As a business owner, it is in your best interest to handle disputes quickly and carefully. Many business owners make the mistake of believing this means avoiding disputes entirely. But if you make that your goal, you set yourself up for failure.
Instead of focusing on the difficult task of avoiding all disputes, investigate all potential options for handling them. This is the best way to prepare.
What is arbitration?
FINRA takes a look at arbitration and mediation, which provide alternate methods for resolving any potential disputes. They differ from litigation in several ways, with mediation providing a bigger difference than arbitration.
Arbitration behaves similarly to litigation in numerous ways. First, an arbitrator fills a role similar to a judge. They listen to all sides present their arguments and make a decision from there. This decision legally binds all parties, meaning you do not have a choice but to follow what they pick for a resolution.
However, you do not need an entire court hearing with a jury. This saves you money and the time you would otherwise spend waiting for your case to work through the system.
How does mediation differ?
Mediation differs more. A mediator does not hold the legal power that arbitrators or judges do. Instead, they simply act as referees, monitoring your discussion as you work things out amongst yourselves. They may pitch in with ideas or opinions at times. They also ensure everyone gets to say their piece. Beyond that, it is up to you and the other members of the dispute to decide how to handle it.
Each option offers its own potential benefits, but they do not work comprehensively in every single situation. It is up to you to decide which fits your situation best.