Is alternative dispute resolution right for my business conflict?

Alternative dispute resolution can provide a cost and time effective option to resolve business disputes.

Disputes in business are not uncommon. They can arise due to confusion on shipment requests or may result from allegations of nonperformance. Regardless of the cause, these issues can arise on a daily basis. As a result, it is wise for businesses to have a cost-effective strategy to address these issues. One option to consider is the use of alternative dispute resolution.

Alternative dispute resolution

Alternative dispute resolution is defined by Black’s Law Dictionary as the resolution of a conflict outside of court through the use of a third party to keep things neutral. This process is different than the traditional courtroom lawsuit. Alternative dispute resolution generally does not make use of the courthouse with multiple lawyers, a judge and the possibility of a jury. As a result, the process is often more efficient in both time use and cost.

There are two main forms of alternative dispute resolution: arbitration and mediation.

Arbitration

Arbitration is defined as the "investigation and determination of a matter or matters of difference between contending parties, by one or more unofficial persons, chosen by the parties, called ‘arbitrators,’ or ‘referees.’" Essentially, the parties seeking resolution choose a neutral third person to conduct a mini trial. Evidence is provided and the arbitrator hears testimony from each side. The arbitrator than issues a ruling based on this information.

When using arbitration, the parties elect to have the arbitration binding or not. If binding, the decision cannot be reviewed by a court. If not, the parties can choose to either follow the arbitrator’s ruling or take the issue to court.

Mediation

In contrast, mediation is defined as the "intervention; interposition, the act of a third person who interferes between two contending parties with a view to reconcile them or persuade them to adjust or settle their dispute." This basically means that the mediator assists the parties in coming to a decision instead of providing a ruling.

Importance of legal counsel

There are pros and cons to both forms of alternative dispute resolution. One negative to be cognizant of is the fact that these processes are only successful if both parties are willing to negotiate. As a result, it is wise for those considering moving forward with either alternative dispute resolution or traditional litigation to seek the counsel of an attorney experienced in dispute resolution practices. This legal professional will review the benefits and risks of each option and help you to choose the path that is best for your unique interests.