Alternatives for Resolving Business Disputes

Whether it is a breach of contract, partnership dispute, business-to-business feud, territory clash, client conflict, or supplier problem, disagreements are bound to happen in the world of business. While litigation has been the primary resort for resolving disputes for centuries, you should know that taking a business conflict to the trial can result in protracted and expensive courtroom wars. In addition to that, formal procedures and investigations can often be so adversarial and stressful to disputing parties that any possibility of them reconciling their conflicts, and working together again is unlikely. This is where Alternative Dispute Resolution (“ADR”) methods come in to play.

ADR refers to methods through which business disputes can be resolved outside the public forum of the court system - and with minimal time, effort, and capital. ADR primarily consists of two methods: mediation and arbitration. If you and your business are facing a Chicago area business lawsuit or dispute, you should fully understand the differences between the two as it would help you reach the best settlement for your case. With that said, let's look at what these two ADR conflict resolution tools mean and how they differ from one other.

Mediation is the most commonly used form of ADR that involves an unbiased, neutral third party – the mediator – who guides the proceedings to find an uncoerced resolution to the dispute. The mediator acts like a "dutch uncle" who has no vested interest in either party's business or the right to make any decision as to how the dispute should be resolved. Their job is simply to facilitate communication and assist both parties to work out the real causes of the conflict. In other words, mediation is basically an informal yet moderated forum for negotiation, wherein parties are free to reach their own settlement by talking out their differences, with the mediator helping get them past their positions so that the parties' real interests can be addressed.

Points to remember

• Time and cost savings over both arbitration and litigation are substantial.
• The settlements remain confidential as proceedings do not take place in a public courtroom, and the transcripts are not added to the public record.
• The process gives parties total control over the resolution.
• Potential damage to the relationship between both parties in the future is less likely to occur.
• There is often a lack of finality in the resolution.

If parties cannot resolve their discord with mediation, and they do not wish to go to court, the next step is usually arbitrating. Arbitration is similar to mediation in that a neutral third party (in this case, an arbitrator or a panel of arbitrators) is involved. Contrary to mediation, however, the third party does not pave the way for a negotiation. Instead, they collect all the facts and evidence from both parties and make a legally binding decision to settle the conflict.

Points to remember

• It is overall less costly and quicker than litigating in a courtroom, but still more expensive and time-consuming than mediation.
• The process has finality - arbitration rulings cannot be appealed.
• The settlements remain confidential as proceedings do not take place in a public courtroom, and the transcripts are not added to the public record.
• The proceedings may sabotage the business relationship between the two sides.

Mediation and arbitration are both excellent ways to spare the expense of protracted litigation. The key difference between these two is that whereas the arbitrator reviews the case and makes a final judgment, a mediator will assist the parties to reach a voluntary settlement. The desire of parties to have greater control over the settlement process and to cut a deal on favorable terms rather than relying on a third party's judgment is why mediation is usually preferred over arbitration as the ADR method of choice.

Which is the most suitable dispute resolution method for your case should be determined by the issue(s) presented in your dispute as well as the type of your business. To evaluate which dispute resolution process suits your needs, please contact the team of experienced Chicago Business Litigation Lawyers at Bellas & Wachowski today using the contact form on the right. We will make sure that your business disputes are settled in a punctual and cost-effective manner so that you can get back to your day-to-day business operations.