Businesses facing disagreement may be able to preserve their commercial relationships by using alternative dispute resolution methods.
A successful business enterprise does not exist in a vacuum. To serve customers and make a profit, a commercial concern must rely on and cultivate professional relationships with other businesses to function in the marketplace. Ultimately, those relationships, whether needed for supplies, outsourcing, services or other business needs, can impact the bottom line and have real commercial value.
Despite best efforts, business-to-business disputes will arise in every industry and in companies of any size. The problem then looms large: how can a business owner resolve a contract or other type of disagreement with another business without permanently hurting the commercial relationship, which might be crucially important and need to be maintained.
At this point, a seasoned business attorney can help the business make a wise decision about how to proceed. Should a lawsuit be filed or is it likely the other party will sue? Business litigation is expensive and certainly harmful to any ongoing relationship that may be better preserved. An option that should be carefully considered is that of alternative dispute resolution, known as ADR.
Alternative dispute resolution
ADR is the resolution of a conflict by means other than resorting to litigation and includes mediation, arbitration and informal negotiation. These alternatives to the lawsuit can often be cheaper, allow for creative solutions, increase privacy, keep control of the process in the hands of the disputing parties and avoid the adversarial nature of court proceedings, thereby raising the chance of preserving and even strengthening the commercial relationship going forward.
After all, the resolution of almost every conflict involves some type of compromise.
Mediation is the employment of a neutral third party specially trained in conflict resolution, negotiation and communication techniques. The mediator works with the parties individually and together to try to find a compromise that each party can accept. When a professional mediator combines his or her conflict-solving skills with strong understanding of the particular industry at issue, he or she can bring considerable assistance to commercial parties at odds, but still negotiating, over a legal issue.
Arbitration involves a neutral party or panel of neutral persons who make a binding decision in a dispute after hearing from the involved parties and reviewing relevant evidence. Arbitration loosely resembles a trial-like situation, more so than mediation does.
An experienced commercial lawyer will provide to a business client advice that allows an informed and strategic decision about how to handle the dispute at hand. The various ADR methods should be considered, keeping an eye on the possibility that litigation could still be the preferred method, depending on the circumstances.
A business and its legal counsel facing a dispute can weigh the pros and cons of ADR options and litigation, including an analysis of the risks and potential benefits of each, with commercial goals and objectives in mind. Coming to an agreement using ADR provides at least a certain outcome, whereas nothing is guaranteed in court.
Keywords: ADR, alternative dispute resolution, arbitration, mediation, commerciall dispute