Texas Business Attorneys

Business Litigation Center - Alternative Dispute Resolution

Alternative dispute resolution (ADR) is the name for various means of settling disputes, including arbitration and mediation, without undergoing traditional litigation. ADR is a popular way to resolve business disputes because it is usually less costly and quicker than traditional litigation. Businesses faced with legal conflicts should consult a trial lawyer to determine whether they can use ADR to avoid drawn-out courtroom litigation.

Arbitration

The reason that many parties resolve their disputes through arbitration is that it is usually much quicker and less expensive than court litigation. In arbitration, the parties to a dispute hire a neutral third party to hear each side's argument and issue a decision, much like a judge.

Today, many businesses include arbitration clauses in contracts for sale of goods, services, and other exchanges. The clause states that any legal conflicts relating to the subject of the contract will be decided by arbitration rather than by litigating in court. In most cases, the parties agree beforehand to be bound by the arbitrator's decision, precluding the possibility of relitigating the issue in court. However, sometimes arbitration is nonbinding, allowing the parties to resort to a court of law. The parties can also agree to allow some mechanism for appealing an arbitration decision, but most arbitration agreements simply provide that the initial decision is final.

Mediation

Mediation is an even less formal means of conflict resolution than arbitration. Mediation involves an unbiased, trained mediator hearing the parties' arguments and attempting to offer a mutually acceptable compromise. Mediators often succeed by facilitating calm, reasoned discussion between the parties and offering them an unbiased view of the merits of each side's case.

A mediation session is relatively short-usually concluded within one day. The process is broken down into steps: opening statements, discussions, private caucuses, negotiations, and finally a suggestion for settlement by the mediator, rather than a binding decision as in arbitration. The mediator charges a fee, but that cost is usually much lower than the cost of litigation or even arbitration.

Summary

ADR has become very popular for resolving business disputes because it allows business owners to save valuable time and money by avoiding traditional litigation. Arbitration and mediation have also become more common due to the prevalence of contract provisions requiring one of these methods to resolve future conflicts.

A skilled Texas business attorney can help you to determine whether ADR is a conducive method for resolving your business dispute.

< Back to Business Litigation Center Home