Business conflicts are based on a myriad set of factors including subject matter, industries, cultures, geography, emotional and monetary concerns.  A conflict inflicts a cost on a business in terms of finances, time, resources, and impairment of organisational performance.  When direct negotiations stall, or even fail, the business must look to alternate methods for a solution, including litigation, arbitration and mediation.  In evaluating which avenue to pursue, a business will consider the following factors (although different businesses or circumstances may result in a different weighting of these factors):

A. Efficacy of result – A business seeking control over its destiny will prefer a mutually acceptable agreement rather than gambling on a winner/loser result determined by a party and circumstances beyond the control of the business. 

B. Time – a short time frame between onset of dispute and its resolution help maintain business momentum and focus on business goals.

C.  Confidentiality – public airing of a business dispute may serve to undermine public confidence and damage reputation, hampering business growth or even reducing market share or profit margin. 

D.  Reputation – hand-in-hand with confidentiality, business reputation is an intangible asset that requires careful safeguarding. 

E.  Cost – businesses (even "non-profits") remain successful by keeping costs, both monetary and non-monetary,  as low as practicable. 

F.  Risk – while risk is unavoidable for a business, the successful ones are able to minimize risk and take conscious effort to control risk to at least some extent.  

While litigation or arbitration may be preferable in some cases (such as need to establish a legal precedent, availability of protective legal remedies or importance of the matter to a wider audience), in most cases careful consideration of the factors described above will result in a decision to try mediation as the dispute resolution mechanism of first resort (with arbitration as a clear second choice).  The likelihood that mediation is the best dispute resolution mechanism for a business is enhanced when taking into account the flexibility that mediation offers on customizing a process to the needs of the parties (e.g., if time and cost are of paramount importance, the mediation can be set at the earliest practicable date and discovery can be streamlined).

Once the decision is made to use mediation as the dispute resolution process, a business should seek a mediator with at least the following characteristics:

• sufficient experience for the sophistication of the matter to be resolved
• adherence to the Codes of Conduct applicable to the Mediator and the mediation
• ability to maintain the level of confidentiality and trust needed by the parties both during and after the mediation

Conclusion

The author, Jay Lazrus, is an experienced attorney and neutral.  For more information, or to retain his services as a mediator or arbitrator, please visit his website at www.raegroup.com  or go to www.virtualcourthouse.com and select him as your neutral.  

My website contains information about my alternative dispute resolution services and an archive of my newsletters.  I encourage you to share this newsletter with anyone interested in issues pertaining to alternative dispute resolution.  The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Jay Lazrus of the RAE Group.  If you are interested in being added to my email list, please e-mail me at [email protected].