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Should you use ADR for your next business dispute?

For many businesses, when a dispute with other businesses develops they naturally default to thoughts of traditional litigation. They want to sue in court to resolve the matter. Then they sit down with their attorney and find out how much such litigation may cost. Some may still insist on traditional litigation, but others may seek a less expensive way to fix their problem.

This is why alternative dispute resolution (ADR) developed, as a means of avoiding much of the costly and time-consuming procedure and evidentiary rules that control courtroom litigation. The goal of ADR is to allow the parties to come to a settlement without having to go through the complex and expensive procedure that leads to a trial.

ADR is not a single, monolithic procedure, but can use a variety of methods to help the parties reach a settlement. It includes arbitration, mediation, the use of neutrals, mini-trials and other, custom processes. The process can be very flexible because you and the other party contract to the process to serve your needs.

You may use a mediation process, where an agreed-upon, neutral third party will work to help each party understand the issues. You may opt for binding arbitration, where an arbitrator or arbitration panel hears arguments and makes a decision.

Arbitration is very popular, as it can save money by reducing some of the procedural requirements of trial litigation. However, you must understand how the arbitration works and realize that with the cost savings you lose some procedural safeguards.

Which method of ADR is right for your business may change depending on the situation and it is best to thoughtfully examine the pros and cons of each form and the types of situations where each method is best suited.