In business, bitter confrontations can’t always be avoided. It could be a disgruntled employee, customer or supplier – or even your business co-owner who no longer wants the same thing for the business that you do. But is hiring a lawyer the answer or can conflict resolution be better with a neutral third party? In this article we look at some of the problems that entering the legal system can create as well as some alternatives.
Why can hiring a lawyer actually lead to more conflict?
The challenge with going to a lawyer is that lawyers work in an adversarial process. It’s a system that’s designed for fighting. If we were to use modern design thinking to create a system for resolving business disputes, it’s almost certain it would look nothing like our current adversarial process.
Typically, what happens if you’ve got a business dispute and you go to a lawyer is that your lawyer will send a letter to the other side, advising them of the issue. You may be told not to speak to the other side anymore. The other side will then do one of two things. Either they will lawyer up as well – in which case there’s generally just generally written communication going backwards and forwards between the two lawyers.
Alternatively, the other party may think “Oh, my God, it’s a lawyer’s letter, I’m scared”, and they stop all future communication. So, what that means is you’ve got increasing legal fees as your lawyer keeps writing to try to elicit a response. You’ve also got delays, and there’s more frustration. So, what was a small dispute suddenly grows into a much larger dispute because it’s not being dealt with in a timely manner.
What are the other options?
Mediation and facilitation are the processes that can help people through this. And really, that’s just bringing in a neutral third party. Either can be done as a formal or an informal process. Both processes help guide the parties through a negotiation. The mediator or facilitator help each party see what’s important to the other to work out possible solutions. They look at things from a very practical perspective. And they try to work out a solution that will work for both parties.
Often people think of mediation in the family law context, because we’re familiar with it there. But they don’t often think about it in terms of business disputes. In most states, subsidised mediation for small businesses is available through your state’s Small Business Commissioner. Otherwise, private mediators can be found through organisations such as Kato Collective or by googling commercial mediator.
What about the cost factor? Does this make justice unattainable?
The cost of managing disputes is always a challenge. Justice through traditional litigation if definitely unaffordable for many small businesses – regardless of how good their case is. This is one of the reasons why bringing in a neutral is so important. The minute you start down the litigation process, going to court, it’s expensive – lawyers’ fees, filing fees, expert reports. It all adds up. Litigation is also a process you can’t easily get out of if you stop being able to afford the legal fees.
Mediation gives you a chance to deal with those issues quickly. Even if you don’t get to a settlement, you’ll probably have got some clarity around the dispute that will make the legal process run more smoothly.
When is hiring a lawyer the only option?
Unfortunately, you can’t force somebody into mediation. So, if the other side is not willing to participate, you’re going to have to go down the legal route.