• Disputes
  • January 20, 2022

How Can Alternative Dispute Resolution Help Small Businesses?

article
Alternative dispute resolution (ADR) is a highly effective technique for helping small businesses resolve disputes. 

Formal litigation is expensive, time-consuming, and comes with the risk of having to pay the other side costs if you lose your case. ADR is important because it provides an alternative to SMEs who may have a valid legal claim but are worried about the risks associated with going to court.

What is alternative dispute resolution?

ADR encompasses multiple mechanisms including negotiation, mediation, adjudication, and arbitration. Below we explain the different types of ADR:

Negotiation

Solicitors will negotiate the particulars of the dispute on behalf of the parties over the phone or in person. Alternatively, a round table meeting can take place, normally in a Solicitors office. At the end of the meeting, each party will break out into their own separate conference rooms. After receiving instructions from their client the Solicitors will meet in a third conference room to advance negotiations and pursue a settlement.

Mediation

In commercial mediation, a professional neutral third party is appointed to help both parties resolve the dispute and they are often referred to as the mediator. The mediator is not a judge but is an expert at facilitating negotiation between you and the other party to reach a voluntary settlement.

>> For more information about the mediation process, read our blog Why Mediation Is A Great Way For SMEs To Resolve Disputes

Adjudication

Primarily used for construction contract and professional negligence disputes, parties must present evidence to an Adjudicator who makes a quick decision to resolve the dispute.

Arbitration

Parties enter into an Arbitration Agreement which sets out when and how arbitration is to be conducted to resolve a dispute. Arbitration awards are usually binding and can be enforced internationally. 

>> Learn more about how the arbitration process works in our arbitration guide

What are the benefits of alternative dispute resolution?

ADR provides many advantages to an SME involved in a business dispute, including:

  • ADR methods are usually cheaper and less stressful than formal litigation
  • although not legally binding (except for most arbitration proceedings) the fact that ADR is voluntary (with the exception of adjudication) means both parties are normally motivated to reach a solution and avoid going to court
  • the details of the process and settlement are confidential
  • flexibility is an important part of all ADR mechanisms

How does alternative dispute resolution work?

Each ADR method works differently. The first step to take is to contact an experienced Business Disputes Solicitor. They can advise which option will provide the best chance of resolving your dispute and explain in detail how each method works. 

Wrapping up

ADR provides considerable benefits to SMEs involved in business disputes but in order for ADR to work effectively, all parties must be willing to actively participate and stick with the decision. Having the assistance of an experienced business lawyer helps with your conflict resolution needs.

Get legal assistance from LawBite

If you are a small business owner facing a commercial disputes or conflicts, it is important you know all of your legal options. At LawBite, our expert Dispute Resolution Solicitors can walk you through various ADR options and help you evaluate what might work best for you any time a new dispute arises.

Additional useful information 

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.



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