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Austin TX Business Law Blog

Saturday, August 28, 2021

Benefits of ADR in Business Disputes

Let’s face it, every business is likely to encounter some kind of dispute at one point or another. Competing management styles, difficult team dynamics, and other things can mean big headaches for a company even if it is otherwise thriving. Because of this, it can be important to have a plan in place to help address issues before they become out of control and jeopardize the wellbeing of the business. ADR can be a good option for this.

Benefits of ADR in Business Disputes

ADR, or “alternative dispute resolution,” refers to less formal means of resolving disputes outside of the courtroom. In ADR, parties to a conflict work collaboratively with a neutral party or panel in order to try and arrive at mutually agreeable resolutions to the problem. There are, in fact, several different kinds of ADR. Two of the more commonly employed ADR methods are mediation and arbitration. Knowing about the available ADR methods and what options may be best for your own situation can be important so you know which may be the best fit.

In mediation, the neutral third party is a mediator who works together with all parties to negotiate a mutually agreeable resolution. Mediators receive specialized training on resolving conflicts through negotiation techniques and managing various human dynamics. Effective listening skills are, of course, also important for a mediator to possess. The mediator is tasked with facilitating each party’s move towards a common ground. He or she may develop proposed solutions to the conflict. At the end of the day, however, the final decision on the conflict resolution is left to the parties. In arbitration, one or more arbitrators are tasked with listening to the respective arguments from all parties to a conflict. Usually, there will be a panel of three arbiters as opposed to just one arbitrator. Prior to arbitration, all parties must agree to abide by the decision rendered by the arbitrator.

In whatever ADR method you decide upon, there can be a wide variety of benefits. First of which is the fact that ADR is generally much more cost-effective than bring a dispute to court. Litigation can be expensive. The court fees and costs alone can run high. Furthermore, ADR usually will cost you less time than litigation. The court system is known for many things, but efficiency is generally not one of them. Save yourself and your business time with ADR solutions.

Litigation can jeopardize the well-being of a business in many different ways. First of all, it is disruptive. Pending litigation can be distracting and alarming to employees of a business. Furthermore, litigation is public and, therefore, subject to public scrutiny. Litigation can quickly tarnish a company’s brand and reputation. ADR, on the other hand, is confidential and closed to the public.

ADR also offers more flexible solutions to problems whereas court resolutions tend to be much more structured and narrow minded. Furthermore, parties have more power in coming to a resolution than they would in court proceedings, which means that everyone works together and becomes invested in the outcome of the resolution. This, in turn, can mean parties are much more likely to comply with the agreed-upon resolution.

Business Law Attorney

Are you interested in ADR for your business? Talk to the dedicated business law team at The Kumar Law Firm about your options. Contact us today.


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