Litigation used to be the most common way to resolve business-related disputes. However, more companies are leaning towards alternative resolution methods.
Each method has advantages, and some may be more appropriate for certain situations. Before deciding which method to choose, evaluate some of the factors involved.
Options available to resolve a dispute
The Harvard Law School Program on Negotiation discusses the three main resolution methods used by conflicting parties. Mediation is the most casual, as it involves a neutral third party that works with both sides to come up with a solution.
Litigation typically takes place in the courtroom, and a jury or a judge makes the final decision after hearing evidence and testimony from each side. Arbitration is a balance of the two other methods. It is less formal than litigation and it involves a neutral third party, but this person makes the final decision after hearing from each side.
Factors involved with choosing the right method
Cost and speed are two factors you may want to consider. If you want to spend the least amount of money as possible, mediation may be your best choice. Arbitration is also a less expensive option. Both methods are also quicker than litigation.
Communication and the willingness to cooperate also come into play. If two sides are able to talk through their differences and can negotiate with the help of a third party, mediation may be a good choice. Arbitration may be better for those unwilling to communicate with each other but are willing to cooperate.
Complexity is another factor. Litigation is often better for more complex cases that require expertise witnesses. Litigation may also be the better choice for those looking for large financial settlements.
Another thing to keep in mind is the ability to appeal the decision. The decision made by an arbitrator is usually binding, while one made via litigation has an appeal process if a party does not agree with the decision.