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Contracts
and Claims
Timely articles covering the most pressing issues
facing construction firms in the Midwest
Four ways to work out
business disputes
by Giuseppe Leone – Business
and Workplace Mediator
articlecity.com
KANEOHE, HI October 23, 2005 –
Business owners have four options to resolve
disputes with partners, vendors or customers.
Each option is based on different assumptions,
and entails a different cost. Therefore, it pays
to understand them better.
Option #1 – Direct negotiation
Direct negotiation is certainly the cheapest –
but not necessarily the easiest – way to
resolve a conflict. A good place to start, is to
get clear about what one wants, why, and how much
one cares for the future relationship with the
other person. The next step is finding out how
the situation looks from the other person’s
perspective. This task requires effective
questioning, listening, and observing. The final
negotiation step is crafting an agreement that
both parties believe to be better than all other
alternatives.
To negotiate successfully one needs some
planning, communication and negotiation skills.
Without them, it is easy to end up with no deal,
or a bad deal, or even a personal war.
Option #2 – Mediation
The goal of mediation is not to find who is right
or wrong, but how the problem at hand can best be
resolved. Mediation is a process in which parties
who disagree meet with a neutral third party, who
facilitates their negotiations. The mediator
doesn't have any decision-making authority. The
parties decide how to resolve their problem, in a
way that is mutually acceptable.
Since mediation is confidential, mediation
discussions and materials are not admissible in
court. In a sense, when people mediate they have
everything to gain and nothing to lose. If they
are able to reach a mutually acceptable agreement
with the mediator’s assistance, that’s great.
Otherwise, they can still use the remaining two
options. And in that case, whatever they have
said or heard, offered or counter-offered during
mediation, doesn’t matter.
Option #3 – Arbitration
The business dispute is submitted to a neutral
arbitrator, who examines the evidence, listens to
the parties, and renders a binding decision. The
conflicting parties must accept the
arbitrator’s decision, no matter whether they
like it or not. Arbitration is past-oriented, and
requires a certain amount of fact-finding.
Therefore, generally it takes more time (and
money) than mediation, but less than litigation.
Option #4 – Litigation
The fourth option is to let the judge decide
which party is right or wrong, based on the facts
and the law. In actuality, though, the vast
majority of civil cases never get that far (some
statistics say up to 90%). They settle out of
court. A few days – or even hours – before
the trial, the two conflicting parties, assisted
by their respective attorneys, prefer to
negotiate their own agreement, rather than
running the risk of losing in court.
For business owners – as well as for anyone
else – litigation has two major drawbacks.
First, it inevitably has a detrimental effect on
the future relationship between the parties.
Second, it can be quite expensive in terms of
time, money, and stress. Nonetheless, when a
business dispute cannot be resolved any other
way, litigation is a valid option.
About the author
Giuseppe Leone is a Business and Workplace
Mediator. Past President of SPIDR (Society of
Professionals in Dispute Resolution) Hawaii
Chapter. Mediator for Hawaii District Courts.
Email: mediationplus@yahoo.com
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