Business Disputes & Resolution Options
No matter which type of dispute your company confronts, knowing your dispute resolution options is critical to cost-effectively and efficiently resolving your dispute. Disputes can be categorized under five headings: employee-management, employee-employee, business-customer/client, principal-principal and business-business. Fundamentally, there are four dispute resolution options: negotiation, mediation, litigation and arbitration. You can evaluate which option is best for your particular dispute based on five criteria: costs, time, voluntary participation, success probability and private/confidential nature of each process. Additionally, it is possible that you might need to participate in three of the dispute resolution options in the life of a dispute in order to achieve the final resolution.
For example, an employee complains of age discrimination for not receiving the promotion he was expecting. You can initiate a negotiation with the employee to resolve the complaint. Should negotiation fail, you may consider interviewing and hiring a professional mediator who has no stake in the outcome of the dispute to facilitate the negotiation between you and your employee. You can participate in mediation on your own, or with the assistance/presence of your own independent attorney.
On average, the success rate in mediation is anywhere from 75-85% . Even when a dispute does not resolve “at the mediation table” often it is resolved by the parties subsequent to their participation in the process. What the parties learn and discuss during the mediation process serves as the foundation for the future resolution of the dispute.
In the event, mediation fails either party can go to court to have the dispute resolve by a judge. Participation in mediation does not impact either side’s right to file a lawsuit. Alternatively, the parties can agree to have their dispute resolved by an arbitrator. Much like a court case, arbitration involves litigation, attorneys are involved and a third-party (like a judge) ultimately makes a decision about the dispute. As business owner, manager or executive, the key is to become informed about the different dispute resolution options available, and to evaluate which option stands out as the most appropriate in consideration of the nature of your dispute and your best case scenario.
| Criteria | Traditional v. Problem-Solving Negotiation | Mediation | Litigation | Arbitration |
| Costs | No to Low Cost (Do it yourself) | Shared Cost (Both sides agree to hire 3rd party professional-the Mediator.) | High Cost (Each side retains lawyers and pays own court costs.) | Moderate to High Cost (Each side retains lawyers and pays own arbitration costs-unless agreed to otherwise.) |
| Time | Little Time Commitment | Moderate Time Commitment(Half day or Full day session typical.) | High Time Commitment(Average: filing lawsuit to judgment can take 18 months to three years.) | Moderate to High Time Commitment(Depends on arbitrator’s. lawyers’ and parties’ schedules.) |
| Participation | Voluntary(conditioned on both sides’ willingness to negotiate. | Voluntary (requirement of participation in the mediation.) | Mandatory (once you are serve with a summons you are legally required to answer and appear in court). | Voluntary (but there is no appeal of the arbitrator’s decision except in rare instances.) |
| Success | Depends on each party’s willingness to engage in problem-solving negotiation rather than traditional negotiation methods. The likelihood of success of a negotiation increases in relation to the parties’ commitment to reach a resolution. | Is a shared responsibility of the parties to resolve the dispute using problem-solving strategies facilitated by the Mediator. | Is determined by the judge (however, losing party can appeal.) | Is determined by the arbitrator(there is no right to appeal except in rare instances.) |
| Confidential | Private but no guarantee of confidentiality unless included in writing in the settlement agreement | Private and Confidential (these are requirements to participate in mediation.) | Public Forum(Customers, media and public at large can access information about the court case.) | Private Forum(No guarantee of confidentiality unless ordered by the arbitrator.) |