Do you own a small business in California? Small businesses have contributed greatly to the state’s economic success. California businesses with fewer than 20 employees have the highest rates of net job growth. However, a conflict or dispute could jeopardize the success of your small business. The amount of time and money you spend on litigation could result in you losing everything you have worked hard to build.
Fortunately, you have other options as a small business owner. When a dispute arises, you can turn to alternative dispute resolution methods, such as arbitration or mediation, to help you resolve a conflict or dispute. Alternative dispute resolution (ADR) can give you the tools to resolve even the most complex business disputes. The parties involved in the conflict can work outside the courtroom with a mediator to reach a resolution.
Below, we review the main types of alternative dispute resolution available to small business owners. We also discuss the top five business benefits of using alternative dispute resolution. Avoid the hassle of traditional litigation by reaching out to a dispute resolution attorney today.
What Are the Main Types of Alternative Dispute Resolution?
As a small business owner, it is important to keep your expenses as low as possible. The cost of litigating a dispute or conflict can jeopardize your entire company. Fortunately, you can save money by working outside the courtroom to find a solution. In general, the most common types of alternative dispute resolution used in business are arbitration and mediation.
What Is Mediation?
Mediation is more informal than arbitration. 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. The mediator’s ultimate goal is to help both parties arrive at a mutually acceptable resolution. Mediation is best when you wish to preserve your working relationship with the other party.
What Is Arbitration?
Arbitration is the most formal of all ADR processes. It 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 often little discussion between the parties.
The outcome of the dispute is decided by the arbitrator alone. There are two main types of arbitration.
- 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.
In our experience, using ADR to resolve a dispute benefits small business owners significantly. Mediators and arbitrators are trained professionals. They understand how to achieve the best possible outcome through their respective training. For additional information, contact a California business attorney at our firm for a free initial consultation.
When is the Right Time for ADR?
Mediation or arbitration before a lawsuit is always the best idea, but just because a lawsuit has been filed does not mean you cannot try and get everyone to participate in an alternative dispute resolution. Often, the Court will require you to attend one or more ADR sessions before setting the case for trial. If you know you are going to have to compete at least one ADR session, it benefits the small business owner to get in there quickly.
Business Benefits of Alternative Dispute Resolution
ADR is a collaborative process designed to assist small business owners with resolving their disputes. It is an informal and speedy alternative to traditional litigation. ADR has numerous benefits, including:
- Cost-effective – ADR is less costly than commercial litigation. The entire conflict resolution process occurs outside of the courtroom. There are no court fees or associated costs when going through mediation or arbitration.
- Time-effective – Small business owners 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 small business owners the flexibility to determine when and where meetings take place. It also gives both parties the flexibility to determine how the process will continue.
- Confidentiality – ADR is confidential and not open to the public, unlike the litigation process. This allows small business owners to work through complex problems without fear of tarnishing their brand or reputation.
- Successful outcomes – ADR is extremely successful. The US. Department of Justice reports that 71 percent of all business disputes in 2015 were resolved when the parties engaged in ADR voluntarily.
It can take months or even years to settle your dispute through traditional litigation. By implementing an ADR strategy early in your case, you can save yourself time and money. A Palo Alto business law attorney can offer you advice during a free initial consultation. Do not hesitate to reach out.
Contact a Palo Alto Business Law Attorney
Are you facing a business dispute or conflict? It is important to know all of your legal options. Through alternative dispute resolution, you may be able to successfully resolve even the most complex business issues.