Not everyone wants their day in court. If you have the misfortune of being embroiled in a business dispute, the cost, time and publicity involved in court proceedings can leave you feeling like a loser regardless of the outcome.
For small businesses, these drawbacks can be more acute. Just this year there were further hikes in court fees, increasing the cost of commencing proceedings by up to 600% in some cases. How then can you best resolve your dispute away from the courts? It's time to look at the alternatives.
What is alternative dispute resolution?
Alternative Dispute Resolution (ADR) has been around for centuries, but has gained increasing popularity with the business community in the past 40 years.
It is an umbrella term to describe a range of procedures and techniques to resolve disputes without court intervention, usually with the help of a neutral third party.
In many ways, it's an easy sell. It's often cheaper, quicker and less stuffy than court proceedings; it's confidential (reducing reputational risk); and the parties can even pick their dispute resolver and tailor the process according to their needs.
ADR is less about combat and more about preserving business relationships. There are many forms of ADR, but the most popular are mediation and arbitration. Mediation is a non-binding process where a neutral person assists the parties to devise their own solution. Arbitration involves a sole arbitrator or a three-member Tribunal weighing the evidence and reaching a legally binding decision.
Preparing for the worst
Just as we all loathe going to the dentist, business owners hate consulting lawyers or even thinking about the possibility of a dispute until something actually goes wrong. But it pays to be proactive. Having an airtight dispute resolution clause in your business contract with clients or with suppliers can save you money - and it could save your business.
Unlike with litigation, in order to use any ADR method there must be agreement between the parties to do so - that's difficult to achieve in the midst of a dispute.
So legally-savvy business owners should think ahead and incorporate dispute resolution clauses into their contracts at the outset. This will set out what will happen in the event of a dispute under the contract. That could be an agreement to negotiate, mediate or arbitrate - or do all three (known as a multi-tier arbitration clause).
You can find free dispute resolution clauses on The Chartered Institute of Arbitrators (CIArb) website.
Help is at hand
Recently, we've seen the emergence of mediation and arbitration schemes aimed specifically at small businesses and/or for lower value disputes. The CIArb's Business Arbitration Scheme, for instance, allows small businesses to resolve their dispute for a fixed cost and promises a legally-binding award within 90 days of the appointment of the arbitrator. The scheme is simple enough for the layperson to understand so parties can represent themselves if they wish.
The Government has also recently introduced a Small Business Commissioner to handle late payment complaints and supply-chain bullying, and to direct parties in dispute to established ADR providers like CIArb.
ADR should no longer be a confusing or frightening prospect for small businesses. By researching and planning ahead, small firms can take control of their own dispute management strategy and be well-placed to deal effectively with any disputes that arise - the alternative way.
Sponsored post. Copyright © 2016 Written by Keisha Williams on behalf of the Chartered Institute of Arbitrators (CIArb), a leading professional membership organisation representing the interests of alternative dispute resolution (ADR) practitioners worldwide. With over 14,000 members, CIArb supports the global promotion, facilitation and development of all forms of private dispute resolution.