Litigation as a Last Recourse: How Can Mediation Help Small Business Owners


In business, legal disputes can arise from a number of different reasons and are never pleasant. Resolving a legal issue in front of a court through litigation is time and money consuming, and is accompanied by a feeling of uncertainty regarding the outcome of the process.

All the negative factors of litigation are even more pronounced in the case of small businesses, where the costs of the process can put an entrepreneur on the brink of bankruptcy. This is why small business owners are advised to opt for mediation in resolving disputes whenever possible.

What is Mediation?

Mediation can be described as a method for the parties to communicate, under the guidance of an impartial mediator, with the goal of the communication being reaching a mutually agreeable solution to the dispute.

Unlike the litigation process, in mediation, parties are allowed to communicate their points of view and expectations much more freely and directly, without having to adhere to a specific set of rules.

Also, considering that the role of the mediator is much closer to an advisor than an arbiter or judge, the method of settling the dispute is entirely up to the parties.

If you are a small business owner facing a legal dispute, these are some of the reasons to consider mediation over other forms of dispute resolution:

6 Reasons Why You Should Go for Mediation

How Can Mediation Help Small Business Owners

#1 Economic Reasons

Procuring the services of a mediator is quite simple, as well as affordable, considering that the mediation fee is split between the parties and that there is no need for hiring expensive lawyers or paying for additional costs.

Another factor contributing to the low overall cost of mediation is the shorter duration of the entire process. While cases before the court can stretch over a very long period of time, mediated settlements can usually be reached reasonably quickly.

#2 Organizational Reasons

In contrast to resolving disputes in court, initiating a mediation process requires much less preparation. Without the need for pre-trial and discovery work, all you need to do is select a mutually agreeable mediator and schedule the first mediation conference.

When selecting a mediator, you should look for reputable small business lawyers who will advise you on the choice of mediator, since the experience of the mediator can greatly contribute to reaching a mutually agreeable settlement.

Having a counsel in law also facilitates the process by providing the procurer of legal services with much-needed insight in the scope of their rights and possible ramifications of the settlement.

#3 Mediation is Less Formal

The location of a mediation is chosen by the parties. This means it can take place in an office, a conference hall, or any other mutually agreeable location.

This can create a general atmosphere much unlike the one in a courtroom, where the parties can be relaxed and resolve their differences through direct and informal communication.

It is also important to note that the results of mediation are not legally binding, so there is no downside to trying to settle the dispute amicably before going to court.

#4 Keeping your Business Partners

Going to court with a business partner usually means severing all ties with them, regardless of the outcome, as one party winning the case inevitably means that the other party has lost.

Since having a good relationship with business partners can make the life of a small business owner much easier, it is important to think about the future of your business when deciding on the manner of settling a dispute.

This is another advantage of settling disputes through mediation, as solving the problem through a mutual effort will help you maintain business relationships and even avoid future disputes of a similar nature.

#5 Mediation is Confidential

Mediation takes place behind closed doors, away from the public eye. With only the parties in dispute and their legal counselors attending, the issue can be solved without any external pressure, while maintaining good public relations.

This relaxed and private atmosphere can contribute to the parties being more open to suggestions and encouraged to express their opinions and disclose relevant facts, in order to reach a mutually agreeable settlement.

#6 Mediation is More Flexible

This alternative dispute resolution technique provides contesters with much more control over the way they approach and solve their conflict.

Mediation is a logical next step after failed negotiations and provides an alternative to litigation or other more formal processes which result in legally binding outcomes.

What sets mediation apart from the other alternative dispute resolution techniques and court proceedings is the range of solutions available to the parties.

Compared to the remedies available in courts and tribunals, solutions offered in mediation are only limited by the imperative law and the will of the parties. This, in particular, is one of the more compelling points for small business owners since it lets them resolve their conflict in a way that doesn’t burden them more than it is necessary helping them stay solvent and continue doing business.

Although litigation is sometimes unavoidable and necessary, attempting to resolve a legal dispute through mediation before going to court is always worth a try, since it can have many benefits, as described above.

As the option of filing a lawsuit always exists, if the efforts to reach a mediated settlement fail, the parties will have lost very little, while gaining insight into the position of the other party, which can contribute to the efficiency of the litigation process.

On the other hand, a successful mediation can save money, time and relationships, which should be reasons enough for any small business owner to opt for mediation in resolving disputes whenever possible.


Author: Daniel Brown