We’ve all heard stories about a business transaction gone wrong: a vendor who didn’t provide goods as expected, two parties interpreting contract terms differently, or a client who has unreasonable expectations from your services. These aren’t just hiccups one encounters as part of conducting business. Sometimes, these disagreements can turn into real disruptors and can even put in jeopardy everything you’ve worked so hard to accomplish.
While some people abhor litigation and try to avoid it as much as possible, others may see it as a tool to obtain leverage. The spectrum for threatening a lawsuit can range from honestly believing one has been wronged, to intimidation tactics.
What’s a person to do if he or she wants to minimize damage?
Enter Alternative Dispute Resolution (ADR)
TV shows only show us courtroom dramas because that’s what’s popular, and it’s what most people are familiar with. However, for over 30 years, Florida has been utilizing ADR to resolve disputes. Instead of arguing before a Judge, there are options for conflict resolution.
Mediation: Mediation is an informal process where a neutral person (a mediator) facilitates discussion between the parties in efforts to reach an agreement. The best part about this option is that both parties have a level of control in the outcome. Since the process consists of going back and forth with negotiations, they get to offer and counteroffer terms with which they would be able to live. Also, the role of the mediator (who must be certified by the Florida Supreme Court) is to facilitate these discussions. He or she will not render a decision on the case. Further, mediation is confidential so what is offered and discussed cannot later be admitted in a court proceeding.
Rarely do both parties leave a mediation feeling like they got 100% of what they were hoping for; but finding a middle ground both sides can live with is a lot more desirable than a protracted, costly and unpredictable court battle.
If you reach an agreement, it will be memorialized in writing and signed by both parties. This accord would then be as enforceable as a court decision.
If you are unable to reach a resolution, the case will proceed to court. But again, information exchanged during mediation is confidential, so you will not be able to use a statement made by the opposing party against them at trial.
Arbitration: Arbitration is also an out of court process, but it is more formal than a mediation. Arbitration involves a single arbitrator, or sometimes a panel of arbitrators, looking at the facts of your case. What differentiates it from mediation is that the arbitrator or panel of arbitrators do render a decision resolving the dispute to which both parties are bound, and typically the ruling cannot be appealed.
It is standard practice to include an arbitration clause in contracts, wherein the parties agree to binding arbitration instead of resorting to litigation. A reason for doing so is that it’s faster and expected to be less expensive than going to court. If there is no such clause in your contract and you file a lawsuit, a judge may refer your case to non-binding arbitration. If you are not happy with the decision in a non-binding arbitration under Florida law, you have 10 days to file a motion for trial.
No matter the reason, litigation is costly, time consuming, and has the potential to destroy what was previously an amicable or cordial business relationship. It also drains resources that could be better used towards your business. As you develop your contracts and if you do end up with a dispute in your hands, it is worth it to look into ADR to more quickly resolve disputes and mitigate losses.
If you’d like to learn more about dispute resolution, and incorporation of mediation and arbitration into your contracts, contact Sheryl Hunter at email@example.com to arrange for a consultation.
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