Businesses generally do not want their disputes to go to court. Litigation requires that the members of the executive or management team take time away from operations to address legal issues. The cost of going to court is often quite high, and there is also the risk of bad publicity if there are claims of misconduct brought against a business.
Even in scenarios where an organization might be the plaintiff in a case, businesses will often seek to avoid taking matters to court whenever possible. Despite how averse many executives and business owners are to initiating litigation, it is sometimes the best possible response to issues with another organization.
A large percentage of the lawsuits initiated by one company against another will not go to court but will instead settle. How do organizations keep their legal matters out of the civil courts when filing a lawsuit seems necessary?
Some executives and business owners will ignore their contractual obligations to others until it becomes clear that they have no other choice but to address an issue. A pending lawsuit is often the jolt of reality someone requires when they have previously done everything in their power to avoid fulfilling contractual obligations.
Someone who has previously refused to communicate or compromise may become more open to the idea of working out the issue when they know that a lawsuit is imminent. People often agree to mediation or other alternative dispute resolution systems, like arbitration, when there is a pending lawsuit that could damage a company’s finances or reputation. Some businesses even require mediation in their contracts with other parties.
In mediation, both parties embroiled in a dispute have an opportunity to present their side of the situation. They can work with a neutral outside professional to resolve their disagreements and potentially reach an amicable solution. It is possible to discuss the details of a business agreement and the failings of either party without reputation-damaging information becoming public knowledge, as mediation records are largely confidential.
Those who attend business mediation can potentially settle the matter and then end the lawsuit without it actually going to trial in front of a judge. Mediation is one of the many reasons that the vast majority of business lawsuits do not culminate in a trial. Exploring alternative approaches to conflict resolution may benefit those concerned about how another company’s failings have impacted their organization’s operations.