Avoiding Court in Business Disputes

For business owners, few problems elicit terror like the threat of litigation. Months spent in court, devastating payouts, negative news stories — they’re the stuff of nightmares for executives in every corner of industry.

If you own a business, you certainly know that going to court is an activity you want to avoid. The question is how, especially once a disgruntled client, vendor, or business associate has filed a lawsuit against you.

Fortunately, you have options, even when a dispute appears headed for the courtroom. By working with an experienced mediator, you gain hope of steering a business disaster toward an agreeable — and even amicable — resolution.

The Advantages of Mediation

Opting for mediation offers multiple advantages to businesses on both sides of a dispute. Most importantly, it serves as a method for avoiding a full-blown trial, which has a number of downsides.

Going to court can mean racking up significant expenses — which can present a heavy financial burden, especially for a small business. In addition to the evident costs, dealing with lengthy litigation also can siphon human capital from a business.

High-level managers may be forced to sit in court while, back at the office, support personnel devote time and effort to preparing for and responding to legal twists and turns. In addition, negative emotions like fear and stress further distract team members. The result? Often, work slows or stops at all levels of the enterprise.

Litigation also can ravage the reputation of a business as negative news stories begin appearing in local and national media. Once a story appears online it remains available forever, so any damage to a brand can continue indefinitely as prospective clients search for your company’s name. Mediation is confidential, preserving the privacy — and reputations — of both parties.

And, of course, a lawsuit can permanently damage the business relationship between your company and the other party, creating personal acrimony that damages or destroys the possibility of a future working liaison.

Heading off Problems with Planning

In the early days of a business relationship, all may seem rosy, and it may be difficult to imagine things going sideways. But an eternal truth in business is that despite the best-laid plans, accidents happen, things go wrong and people get angry and want to place blame.

If you’re just starting a relationship with a new client or business associate, heading off potential legal problems is your best plan of action. While the relationship is fresh and positive, broach the subject of mediation should a dispute arise.

Consider having your business attorney draw up standard language that you can include in all your contracts and that you can customize as needed for specific situations. By including a mediation provision in your contracts, you take a powerful step toward staying out of court should problems arise.

Include details such as who will provide mediation services, a statement that both parties agree to accept mediation findings, and the time frame for which the mediation will continue before parties are free to pursue litigation.

Communicate to Uncover and Address Problems

If contracts already have been signed and it’s too late to include language favoring mediation, you still can take steps to reduce the risk of litigation. Many business disputes start with a failure to address simple problems in a timely fashion — and escalate until one party consults an attorney. By communicating clearly from the start of your business relationship, you greatly reduce the chances of litigation appearing, seemingly, from out of the blue.

In most cases, an aggrieved party will make their complaint known — and fail to receive a satisfactory response — before initiating litigation. Ensure that your team members always respond promptly and professionally to communications from clients, customers and other business associates.

What if Litigation Is Imminent?

If a business dispute has escalated and litigation is forthcoming or under way, an experienced attorney can assist you with starting the mediation process. When possible, it’s best to head off litigation through effective communications and the inclusion of mediation language in contracts.

But until a judge hands down a ruling, it’s not too late to pursue a resolution through mediation. By working with an experienced, neutral mediator, you may find a solution you wouldn’t have imagined.

                       

Richard Gertler

Richard Gertler is an attorney in Long Island, NY. He focuses his practice on commercial litigation, business law, and bankruptcy. When he is not managing Gertler Law Group, LLC, he is spending time with his family or being involved in the East Meadow community.  MORE >