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What is alternative dispute resolution?

On Behalf of | May 5, 2021 | Business Litigation

Running a business in Chicago can be stressful and complex. Business owners and leaders must deal with a vast array of problems and situations on a daily basis. When conflicts arise and business operations are threatened, they may seek methods of resolution that are efficient, decisive, and comprehensive.

Some business disputes must be litigated in court. Others may be resolved through alternative dispute resolution. This post will discuss two forms of alternative dispute resolution that businesses may utilize to manage their internal and external complications. Readers are reminded that this post is informational in content and no part of this post should be read as specific legal advice. Business owners should turn to their controlling contracts and agreements to understand if they have alternative dispute resolution options to resolve specific matters. Attorneys who work in the business law field may advise their client on their options to use alternative dispute resolution methods.

Arbitration as a binding out-of-court resolution tool

One form of alternative dispute resolution that businesses may utilize to settle their disputes is arbitration. Arbitration is similar to litigation in that the parties present their claims and cases to a neutral third party. The arbitrator has the power to offer a decision regarding what it believes the outcome of the claim should be. Depending on the terms of the parties’ relationship and contracts, decisions made in arbitration may be binding on them or non-binding.

Mediation as a collaborative process to manage disputes

Mediation differs from arbitration in that it is a collaborative process. Parties who enter mediation work together to come up with solutions to their differences and settle their disputes with mutual agreement. They may work with a third-party mediator to help them work through their differences, but their mediator does not issue a decision regarding what they believe the outcome of the case should be. Generally, mediation is non-binding and the parties who enter it may and the process in enter litigation if it is not fruitful.

Not every business dispute has to be litigated in court. Alternative dispute resolution tools may help businesses avoid the headaches and costs associated with going to court. Before initiating alternative dispute resolution, it is important that a business and its leaders understand their rights. Attorneys who work in business law can advise their clients of how alternative dispute resolution may protect their interests and address their pending business complications.

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