In the business world, disputes are inevitable, and how you handle them can shape your company’s future. Jumping straight to litigation is an option, but litigation is almost always a long, costly process that drains vital resources from your business. Fortunately, many business owners have been able to resolve even complex disputes through alternative means like mediation and arbitration — and you may be able to as well.
While they might not be right for every kind of business dispute, forms of alternative dispute resolution like mediation and arbitration can help you resolve business conflicts for a fraction of the cost of litigation. Mediation and arbitration are also vastly more efficient — and much more likely to preserve your relationship with the other party.
What Is Mediation?
Mediation is less formal than arbitration. It typically involves the two parties’ meeting with a trained, impartial third party called a mediator. The mediator doesn’t make decisions or try to push either party in a particular direction. Instead, they try to guide the two parties toward a resolution. Mediation is confidential and involves no forced resolutions, so it’s an ideal avenue if your business or partnership dispute is one that can likely be resolved by honest, open communication. It also tends to be faster and less expensive than arbitration or litigation. However, because the parties are not legally obligated to come to a decision, you may finish the mediation process with the same dispute you started with.
What Is Arbitration?
If you want to avoid the formality of litigation but find mediation to be too informal, arbitration might be an appropriate middle ground. This process is essentially like scaled-down, private litigation. An arbitrator (or a panel of arbitrators) is chosen to hear both sides of the dispute and issue a decision. As long as both parties agree to it, arbitration is usually legally binding. This process is usually more expensive than mediation but still much less expensive than litigation.
Mediation vs. Arbitration: Key Differences and Considerations
Before choosing which type of alternative dispute resolution (ADR) may be best for your situation, you should take a close look at some of the main differences between them. Here’s a look at how mediation and arbitration stack up:
- Cost: Mediation is typically less expensive than arbitration.
- Resolution: Arbitration guarantees a final decision, but mediation does not.
- Time: Because of the guaranteed result, arbitration may ensure a faster timeline.
- Business Relationships: Because mediation is collaborative, it may be more likely to preserve your relationship with the other party.
It’s also worth considering what options you have if you are dissatisfied with the outcome. For instance, if both parties cannot come to a resolution through mediation, you may be able to move on to arbitration. If you aren’t satisfied with the outcome of arbitration, you may have limited options to appeal.
Before selecting a method of ADR, call Weisblatt Law Firm at (713) 666-1981 to start talking about your options today.
Hybrid ADR Approaches
The Best of Both Worlds
Can’t decide between mediation and arbitration? With a hybrid ADR approach, you can choose certain elements from each approach and maximize your chances of efficiently resolving your business dispute. These are some common hybrid models.
Mediation With Recommendation
With mediation, the mediator is an impartial third party. However, if you choose mediation with recommendation and the parties can’t reach an agreement, the mediator will recommend a solution. The parties are not obligated to accept the proposed solution, but it may make it easier for them to make a final decision.
Med-Arb
Often, if you cannot resolve an issue through mediation, you move on to arbitration. Med-arb makes this process more efficient. With med-arb, you choose a neutral third party who is trained as both a mediator and an arbitrator. The process starts with mediation, but if you and the other party cannot reach an agreement, the mediator will then transition to the role of arbitrator and issue a binding decision.
Mediation and Last-Offer Arbitration
This option (often abbreviated as “MEDALOA”) is an even more efficient version of med-arb. The process starts with traditional mediation. If the parties are able to reach an agreement, the dispute can be resolved with mediation alone. However, if they reach an impasse, the parties each come up with a final offer and submit it to the mediator. The mediator then transitions into the role of arbitrator, reviews the offers, and issues a final decision.
Mini-Trial
If your dispute is serious enough that you think it may very well lead to litigation, a mini-trial may be the best way to go. With this option, a neutral third party who has relevant expertise stands in as a “judge.” In some cases, you may even choose to include a mock jury. Each side argues their case like they would in a courtroom, and the “judge” may even issue an opinion. Because a mini-trial gives you a sense of how the dispute may go if taken to the litigation stage, this approach is likely to lead to a settlement.
Enforceability of ADR Agreements
Before choosing a form of ADR, make sure you thoroughly understand the legal enforceability of any decisions made. While it’s true that mediators generally do not make binding decisions and that arbitration is usually legally binding, different ADR providers may have their own unique terms. If you work with Weisblatt Law Firm, we can assist you in choosing the right ADR provider and make sure you thoroughly understand the legal implications of any dispute resolution method you choose.
Need Help Making an Alternate Dispute Resolution Plan?
Let Our Experience Work for You
Despite your best efforts, you’re bound to run into a business dispute every so often. How you handle it can have a long-lasting impact on your company’s reputation. At Weisblatt Law Firm, we’re dedicated to helping Houston-area businesses overcome legal challenges and strive for long-term success.
The right business lawyer can help increase your chances of solving business disputes through ADR — and avoid the stress, expense, and time investment of litigation. Call Weisblatt Law Firm at (713) 666-1981 for a free phone consultation.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
