When there is some kind of legal dispute in the business world, there are multiple ways to bring it to a conclusion. Business owners in Texas should be aware of these approaches and how they differ in terms of cost, timeline, and structure.
Three Ways to Resolve Disputes
There are three primary resolution options for a dispute, and they are arranged on an escalating spectrum of seriousness. Going higher up the spectrum raises the stakes, makes the process more formal, and also increases the legal costs of carrying it out to the end.
The first type is mediation. In mediation, there is a neutral third party who meets with the two disputing parties to guide them to a resolution that they can agree on. The third party is often a retired judge or other experienced professional.
In arbitration, the third party’s role expands. Rather than being a guide, their decision now has legal weight and force – they act as a judge whose ruling determines the outcome in a structured way.
Lastly, there is litigation. Litigation involves going through a formal court process with lawyers on both sides arguing cases before a judge and sometimes a jury. Litigation is the most complex and expensive way to resolve a dispute, but also the most final approach in terms of power.
Conflicts can move between levels as well. For example, a labor dispute may start off in arbitration, then escalate to litigation if one side believes arbitration is inappropriate or refuses to negotiate in good faith.
Resolving business disputes effectively depends on a good understanding of these categories and how they might apply to any given conflict.