Business Dispute Resolution: 5 Common Myths

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Business Dispute Resolution: 5 Common Myths

23 April 2021

When it comes to disagreements in business, you may assume that the courtroom is where everything gets settled. Dispute Resolution expert, David Mallinson looks at Alternative Dispute Resolution (ADR) strategies such as mediation and arbitration which are increasingly popular with businesses of all shapes and sizes.

In many cases, contentious issues can be dealt with in a sensible, mutually agreeable and legally binding fashion without undertaking the significant hassle and expense often associated with a court action.

ADR approaches are not always well-known and well-understood by business owners and managers, who frequently may not realise what their options are - or have misguided notions about what dispute resolution can entail.

In this article we are going to look at some of the most common misconceptions concerning Alternative Dispute Resolution (ADR) - and set the record straight on several key points.

Myth 1: Alternative Dispute Resolution is expensive

Sometimes, business owners may be under the impression that ADR strategies can be pricey. While the cost associated with a particular alternative dispute resolution process can differ on a case by case basis, the reality is that ADR approaches take much less time to complete than litigation. Thus, the costs are usually much lower. However, in some certain situations where the dispute cannot be resolved via an alternative method, it may still end up being resolved via a formal Court based process. For this reason, choosing a dispute resolution strategy is perhaps best thought of as picking the right tool for the job - and an expert dispute resolution solicitor will be able to outline the options and give advice from their years of experience.

Myth 2: Mediation is rarely effective for big commercial cases

After all (the logic goes), you never seem to hear about large-scale cases getting settled via mediation - so does this mean that nobody uses it? In fact, it is often by design that many of these cases stay away from the public eye. One of the advantages of resolving a dispute via mediation is that the outcome of the matter can be kept private, with a confidentiality clause in the settlement agreement preventing both parties from giving public exposure to the mediation and its outcome. Big companies certainly do use mediation to settle their disputes when appropriate, and another advantage of doing this is discussion topics and related documents brought up during the mediation process cannot later be used again if the matter does go to court. For both parties, this can help limit the public exposure to certain aspects of discussion.

Myth 3: It is always worth going to court if you have a good case

It may seem at the outset that your case is so strong that taking your opponent to court would be an obvious decision. However, it is important to realise that there are no guarantees in litigation. Even if your case seems that it would be a sure-fire win for you, there are many factors which may affect the judge's verdict on the day. For example, you may find you are let down by one of your witnesses - or there may even be new information introduced by a court order that significantly weakens your position. In addition, even if you do win the case it may still be a matter of debate as to whether or not it was "worth it". Litigation is an extremely expensive and time consuming process, and even in victory a participant may ultimately end up out of pocket as a full recovery of the legal costs is not guaranteed. By contrast, mediation and arbitration strategies are significantly less expensive, and in many cases even an unfavourable outcome can work out much cheaper than the costs of taking your opponent to court. It is also the case that ADR strategies can afford both parties more control over the process (such as being able to decide who to appoint as an arbitrator, for example, whereas in court you would have no say over the identity of the judge). For these reasons and others it can be a big mistake to assume that going to court is necessarily your best option.

Myth 4: Mediation always leads to compromises

Given that a mediated outcome hinges on the agreement of both parties, it might seem logical to imagine that the process can only ever produce solutions of compromise - where neither party gets what they really wanted. While mediation is designed to help both parties find common ground and reach a mutually beneficial solution, nobody is forced to accept any terms they find unfair or unfavourable. The mediation process can conclude with the result that no agreement was reached - or only partial agreement on certain points. There are no penalties for failing to come to an understanding - and if the mediation process proves to be unsuccessful, it has little bearing on your chances of a successful outcome later in court if you decide to take that approach.

Myth 5: Mediation leads to a "verdict"

Many people think about resolving a dispute via mediation as if it were arbitration or a court case - which is to say, that they need to make a case to a third party in order to receive a "judgement" to settle the matter. In reality, a mediator's role is not to make a verdict one way or another, but simply to facilitate a good voluntary settlement of the matter between the parties. Parties to mediation do not “present their case” to the mediator (although the mediator will review the facts of the matter at the start of the case). Instead, they use the mediator as a conduit for discussing possible avenues of resolution.

However, although no "judgement" is issued as a result of mediation, this does not mean that the parties are not bound by the outcome. At the end of the mediation process, a legal agreement is drawn up and signed by both parties to make an agreement binding.

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Business dispute resolution

In many situations, alternative dispute resolution strategies can be highly preferable to settling a disagreement in court.

There is a time and place for each approach, and selecting the right option can sometimes save you from a significant amount of wasted time, expense, and disruption.

With the help of an experienced dispute resolution solicitor, you can make an informed and sensible decision as to which approach you will take - and which path is the most appropriate for your business.

Resolving an existing dispute

If you are involved in a business dispute it is important to act quickly. Our team has a reputation for its strong commercial approach which achieves swift and favourable outcomes for our clients. Contact us now for further advice.

Girlings has offices in AshfordCanterbury and Herne Bay.

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