The Pros and Cons of Using ADR in Your Business Litigation Dispute

Operating a business always carries the risk of legal disputes between you and various parties. Whether disputes develop between you and your partner, employee, supplier, landlord, contractor, or another party, you will need legal advice and representation to resolve the matter in your favor. A business litigation lawyer at Kramer Green can represent your interests throughout these disputes to reach the most expedient and positive resolution possible. Using alternative dispute resolution or ADR techniques is one way to minimize the time and expense involved in traditional litigation and still achieve your objectives.

Not every business-related dispute ends up in the courtroom, with a judge or jury deciding your fate after a lengthy trial. Instead, most legal disputes are resolved through a settlement or an agreement between the parties involved. The parties may settle through informal negotiations through their attorneys, or they may settle the case through alternative dispute resolution (ADR), such as mediation or arbitration.

Understanding ADR: Arbitration and Mediation

Florida Statutes §44.1011(1) defines arbitration as “a process whereby a neutral third person or panel, called an arbitrator or arbitration panel, considers the facts and arguments presented by the parties and renders a decision which may be binding or nonbinding.” Some business contracts require the use of arbitration rather than litigation. An arbitrator’s decision may be binding, meaning that the decision is final, and the parties must accept the decision. However, in other cases, the arbitrator’s decision is nonbinding, meaning that one or both parties can challenge that decision further.

On the other hand, under Florida Statutes §44.1011(2), mediation is “a process whereby a neutral third person called a mediator acts to encourage and facilitate the resolution of a dispute between two or more parties.” The mediator’s role is not to make a decision for the parties but to help the parties reach their settlement. Mediation is a non-adversarial process that is much less formal than arbitration or traditional litigation and aims to find common ground between the parties to reach a mutually acceptable resolution of the dispute. The mediator cannot decide for the parties or force them into any settlement.

ADR Pros and Cons

In some cases, your contract or your local court rules may require you to engage in a particular type of ADR, at least initially. However, if ADR is simply an available option, you must consider its appropriateness for your situation and, if so, which option is best for you and your business. Both types of ADR have pros and cons that you must weigh as you consider your options.

Both types of ADR tend to be quicker and less expensive than going through litigation. Therefore, rather than being caught up in protracted and costly litigation that takes you away from running your business, you can focus your efforts and resources on your business sooner by resolving the dispute more quickly. ADR rules and procedures also are less formal and more relaxed than the traditional court setting, and the parties can agree to select a mediator or arbitrator. In contrast, they usually cannot pick a judge to hear their case in court.

You also can shelter your business from the negative publicity that a lawsuit can bring, especially in a smaller community. Court filings and lawsuits are public records that anyone, including the media, can access. If your business dispute involves salacious allegations or matters you would rather keep private, then ADR may benefit you. ADR proceedings are private and do not become matters of public record, whether successful or not.

However, ADR also has some disadvantages. For example, mediation may be ineffective and a waste of time and money if one or both parties are entrenched and unwilling to negotiate. Likewise, mediation is unlikely to resolve the dispute if one or both parties are unwilling to discuss matters openly. Furthermore, even if the parties can settle through mediation, it may only be legally binding if the parties take immediate steps to make it so.

Arbitration also has some disadvantages. Unlike in a traditional lawsuit, if the arbitrator rules against you in a binding arbitration, you have no right to appeal. The informality of arbitration can be an advantage, but it also has its downsides. For instance, you lack procedural safeguards during arbitration, making it difficult to ensure that the other party has properly disclosed all documents. Likewise, you may be unable to take advantage of certain technical defenses during arbitration, because arbitration is not a formal court proceeding.

Furthermore, arbitration tends to be more costly than mediation. Finally, unlike mediation, arbitration still has a “winner” and a “loser,” similar to a court case, which may not make it as appealing as an option.

We Can Help You Protect Your Business

The business litigation attorneys of Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. have the skills and knowledge necessary to assist you throughout any business litigation that you might encounter. We know how important your business is to you, and we take all actions needed to help you protect it.

Together, we can work to resolve business-related legal disputes as they arise, whether through ADR or litigation. Call our office today at (954) 966-2112 or reach out to us online to set up an appointment and learn more about the legal services that we can offer you.

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