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The Role Of Alternative Dispute Resolution In Resolving Business Conflicts

Conflicts may arise in business settings for a variety of reasons, including misunderstandings, miscommunications, and simple human nature. Common types of business conflicts include employer-employee disagreements, lateral conflicts between colleagues within a workplace, and disputes between companies over the interpretation or the fulfillment of contract terms. Litigation is a familiar means of resolving these disputes, but parties hoping to avoid the legal fees and sometimes lengthy delays associated with court proceedings may wish to consider one of a variety of methods for alternative dispute resolution (ADR). To gain a deeper understanding of some ADR methods that may be useful in resolving business conflicts and to seek assistance with determining whether one of these methods may be appropriate to your situation, consider contacting an experienced New York business law attorney with Schwab & Gasparini by calling any of our conveniently located offices throughout New York State. You can reach us in Syracuse at (315) 422-1333, in Albany at (518) 591-4664, or in White Plains and Hudson Valley by dialing (914) 304-4353. 

What Is Alternative Dispute Resolution? 

The New York State Unified Court System (NYSUCS) employs a fairly broad definition of alternative dispute resolution, encompassing any of the "different ways people can resolve disputes without a trial." As the definition suggests, ADR functions as an "alternative" to traditional litigation, and may therefore apply to any method that is used to resolve a conflict that might otherwise result in a trial. Most businesses are eager to avoid lawsuits; ADR offers non-litigation pathways to resolving business conflicts.

ADR Methods vs. Conflict Resolution Styles

Conversations oriented around strategies for resolving business conflicts frequently reference not just formal methods of dispute resolution, but also a variety of approaches to those processes. These approaches are known collectively as "conflict resolution styles," and like ADR each of them will have its strengths and weaknesses and be more appropriate to some settings and types of conflict than to others. Because conflict resolution styles are often a part of the conversation as businesses consider possible litigation alternatives, and because many of these styles can be adapted to ensure the most productive ADR experience, it can be helpful to get a general overview of widely recognized conflict resolution styles and some of their most common applications in business settings.

Schemas for Categorizing Conflict Resolution Styles

A number of psychologists, mediators, and conflict resolution professionals have over the years attempted to develop easy, bullet-point-ready schemas for conflict resolution in business. These schemas offer the advantage of being readily memorable, and for this reason versions of one or more of them often appear in Human Resources Management (HRM) training manuals and standard operating procedures, but the same basic template may also be applied to external business disputes in a variety of contexts. 

What Are the Five Main Conflict Resolution Styles? 

Some of the commonly referenced schemas are best applied to employer-employee conflicts, while others have applicability to contract disputes; the most useful examples can be tailored to a variety of situations in and out of the workplace. The Thomas-Kilmann model has become especially popular in recent years, perhaps because its framework of describing modes of handling conflict, rather than prescribing the mode to employ, encourages adherents to reflect on their own perceptions of the conflict in order to choose their "mode" more consciously as they work toward resolution. 

While necessarily limited, the Thomas-Kilmann model can provide a useful intellectual tool for business owners and stakeholders to employ as they prepare themselves for complex negotiations and for choosing among the various options for alternative dispute resolution. The five conflict resolution styles recognized under the Thomas-Kilmann model are: 

1. Accommodation
2. Avoiding
3. Compromising
4. Collaborating 
5. Competing

Common Types of Alternative Dispute Resolution

Most business owners and managers are probably familiar with two of the most popular forms of alternative dispute resolution: mediation and arbitration. Many individuals who have never participated in any form of business dispute have nonetheless encountered terminology related to "binding arbitration," as binding arbitration clauses are very common in contracts for such services as cellular voice and data or digital streaming. However, the NYSUCS recognizes many more types of ADR, including: 

• Arbitration
• Collaborative Law 
• Mediation
• Neutral Evaluation
• Parenting Coordination
• Restorative Justice 
• Settlement Conferencing
• Special Master
• Summary Jury Trials 

Choosing a Method for Alternative Dispute Resolution 

Some forms of alternative dispute resolution, such as parenting coordination, can obviously only be applied to specific types of conflict; others, such as summary jury trials, may not be available in all jurisdictions. A seasoned New York business law attorney from Schwab & Gasparini may be able to help you determine which ADR methods are available and appropriate in your situation. 

