NFIB

When Minds Can't Meet: Conflict Resolution Part II
03/ 28/ 2002


Last week's Workshop began a discussion about conflict resolution, outlining the steps to take when business disagreements and disputes arise. Today's Workshop continues a description of mediation and arbitration, which maybe undertaken when two parties can't come to a meeting of minds about a particular situation, or can't reach a mutually satisfactory agreement in a negotiation.

It's always beneficial for arguments or disputes involving your business to be handled as inexpensively, efficiently, quickly, and privately as possible. Going to court is usually considered the last resort because of possible expenses involved: attorney's fees are steep, and the meter is going throughout initial meetings, letters back and forth between parties, briefings, depositions, and court time. Both mediation and arbitration are almost always less expensive than going to court, even when attorneys are used by the disputing parties. Both can be costly, however, depending on the length of time required for attorneys, mediators, and arbitrators to be on the job. The mediator/arbitrator is frequently asked to decide how the costs of arbitration are to be divided between negotiating parties.

TV makes it seem like court dates can be set up within the hour, but that is hardly the case. Using the legal system can be excruciatingly slow, with decisions frequently taking years or even decades. Mediation and arbitration hearings, on the other hand, usually can be set up fairly quickly, facilitating situations that are time sensitive. Also, issues taken to court automatically become public, meaning that everyone, including reporters, will know about the details of your situation. For these reasons, businesses frequently use neutral, unbiased, confidential mediators and arbitrators to resolve deadlocks.

Mediation and arbitration have the distinct advantage over going to court in that a good mediator/arbitrator will work closely with both parties to find a solution that is as beneficial as possible to both sides -- something a court may have trouble accomplishing. An effective mediator will even make impartial suggestions and counsel both sides about the effects of suggested resolutions.

Arbitration, which is usually considered binding, is similar to going to court in that the arbitrator's is comparable to a judge. Decisions of arbitrators can be enforced by the court, even when one of the parties disagrees with the resolution.

Many contracts contain clauses outlining the type of mediation or arbitration that will be undertaken should the parties disagree. Also frequently included in contracts is the location where mediation or arbitration will take place. This can become important because, clearly, lengthy mediation or arbitration discussions are more expensive when travel and added attorney fees are present. Before entering into a contract that includes mediation or arbitration clauses, be sure that you understand all terms and factors involved.

In all cases, mediators and arbitrators must be mutually agreed upon by both parties. Even when a contract states that mediation or arbitration will take place, one party cannot simply appoint the mediator/arbitrator.

Mediators/arbitrators can be located in several ways. Since many types of business and industry involve special technical knowledge, mediators/arbitrators who are experienced in the field may be more effective, and may be able to cut right to the essence of a dispute without taking time to become familiar with the field. For this reason, consider referrals from any associations within your industry when searching for mediators/arbitrators. Also, mediators/arbitrators can be found under the heading of "Mediators" in most Yellow Pages. You'll quickly discover that most mediators/arbitrators are attorneys. This is natural because often complex legal matters are involved in decisions.

Mediators/arbitrators will require that both sides gather detailed information to present at meetings. Both parties (including attorneys for the parties, when desired) convene at a designated location, with each side presenting its case in detail. Such meetings can take place over a number of days, although often even relatively complex cases can be presented in a single day - with the mediator/arbitrator taking additional time to reach a final decision.

This article should be considered only an introduction to the field of mediation and arbitration. Every situation is unique, and you should consult your own attorney or business adviser when considering the use of mediation or arbitration. Also, do not enter into mediation or arbitration before fully understanding the process and all consequences of decisions.

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