Anytime there’s a business dispute, you’re at risk of losing everything. Take a look at these 8 tips to resolve business disputes without losing your business.
If your business is involved in a dispute that results in litigation, it could result in serious consequences. You might even risk losing your business if the court’s decision is not in your favor.
Just last year there was over $42 million dollars awarded in Equal Employment Opportunity Commission (EEOC) enforcement suits filed against companies and their employers. According to the EEOC’s official site, that amount rose to over $168 million back in 2004.
Many businesses cannot afford payouts that are this costly while continuing to fund their operating expenses. As a result, companies that are forced to pay might encounter dramatic setbacks.
Often, you can avoid these types of repercussions by settling business disputes out of court.
If you are facing conflict regarding your company, there are steps you can take to resolve the matter.
Read on to find out what you need to know to resolve business disputes without forfeiting your company!
8 Tips to Resolve Business Disputes Without Losing Your Business (or your mind!)
An article published by the Corporate Counsel Business Journal states that the estimated total cost of litigation is around $210 billion dollars.
On the extreme end, a costly dispute can wreck your business. Even established corporations have been known to crumble due to the consequences that arose from lawsuits filed against them.
The good news is that the most damaging of these can often be sidestepped if you know the secrets to resolve disputes when they arise.
1. Plan Ahead
Disputes are bound to happen from time to time. If you own a business long enough, you will likely encounter both internal and external conflict at some point during your career. But, when they do occur, it’s much easier if you have a plan already in place to help direct your actions.
Consider how you will handle disputes among employees, with disgruntled staff members, with other companies or organizations, and with clients. When drafting your business plan, include a recommended protocol to follow in these cases. Determine what should be done immediately (as soon as the conflict rears its’ head), and the following steps to attempt prior to any formal proceedings.
Of course, if a suit is filed, then your plan to resolve matters may go out the window. Should you encounter a lawsuit at any time, you should seek the advice of your attorney.
2. Include Dispute Resolution in Your Contracts
When drafting business contracts, it’s always a good idea to include dispute resolution practices as a mandatory step prior to either party pursuing legal action.
How you define dispute resolution is up to you, but you should make sure that the expectations are clearly written within the contract.
When partners have made a formal agreement, they are much more likely to follow the rules that they have agreed upon. And, this can save you from being blindsided should you encounter a major dispute down the road.
3. Attempt Informal Negotiation
You may be able to save your company money, time, and headache if you’re willing to negotiate with the offended party. This strategy stands the best chance of being successful the sooner you address the problem and offer to work through the matter informally.
Sometimes, a dispute can be laid to rest by simply acknowledging the issue and allowing the disgruntled the opportunity to be heard.
If there appears to be a solution that the party is pursuing, and you have the power to solve their problem, you might consider giving them what they are asking for, especially if it does not require much on your end. Perhaps refunding their fees and apologizing for “the misunderstanding” could stop the conflict dead in its’ tracks. In this case, if the amount is not unreasonable, this might be the smartest route to take.
You might offer a compromise that satisfies their complaint without admitting fault. If this saves your company from costly litigation, it could be well worth it, even if you have to make a small sacrifice to patch the problem.
Many people refuse to apologize because they think that this somehow asserts their guilt, and could be used against them should the matter result in legal action. Or, they let their pride dissuade them from a decision that could potentially save their business.
Pride has often been the downfall of many successful professionals and companies.
A simple apology might carry substantial weight. And, no one is required to admit fault if you choose your words carefully.
You might apologize for the confusion, or express sympathy for how they are feeling.
You would be surprised how many major disputes can be avoided just by offering a sincere apology.
5. Offer to Settle (without admitting fault!)
A study published in The New York Times reports that up to 92% of cases are settled without a trial. The Times also found that defendants who settle are more likely to receive a better deal than if the matter had been decided by the courts.
While settling out of court is an option, even once litigation has begun, you can often settle without ever having to involve the courts if the other party is willing.
You can always ask the complainant what it is that they want. When handled out of court, and without legal representation, most parties will ask for less than they would if advised by an attorney. So, even if you have to come off of some cash, it still may leave you in a better position in the end.
Again, there is no need to admit fault by yourself, your employees, or your business. You can offer to settle in an effort to appease the other party without admitting any wrongdoing at all. Just make sure that you are careful with your words while offering your condolences for their troubles.
6. Talk it Over With Your Staff
It may go without saying, but if the dispute involves members of your staff, you should always discuss the matter with whoever is personally involved prior to making a decision on how you will handle it going forward. After hearing your staff’s interpretation, you are likely to have a better idea of whether you should attempt to settle or have a legit reason to fight back.
It also may help to discuss the matter with your superiors or your highest ranking employees who may be able to offer advice or give you a fresh perspective. Perhaps they have encountered similar situations throughout their career and can lend their knowledge or understanding. Or, they may be able to provide some guidance and direction on how to best solve the problem without increasing tensions.
If you have a close-knit team that you trust, you might consider bringing the dispute before them in a group effort to arrive at a solution.
After all, should the matter ensue in a costly court battle, there is a good chance that your staff will share the weight of such repercussions. If they can help prevent it from getting to that point, it will likely benefit the business and all of its’ employees.
Mediation is sometimes required, either by the courts or as part of a contract that exists between you and the other side. Other times, it considered as an alternative to arbitration or litigation proceedings.
At any rate, mediation should be seen as a last-ditch effort to avoid more formal proceedings, which are usually accompanied by higher costs, an overall greater investment and more serious risks for your business.
Even if it appears that the other party is not intent on giving mediation a fair shake, you should approach the process with an open mind and the hopes that it will result in a resolution.
Things to Consider When Approaching Mediation
Mediation is cheaper than litigation or arbitration, which are likely the next stops after this one. And, the parties maintain control over the outcome in a way that isn’t usually afforded to them should the dispute extend beyond this point.
Depending on the nature of the dispute, another advantage to mediation is that you have the option to choose a mediator who is skilled in the subject matter to assist in settling the dispute.
When dealing with corporate litigation, when the matter reaches court you may find that the jury, and possibly even the judge, have difficulty understanding the details of the case. That’s why it can be an advantage to have an objective third person with expertise in the area to serve as your mediator.
Mediation typically considers the legalities of the case, as well as the emotional and psychological aspects.
If a dispute has reached this point, it will likely be in your best interest to take the matter as seriously as possible and give your best effort in reaching a solution that satisfies your opponent. Otherwise, there is a good possibility that it will progress to the next level.
8. Seek Legal Counsel
If you encounter a dispute that might lead to litigation, you don’t have to wait to consult a lawyer. In fact, if you’re worried about a lawsuit, talking with an attorney might be a good idea.
And, if you’ve gone through the above suggestions and the other party is unwilling to discuss or settle the matter, you should speak with your lawyer.
Do you have questions or need the advice of an attorney with experience? If so, you can contact Savage Villoch Law, PLLC, and set up an appointment for a consultation.
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