Looking for simple business dispute resolution strategies? Then you are at the right place!
Dealing with conflicts can be the worst nightmare of any business. Whether it is a problem with a client, a supplier or an employee, any legal issues can be time-consuming and costly.
However, the real question is…
What is the best approach to resolve such disputes?
In this complete guide, you will learn all the strategies you need to resolve any business conflicts like a pro!
What you’ll learn:
- Why Business Dispute Resolution is Important
- The Hidden Costs of Unresolved Business Disputes
- 5x Proven and Successful Dispute Resolution Strategies
- How to Choose the Right Strategy for You
Why Business Dispute Resolution is Important
Business disputes are far more common than you might think.
Disputes of any kind are time-consuming and very costly. Statistics show that small businesses can spend as much as $91,000 in litigation for contract disputes. That is the money that can be spent on marketing, new customers, or salaries.
The worst part is that the long, unresolved business conflicts don’t only affect your money.
Long, complex legal disputes damage relationships, reputations, and so much stress that it can affect every part of your business.
Hence, it is crucial to know how to handle such conflicts.
Involving experienced litigation lawyers early on can save you thousands in the long run. A proper dispute resolution strategy can help identify the right path and resolve the issue before it gets escalated into a full-fledged court case.
The Hidden Costs of Unresolved Business Disputes
Business people often fail to see the real cost of a dispute.
Business conflict costs are more than just legal fees. If a conflict between you and a partner drags on for months, then what is it that you actually lose?
- Productivity – all the time spent dealing with the conflict is a time that you could have spent on doing something else.
- Relationships – even if a conflict is resolved, the relationships between the companies are still damaged, and it is not easy to make them better again.
- Reputation – in case your conflict goes public, it affects your brand’s reputation and what your customers and suppliers think of your brand.
Surveys show that around 80% of commercial disputes are settled through negotiations or mediation before the case has any formal legal proceedings. This is a significant number!
That means that most disputes never need to see a courtroom if handled appropriately at the very start.
5x Proven and Successful Dispute Resolution Strategies
Now it is time for the strategies that work!
The five dispute resolution methods listed below helped many businesses resolve disputes without all the drama and money of the traditional litigation methods.
1. Direct Negotiation
Direct negotiation is always the first step.
Direct negotiation means that both the parties come together and try to solve the issue by themselves without a third party. This is always the most effective as it is quick and cost-free.
Direct negotiation tips:
- Stay calm and professional during the meeting.
- Focus on the main interests and issues rather than positions.
- Keep everything in writing.
- Put a clear timeframe for the negotiation.
Hence, if both the parties are approaching the matter in good faith, direct negotiations are the way to go. The only thing you have to lose is some time!
2. Mediation
Mediation is the next most straightforward and sensible strategy.
Mediation means a third neutral person to help both the parties reach an amicable settlement. A mediator helps the two sides talk and find common ground.
A mediator cannot force any party to do something, nor they can make a decision.
That is why mediation is so popular.
It is faster and cheaper than formal litigation, and both parties still control the outcome instead of a judge deciding on something they do not know much about.
Mediations often take a day or less to settle, while court cases can take years.
3. Arbitration
Arbitration is like a private lawsuit.
Both parties present their cases in front of an arbitrator who makes a final and binding decision. The process is more formal than mediation but often faster and less expensive than court proceedings.
Arbitration is excellent for contract disputes in which both parties can understand each other but have a problem in interpretation.
One thing to note about arbitration is that it is final. There is no appeal, only a small chance to challenge the outcome.
4. Expert Determination
In some disputes, there is a need for a technical opinion.
Expert Determination is when an expert in the relevant field is appointed to study the subject and give an opinion and decision. This is highly effective in cases like:
- Technical issues in products and services
- Quality standards not being met
- Valuation disagreements
The expert’s decision is either binding or not, based on an agreement beforehand.
5. Litigation
Finally, sometimes, there is no other way left but to go to court.
Sometimes, a formal, legal process of resolving a dispute is the only option. When all the other methods are exhausted, and one party refuses to listen, the final resort is to go to court.
Litigation is expensive and can take years, but sometimes it is the only way.
When the time comes for court, work with the best professionals to get the best results.
How to Choose the Right Strategy
Now the question is how to choose the best approach.
One or more of these five strategies above can be the right one for your business. Consider the following questions to pick the right one for you:
- How important is this relationship for you? If you want to keep the relationship between the two companies intact, negotiation and mediation are the way to go.
- How complex is this dispute? Some conflicts have a technical nature that requires a specialist’s intervention and advice. If this is the case, you have to go with Expert Determination.
- Do you need a fast resolution? In case you need a fast outcome, arbitration or mediation would be a better option than formal litigation.
- Do you need an outcome to be legally binding? Arbitration and litigation provide you with legally binding decisions, which negotiation, mediation, or even expert determination don’t.
The best strategy can be a combination of the above.
Try to go with negotiation first, then move to mediation if required, and keep litigation as a last resort.
Prevention is Better Than Cure
If there is one strategy that I would recommend more than all the others, it would be…
Prevention is better than cure.
The best approach to any business dispute is to avoid it altogether. To ensure this, one has to:
- Have clear and well-drafted contracts.
- Set up communication channels for resolving any disputes.
- Ensure your contracts have clear Dispute Resolution clauses.
- Build relationships on mutual respect.
The contract clearly states how both the parties will resolve any dispute in case there is one. This will ensure no one doubts their steps while resolving the conflict and make the process much more straightforward.
Wrapping It Up
Business dispute resolution does not have to be a painful and costly process.
There are several ways in which even the most complex of the disputes can be resolved without long, costly court cases.
To summarise:
- Begin with direct negotiation always.
- Use mediation as a dispute-resolution method with a third, neutral party.
- Arbitration for binding decisions without involving the court.
- Litigation is the final resort.
- Prevention is always better than cure!
The business that wins are the ones that know how to handle conflicts professionally and swiftly. A clear strategy for Dispute Resolution in Business is not just a good business practice.
It is mandatory.
