Regardless of what industry you work in, one thing that you likely know well is that your peers, acquaintances, and clients may not always agree with you. With so many different people and unique minds in the world, it’s unfathomable to imagine that everyone will agree and get along. With this in mind, an essential skill in the realm of business is dispute resolution.
This entails defusing a tense situation between two parties, understanding their problems, and finding a solution that is appropriate for the situation.
Business disputes are a regular occurrence and it’s only a matter of time before you face one yourself. How you respond will have a significant impact on the outcome, your relationship with the other party, and your reputation.
To ensure that you know your options when handling a business dispute, we’ll explain the primary methods used to manage disagreements below.
Mediation: A relaxed approach.
The most relaxed approach to dispute resolution is mediation. This is the most informal style and works best for basic misunderstandings. A good example of this would be figuring out how much you and another party should pay for a minor accident that you both contributed toward.
With mediation, there’s an understanding that you want to continue a healthy working relationship with the other party.
However, there are clear differences and it’s difficult to see who is right and what is fair.
Mediation involves a third party known as a mediator. This person will listen to both sides of the story and facilitate discussions between you.
A mediator is fantastic for helping guide you to a common ground. They do not decide for you, nor can they force you to follow through with the decision you agree upon.
This is typically the first step in resolving business disputes. If you can’t work things out with another party through mediation, then you’ll need to escalate the formality level.
Arbitration: A less formal approach.
Taking things a step further, you can use arbitration to resolve a dispute.
Arbitration is much more formal than mediation, making it ideal for situations with conflicts of interest and politics. There is often less of a concern on maintaining a relationship with the other party and more of a focus on being on the favorable end of the outcome.
When pursuing arbitration, a third party is also involved. The key difference here is that this third party is an authority figure. This means that they will make the decision, which will be binding. You and the other party will submit your case, including any relevant evidence. The arbitrator will serve as a judge and pass a sentence that is often unappealable.
While arbitration is similar to litigation, arbitration is far quicker and a more private process. This makes it a great choice for businesses looking to maintain their reputation.
Litigation: A more formal approach.
Should you require legal intervention, litigation will be the method employed.
This is often the most expensive, draining, and time-consuming way to handle a dispute. It is the most formal strategy and involves the court system.
Like arbitration, litigation seeks to find a ruling on the situation. It’s typically reserved for fairly hostile situations that cannot be managed with less formal styles of dispute resolution.
Litigation involves a third party serving as a judge. Additionally, a jury panel will also sit in and listen to the case. Both parties will collectively pass a judgment, which often makes the ruling impartial. Court cases take several months and even years to complete. Between scheduling appearance dates, gathering, submitting, and reviewing evidence, listening to testimonies, and managing delays, there’s a lot to work through and it will inevitably take time.
You should always aim to avoid using litigation whenever possible. Other dispute resolution techniques are often cleaner, easier, cheaper, and less stressful to deal with.
Mixed strategies: A combined approach.
The three methods mentioned above are the main techniques used to resolve business disputes. They vary in severity, how the issue is approached, and how enforceable the outcome is. While these three set the standard for business disputes, several mixed strategies exist that use a combination of mediation, arbitration, and litigation.
A few of them include a minitrial, summary jury trial, renting a judge, and negotiations. While not all strategies are effective for every situation, it’s smart to try whatever you can to keep a dispute out of court, so no one wastes their time and money on an easy resolvable case.
Mediation and arbitration are not always successful, but litigation is often unappealing. This is why mixed strategies have been created to help offer more opportunities to quell a dispute.
Consider your unique situation and what it requires for resolution. Find a strategy that suits your situation well for a quick and painless solution.
Business disputes are a normal part of operating a business. Misunderstandings and mistakes are easy to make, but sometimes disagreements require a third party for resolution.
Because of this, you should understand what the main strategies for business dispute resolution are. This includes mediation, arbitration, litigation, and techniques that are some combination of the three or several mixed strategies.
While disputes are certainly a hassle, they don’t need to be a big deal. If you’re prepared to handle any disagreement that comes your way, any misunderstands that happen in the future will be easily squashed and everyone can happily return back to their work.