Dispute Resolution Alternatives Make $ense
Posted by: Louis J. Licata
As any business owner who has participated in litigation of any type can attest, litigation of legal claims is extremely lengthy and expensive, and the resulting cost can cripple a small business for years. Whether the claims that are the subject of the litigation relate to a business contract dispute or an employment matter, the impact of litigation on a business' bottom line is immense. Not only must the business expend its financial resources on the legal fees that accompany litigation, but also the business must expend significant human resources throughout litigation. Also, litigation inevitably impacts the business' bottom line through the decrease in work production due the considerable time investment of the business owner and any employees involved in or with knowledge of the subject matter of the litigation.
Most business owners likely do not voluntarily subject themselves to this agony. To that end, and on the sage advice of their trusted counsel, business owners are taking proactive steps to protect their businesses from the potentially harmful impact of litigation. One of these proactive steps involves the use of dispute resolution alternatives...
Dispute resolution alternatives, which include mediation and arbitration, promote cost effective and reduced time length alternatives to resolve business disputes. Many business owners have implemented mediation and arbitration provisions within their business and employment agreements, as well as within their employee manuals in an attempt to avoid the colossal impact of litigation on their business. Most business owners acknowledge that the use of dispute resolution alternatives, specifically arbitration, provide them with a fair and reasonable way to resolve their business disputes without devastating their businesses.
Generally, arbitration is solely a change in the forum in which the parties will resolve their dispute. Thus, the parties' substantive legal rights remain unaffected. Most arbitration provisions identify the arbitration rules that govern the procedural aspects of the arbitration, i.e. the American Arbitration Association's commercial arbitration rules. During arbitration, the parties to the dispute present their positions to an arbitrator (or arbitration panel) who renders a determination of the dispute's outcome, based on the facts of the dispute and the applicable law.
Although alternative dispute resolution provisions can take varying forms, the effects remain the same – alternative dispute resolution provisions, specifically arbitration provisions, allow business owners to remove their disputes from the judicial court forum, thereby saving both time and money!