included in their contracts. These clauses instruct the parties to enter into the ADR process when a dispute or conflict arises. In general, the most common types of alternative dispute resolution used in business are arbitration and mediation.
Mediation is more informal than arbitration because it leaves control of the outcome to the parties involved. In mediation, an impartial third-party, known as a mediator, is present to help facilitate discussion and help both parties arrive at a mutually acceptable resolution. Mediation is often best when the parties involved wish to preserve their working relationship.
Arbitration is the most formal of all ADR processes and puts the outcome in the hands of an arbitrator. Like a judge, an arbitrator hears arguments and evidence before deciding the outcome of the dispute. Unlike mediation, there is little discussion occurring between the parties and the outcome of the dispute is decided by the arbitrator alone. Arbitration can be non-binding or binding.
- Binding – means that both parties have waived their right to a trial and agree to the arbitrator’s decision as final. In binding arbitration, there is no right of appeal.
- Non-binding – means that both parties can request a trial if they do not accept the arbitrator’s decision.
Benefits of Alternative Dispute Resolution
It does not matter whether you are a small startup business or a giant corporation, alternative dispute resolution has numerous benefits, including:
- Cost effective – since all of conflict resolution occurs outside of the courtroom, alternative dispute resolution is less costly. There are no court fees or associated costs when going through mediation or arbitration.
- Time effective – businesses need to resolve conflicts quickly so they can continue to operate efficiently. ADR moves swiftly because it occurs on your schedule and not the court’s schedule.
- Flexibility – unlike traditional litigation, ADR gives business owners the flexibility to determine when and where meetings take place and how the process will continue.
- Confidentiality – ADR is confidential and not open to the public, unlike the litigation process. This allows businesses to work through complex problems without fear of tarnishing their brand or reputation.
- Successful – ADR is extremely successful. According to the U.S. Department of Justice, 71 percent of all business disputes in 2015 were resolved when the parties engaged in ADR voluntarily.
Contact Our Palo Alto Business Attorney Today!
If you are facing a business dispute or conflict, it is important to know all of your legal options. Through ADR, you can achieve a successful resolution to even the most complex business issues, saving you both time and money.