Arbitration

Arbitration is a very common method of alternative dispute resolution across a variety of contexts. Many business contracts include a clause specifying that any dispute between the parties will be resolved by binding arbitration. Even when arbitration is not required by contract, however, companies engaged in a contentious dispute will sometimes opt to submit their matter to arbitration by a neutral third party in hopes of achieving a fair and reasonable decision more quickly and at less expense than they could expect from traditional litigation. 

While the "binding" specification is not necessarily a definitional requirement for arbitration, in practical terms arbitration loses many of its advantages if the parties must go through the process knowing they may reach its conclusion with their dispute still unresolved, and potentially facing the same costs in time and legal fees associated with litigation that led them to pursue alternative dispute resolution in the first place. Consequently the norm is for both parties to sign an agreement before arbitration proceedings begin, consenting to be bound by whatever decision the arbiter makes. This expectation of finality is one of the main distinctions between arbitration and the more open-ended process of mediation, within the broader field of alternative dispute resolution. 

Mediation

Like arbitration, mediation involves the services of a neutral third party. By contrast to arbitration, however, mediation is not an competitive process in which both parties present their best arguments in favor of their preferred outcome and wait for the third party to make its determination. Rather, a skilled mediator will typically begin by meeting with each of the parties separately and discussing the matter in detail in order to develop an understanding of not only the factors involved in the dispute but also the perspective held by each side. From there, mediation usually proceeds over a series of sessions, in each of which the mediator will seek to foster an environment conducive to collaboration, and may encourage each side to consider compromise solutions they might bring to the table for further discussion, potentially opening the path to a negotiated outcome that will satisfy all involved. 

Unlike an arbiter, a mediator does not issue a decision at the close of the process. Rather, their role is to support the parties in arriving at their own resolution. When successful, mediation can save substantial time and expense when compared to traditional courtroom litigation. Because mediation, unlike arbitration, does not typically result in a "binding" outcome, however, at the close of mediation proceedings either party may still decide to take their case to court by filing a legal action in the appropriate jurisdiction. As a result, mediation is usually suitable only when both sides can be expected to negotiate in good faith and there is reasonable hope of achieving a compromise acceptable to all involved. 

Neutral Evaluation 

The American Arbitration Association provides a guide to what the organization calls "early neutral evaluation," with early emphasizing the role neutral evaluation can play in giving both parties to a dispute a realistic estimate of their likely outcomes should the matter proceed to litigation. Like arbitration or mediation, early neutral evaluation (ENE) embraces the services of a third party; like arbitration, as well, that party will listen to both sides of the dispute. At this point the ENE process diverges from that of arbitration, and instead of issuing a decision binding on the parties, the neutral evaluator gives an informed assessment of the matter oriented toward estimating the problem outcomes if the case goes to court. 

While (ENE) does not inherently resolve a business conflict, it can save businesses considerable time and money by prompting them to reassess the strength of their position, and potentially by encouraging both parties to pursue ADR rather than "risk it all" on a formal trial, especially knowing that either side may be ordered to pay the other's legal costs in the event of an unfavorable verdict. ENE may also nudge a recalcitrant party to a business dispute to reconsider their willingness to adopt a compromise or collaborative approach to resolving the conflict. 

Settlement Conference

Settlement conferences are sometimes left out of efforts to enumerate possible methods of alternative dispute resolution – likely because they are so common that experienced lawyers readily include them as an expected part of the litigation process. The reality of resolving business disputes is that, in most cases, seasoned business law attorneys will go to considerable lengths to achieve outcomes acceptable to their clients that preclude the necessity of a full trial, and so settlement conferences, which take place after legal action has been filed and are typically overseen by a judge or representative of the court, are commonly employed even after other methods of alternative dispute resolution have already failed or been rejected by either side. 

Seasoned Support for Resolving Business Disputes

If you are facing a conflict in your business, whether the dispute is internal or external, large or small, you may be considering possible methods of alternative dispute resolution. The optimal ADR choice will depend on the circumstances involved and any contract terms that specify procedures for resolving business conflicts. To discuss your available options for alternative dispute resolution and seek seasoned counsel in determining your next steps, consider scheduling a conversation with an experienced New York business law attorney from Schwab & Gasparini. Reach out to us today by calling any of our offices, conveniently located throughout the state: Dial (315) 422-1333 for Syracuse, (518) 591-4664 for Albany, or (914) 304-4353 in Hudson Valley or White Plains. 

Sun Jul 14 2024, 12:00am