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How do companies benefit from non-litigated settlements?

On Behalf of | Dec 3, 2021 | Firm News

There is a certain satisfaction in imagining the drama of a courtroom confrontation to resolve differences between two opposing factions. It is true that companies are often rivals, and a battle over competing claims, trade secret violations, or labor disputes seems to demand the winner-take-all approach that litigation offers.

But business entities in Louisville, Lexington and throughout Kentucky rely far more often on the delicate balance of agreements that keep operations and profits flowing, so taking a trade partner, supplier, or shareholder to court could spell the end of that relationship.

Fortunately, there are viable alternative dispute resolution (ADR) methods that present attractive alternatives to litigated disputes. ADR has become important especially in situations where all sides hope to preserve their relationships after the issues have been resolved.

The advantages of ADR for business disputes

One of the most important benefits of ADR from a business standpoint is its substantial savings relative to litigation. The discovery process is not only expensive, but also cumbersome and quite time-consuming. As time is money, the longer it takes to reach a settlement, the more costly it becomes. ADR processes eliminates most discovery and motions.

ADR is effective even for highly charged and complex disputes, as it allows both sides to retain some control over negotiated outcomes in a private process out of public scrutiny. ADR methods can effectively resolve merger and acquisition claims, construction cases, labor disputes, and even international business claims that would otherwise fall into the jurisdiction of international courts.

How business mediation works

In a mediation, there is a great deal of flexibility, and the outcomes are usually nonbinding. The parties agree to meet outside the courtroom with a mutually agreed upon neutral mediator trained in ADR methods, whose role is to help manage discussions to facilitate conflict resolution.

The mediator meets privately with each side to identify goals and priorities before bringing the parties together to discuss both their differences as well as a path forward in which each side will come away with some, if not all, of what they are seeking. As agreeing to compromise preserves business relationships, part of the outcome reflects this goal.

Not only do all sides have greater control over the outcomes, but a mediation lasts weeks while litigation can go on for months or even years. Finally, there is tremendous savings in a mediation without attorney and court fees, and the details of even high-profile disputes will remain private.