Disputes are commonplace in the business world. Whether between suppliers, clients, customers, or competitors, most disputes are capable of early and informal resolution. But not all disputes will come to an end that way. In the life of every business, there are sure to be times where disputes rise to the next level. So what do you do if a serious dispute is threatening your business? There are a few options available to you, but the first is the easiest: remain calm. Business disputes can be frustrating, and they can drive us to take steps or make comments that we wouldn’t usually make. The first thing you need to remember is that those early stages may one day be put before a court. So, before you respond to a party with which you’re in dispute, ask yourself this: how would this sound in court?
The second step you need to take is to get in touch with an experienced commercial lawyer. Managing disputes is a speciality of any good business lawyer, and your lawyer’s insights will give you an early advantage. Essentially, a lawyer will be able to assess your position and the risks currently surrounding you. With that knowledge, you can make a more reasonable decision on how to progress. Most importantly, though, a good lawyer will help you ensure that you do not make your position worse. From the moment you engage a business lawyer to help you, your dispute will move closer to resolution.
Dispute resolution generally takes two forms – here’s what they entail
As far as the law is concerned, there are two forms of dispute resolution. The first is known as alternative dispute resolution, or ADR for short. The second is known as litigation, which involves judicial intervention. As a general rule, ADR is far preferable to litigation. There are plenty of reasons for that, and we will examine them in some more detail shortly. But the primary takeaway, when it comes to ADR, is this: it’s generally cheaper and faster!
Pre-litigation settlements: the preferred form of dispute resolution
Alternative dispute resolution is a blanket term that encompasses things like mediation, conciliation, arbitration, and other informal methods of dispute resolution. In a business dispute, you’re likely to encounter mediation more than anything. Mediation involves the disputing parties coming together to consolidate their positions. In an overwhelming majority of cases, business disputes are partly attributable to breakdowns in communication. In a mediation, you will be given a chance to put forward your position in a calm and reasonable environment. So will your counterpart, and you may find that you share some common ground. In a mediation, parties are able to admit their mistakes, if any, and sometimes agree on terms by which the dispute may be settled to everyone’s satisfaction. Mediations involve the disputing parties, their lawyers, and an impartial mediator who will see that the mediation runs smoothly. Good commercial mediators generally possess a lot of experience in the field of business, and have a background in commercial law.
Of course, there are plenty of times where ADR doesn’t quite work. Sometimes, a mediation can be a fulfilling and worthwhile experience, but still leave some gap between what either party is prepared to accept by way of settlement. In other scenarios, one party may simply refuse to engage, or become combative. In either case, the next step is usually litigation. Keep in mind, though, that there is no limit to the number of mediations that can occur in the context of a dispute.
Litigated settlements or trial: here’s what this involves
Litigation is the term used to describe a dispute that has become the subject of court proceedings. Litigation is commenced when one party to the dispute – the plaintiff – lodges a statement of claim in court. Once that has been served, the other party – the defendant – needs to file a defence within 28 days. If you are served with a statement of claim, it is vital that you seek immediate legal advice.
However, when a claim is litigated informal dispute resolution is still possible. You can continue to negotiate with the other party in an effort to resolve the claim. You can also continue to mediate. If you initiate mediations during a dispute, a judge is likely to look favourably on your conduct if the matter proceeds to trial. The courts prefer matters to be settled without trial, because of the time and money involved in running them.
Understanding litigation as a form of dispute resolution
To understand the value of pre-litigation settlement, you need to understand what litigation involves. Before you seek to litigate, consider the value of the claim, and the commercial implications of succeeding or failing. Is the claim going to yield greater value than the money you spend on legal fees? Will a loss in court damage your commercial reputation and relationships? Those are all factors to consider. Then there’s publicity; court decisions are generally made public, along with all the evidence and documents involved.
There’s also a serious practical element to litigation. A common mistake made by litigators is to pursue legal action against a party that is not able to pay the damages being sought. Such situations can result in a victory at trial; but that victory may not count for much if the losing party can’t pay what they’ve been order to pay. Finally, and perhaps most importantly, there’s the unpredictability of litigation. Sure, you can mount a strong case if you are pursuing a legitimate legal cause. But to prove your case in court can still be challenging. The rules of evidence mean that only certain types of evidence can actually be admitted before the court. And even when admitted, there’s the possibility that your evidence won’t convince the judge. Ultimately, you can’t control the outcome of litigation. And although it’s necessary at times, it’s best avoided for that reason.
If a dispute is looming for your business, here are some preliminary steps
If a dispute looks imminent between your business and another party, there are some early steps you can take. First, consider how your conduct will look if described in court. Is there any chance that it could have an adverse effect on your prospects of success? During a dispute, it is important to act reasonably and courteously. You should always assume that your dispute will end up in court, but work hard to prevent that from occurring. Secondly, get in touch with a lawyer. Even if you only get some initial advice, you’ll still be better off for it.
Commercial lawyers are skilled in dispute management and resolution. They will guide you through the ADR process, and ensure that everything is done to avoid going to court. And remember, if your dispute goes to court, all your conduct will be scrutinised by a judge.
If you receive correspondence from a lawyer, you should seek your own legal advice
There are some general hints that a problematic dispute may be coming your way. If you’re alert to them, you can take steps early. A common precursor to a commercial dispute is correspondence from lawyers. If you’ve had a disagreement with another party, you may start receiving emails or letters from their lawyers. If that occurs, you should always seek your own legal advice before responding. Even if the correspondence seems relatively innocuous, it’s always best to get independent advice. Again, that’s where an experienced business lawyer will offer you an edge.
Developing rapport with your lawyer will give them an insight into your business, and operating style. With that insight, your lawyer will be better placed to tailor solutions to your needs, and those of your business. So get in touch with an experienced commercial lawyer today if you are facing disputes relating to your business. The more you try and resolve it now, the better your prospects in the long run.
The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Business people should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.
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