What is the Best Way to Handle a Business Dispute?

A business dispute can arise for a variety of reasons in business. Handling these situations improperly can cause serious legal situations that result in major capital expenditures. A few ways to properly handle a business dispute is to gather information regarding the situation, discuss problems with a decision maker on the other side, request mediation or arbitration rather than entering a lawsuit and request mutual agreements that create a beneficial solution for both parties.

Depending on the size and scope of the business dispute, extensive documentation may be necessary. This involves gathering all information on agreements prior to the dispute, documenting conversations regarding the issue and collecting internal working papers that may relate to the dispute in question. Having all the information necessary to resolve a dispute allows a company to review the exact issues or steps that led to the dispute. This also helps owners and managers to remember things as they happened, rather than how they think things happened. Additionally, this information is often needed by lawyers or attorneys who will review the information.

When discussing a business dispute with another party, owners and managers should only discuss the problem with someone who can make decisions. This avoids adding non-essential parties to the mix when handling disputes and creating more problems through potential communication problems. Having multiple contacts can also result in a “he said, he said” type of situation. Information flow may face serious restrictions if one party cannot deal directly with a decision maker who is more willing to avoid serious legal liabilities if the business dispute continues down an irreconcilable path.

Prior to entering a full blown lawsuit, mediation or arbitration may help resolve the business dispute. Mediation typically comes before arbitration, although companies may prefer one process over another. During mediation, a third party will help facilitate a meeting between the two parties. This person acts as a go-between that helps bring the parties together and discuss the situation. Mediation does not always, if ever,) result in a binding agreement for resolution.

Arbitration is a more formal process where two parties will meet with an individual who will make a decision for resolution. This is certainly more binding than mediation but may still result in a lawsuit. The arbiter will hear both sides of the dispute and then make the most mutually beneficial decision for both parties. During this process, each side should only request solutions that do not result in a significant disadvantage for either side.