It is a problem common to most businesses: How to resolve payment disputes without:
- irreparably damaging business relationships;
- spending all your money on lawyers; and
- losing countless hours responding to legal paperwork.
In times gone by, the lawyer’s answer to any dispute was to file in court and let the judge decide. But times have changed, businesses must do more with less, and being tied up in litigation is something to be avoided by both sides if possible.
Types of ADR
Thankfully, we now have a full range of methods for resolving disputes outside of court, and often these methods will be mandated in the contract as a prerequisite to taking the matter to court. Known collectively as ADR (Alternative Dispute Resolution), the most common methods are:
- Negotiation / Informal Settlement Conference
Other common methods include conciliation, neutral evaluation, and arbitration. However, this article focuses on negotiation and mediation as they are the more flexible and inexpensive options.
Business benefits of ADR
ADR offers the chance to:
- Preserve business relationships
- Minimise the time required to resolve a dispute
- Keep the dispute confidential
- Keep legal costs to a minimum
- Arrive at a mutually agreeable solution, rather than having a judge impose a solution on you
- Avoid the hassle of complex court procedures
However, the effectiveness of ADR largely relies on the skill of the lawyers involved. ADR is a very different game to litigation.
The key difference is that in litigation the solution that ends the dispute must be accepted by the judge, whereas in ADR the solution must be accepted by the other party. For this reason, the adversarial and combative tactics of litigation are usually completely counter-productive in most ADR. Quite simply, it is difficult to get agreement on anything if you get the other party’s back up.
To give disputes the best chance of settling with a minimum of time and expense requires a lawyer who can:
(1) Apply emotional intelligence in their dealings with the other parties, to keep the negotiations rational and productive
(2) See the dispute from all angles and advise on strategically reasonable offers
(3) Narrow the issues in dispute before the parties meet so that negotiations can run efficiently and focus on the real issues
(4) Reverse engineer the positions of tight lipped opponents to identify oversights and weaknesses in their assessment of the dispute
(5) Tactfully discuss your position and propose solutions to the other parties
(6) Apply creativity and adaptability in the use of pressure and strategy
(7) Make full use of a mediator to overcome sticking points and regain momentum
Without this, negotiations can quickly become a waste of time. However, with skilled legal representation ADR provides an excellent opportunity to maximise the outcome for your business, both financially and in the preservation of business relationships.
ADR exists as one tool in a range of strategies that can be used to contain the expense and time lost to disputes. Contact AustraLaw today to find out how we can help.
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