Businesses are increasingly turning to alternative dispute resolution (ADR) to resolve disputes, including mediation and arbitration, to decrease their legal fees and expenses. Some businesses also may include ADR clauses in standard business-to-business and consumer contracts to keep the time and expense of court proceedings to a minimum. At Provident Law®, we know that ADR can be the most efficient, cost-effective, and confidential way to solve your business disputes, no matter the issues. We use our decades of legal experience and skill to advocate for your interests during the ADR process. Contact a dispute resolution attorney at Provident Law® today and set up a time to meet with us about your case.
ADR Provisions in Business Contracts
Whether to include ADR provisions in contracts is a decision that is unique to every business. Furthermore, whether to include ADR provisions may also depend on the type of contract involved and the nature of the other party.
The time and expenses involved in protracted business litigation can be extensive. In some cases, litigation can bankrupt a business, particularly in the case of a smaller business. Therefore, proactively using ADR clauses is often an effective way to reduce legal costs.
Furthermore, while ADR proceedings are confidential, court proceedings are public. Public exposure from involvement in a lawsuit and potentially adverse rulings against your company can damage your business’s reputation. In turn, damage to your company’s image can be detrimental to its success. As a result, utilizing ADR rather than litigation to resolve a dispute can be useful.
Many standard ADR clauses in business, commercial, and real estate contracts require mediation before arbitration or litigation. For instance, this form of ADR is mandatory as per section 7 of the standard Arizona Association of REALTOR® Purchase Agreement, which most real estate transactions utilize. An Arizona dispute resolution lawyer can represent your interests throughout the mediation process.
The mediation process occurs in a safe and confidential atmosphere. Before mediation begins, both parties submit a written position paper or brief to the mediator, a neutral, independent third-party facilitator. The mediator may share these briefs with the other side depending on the mediation agreement.
During the mediation, both parties and their lawyers gather in one room with the mediator. First, the plaintiff or the party initiating the legal proceedings will present their side of the dispute. Next, the defendant or the responding party will then present their side of the dispute. Finally, the mediator can ask both sides questions about their respective positions, goals, and willingness to compromise.
After both parties have presented their positions to the mediator, the parties move to separate rooms. The mediator then moves between the two rooms, attempting to reach common ground between the parties and broker a mutually acceptable settlement. The mediator aims to drive the parties to reach a fair and reasonable settlement given the facts of the case, the applicable laws, and the industry.
The mediator will propose a settlement if the parties can compromise on important terms and approach a settlement. However, the mediator’s proposal or recommendation is not binding on the parties. In other words, the parties can accept or reject the settlement.
Some business contracts have arbitration clauses, which is another form of ADR. The Arizona Revised Uniform Arbitration Act, and in some cases, the Federal Arbitration Act, apply to arbitration proceedings involving your business. However, the parties may modify or waive the applicability of some provisions of the state arbitration act to suit their needs. Like mediation, arbitration is confidential.
Arbitration is more like formal court proceedings than mediation and requires some fees, such as the arbitrator’s and case administration fees, that do not exist in litigation. However, arbitration still is less costly on the whole than traditional litigation. For instance, while some discovery is permissible during arbitration, it generally is more limited than during litigation, and the standard rules of evidence are inapplicable. As a result, the discovery process is cheaper and less time-consuming.
Once a case goes to arbitration, the parties select an arbitrator following procedures outlined in their contract. Then, the parties each present their case to the arbitrator, who issues a decision. The arbitration may be binding or non-binding, depending on the terms of the contract. Unless both parties have agreed to non-binding arbitration, the parties have very limited appeal rights.
Contact a Dispute Resolution Attorney Today
We are here to analyze your business dispute, explore your options for resolution, and help you determine the best legal strategy for your case. If your business needs guidance and representation with a legal dispute, contact Provident Law® today online or call (480) 388-3343 to speak with an experienced dispute resolution lawyer.