Michigan business owners know that they cannot afford business disputes, which can cost their business time and money.
However, whether you just started a business or have been running your business for many years, disputes will probably arise at some point.
Before proceeding directly to litigation, you may wonder if business mediation is something you should try. While business mediation might not be appropriate for all situations, there are many benefits to mediation you should consider before making your decision.
How mediation is different than litigation
First, it is important to understand what happens at mediation. In a courtroom, you and the other side argue your sides of the conflict to a judge.
You do this through witness testimony and physical evidence, such as contracts or other written documents. The judge then decides for one side or the other.
In mediation, there is no judge. A mediator presides over the mediation but does not decide the case.
Rather, the mediator acts as a neutral third party. Their job is to allow both parties to explain their sides of the dispute and help guide them to a resolution.
A mediator listens and provides advice and guidance, but cannot take one side over the other and does not play favorites.
Mediation saves money and time
Mediation is typically cheaper and quicker than traditional business litigation, which is one of its biggest benefits. You can have one mediation session, or several sessions, depending on how long it takes you to reach a mutually beneficial resolution.
Another advantage to mediation, particularly for businesses, is that it is a less adversarial process than litigation.
No one likes being sued, and if you are sued by someone you thought you had a good business relationship with, that relationship could quickly deteriorate.
Business owners know that strong business relationships play a vital role in the success of their business. Mediation increases your chance of maintaining your good business relationship after the dispute.
Mediation is confidential and can preserve your reputation
Finally, getting a bad reputation can ruin your business. Most business disputes involve money, and while you may not want to lose money, you could never recover from losing your reputation.
Mediation is private and everything that happens during the mediation is confidential. This is an advantage that some business owners overlook.
Bypassing mediation and heading straight for the courtroom could destroy the good name of your business, even if you ultimately win the lawsuit. Bringing your dispute into a courtroom makes it public and opens you up to media coverage.
Some people intentionally avoid businesses that have been involved in lawsuits, regardless of the facts and circumstances involved. They may not feel comfortable supporting a business that gets itself involved in litigation.
When mediation might not work
There are times when mediation might not be the best choice. Sometimes a dispute is so complex, or bitter feelings develop to the point where you know that mediation will not be successful.
If you do not reach an agreement at mediation, you are back at square one. Since the mediator cannot render a verdict like a judge can, you could find you have wasted time and money, only to ultimately not resolve the dispute.
Knowing the best way forward in a business dispute is not always clear. Talking over your options with an experienced business attorney is recommended.