Ohio entrepreneurs like you must know how to handle potential disputes. Though no one enjoys dealing with them, they happen to everyone. The best way to handle a dispute differs from situation to situation. But some possibilities include litigation, arbitration and mediation.
Arbitration and mediation sometimes get confused for one another. But they are both distinct practices. Each has its benefits and potential downsides.
Arbitration and mediation as tools to avoid litigation
FINRA looks at both arbitration and mediation as problem solving tools. They both differ from litigation, which relies on the court. Litigation is often saved as a “last resort”. Entrepreneurs turn to it when businesses cannot come to agreements on their own. The court fees are often expensive. Your business also becomes public record, which many wish to avoid. Not only that, but due to the negative impact of litigation, you may burn bridges.
Arbitration and mediation both allow you to avoid this. Your relationships with other business entities can sometimes make or break your success. No one wants to risk burning bridges because of that. But how do they differ?
How arbitration and mediation works
In arbitration, an arbitrator listens to all sides of the argument. Based on what they hear, they make a decision for all parties involved. This decision benefits every party in some way, though compromises are often involved.
Mediation does not involve a mediator making a final decision. They are there to help businesses collaborate and come to a decision on their own. They offer opinions and advice. But they do not make the final choice. The involved parties must make that decision.
Mediation and arbitration do not hold the same legal power as litigation. But they preserve relationships while saving you time and money. If possible, consider these options first.