Created by FindLaw’s team of legal writers and editors | Last updated June 20, 2016
If you are a small business owner with a legal dispute on your hands, you should probably consider mediation. Even if a small business owner wants to go to court for a sure-win case, it’s often quite difficult for the small business to come up with the money to litigate. Even just finding the time to attend hearings can cost a small business substantial revenue. And because of the nature of small businesses, the owner could face personal repercussions for deciding to go to court, such as losing friends or harming his or her reputation in the community.
However, there is an option that many small business owners fail to consider when faced with legal problems. Mediation can solve many issues without some of the drawbacks that litigation poses.
Mediation offers small business owners another option when it comes to resolving problems. In the example above involving the smell from the neighboring business, the small business owner could choose mediation over the other options, and come up with a solution that all parties agree on.
During the course of mediation, a neutral third-party (the “mediator“) meets with both sides of the dispute and helps the two sides frame a discussion. The goal of this discussion is to find a solution that both sides are amenable to. Also, because both small business owners will give input into the settlement, both sides are more willing to follow the result of the mediation. Because the small business owner has already laid the groundwork for solving problems, if any future smells (or other issues) arise between him and his neighbor, the two owners will have a relationship that they can build on to resolve their differences.
Generally speaking, mediation is much cheaper than hiring a lawyer at an hourly rate. You can generally find free to low-cost mediation services through local communication centers or bar associations. In addition, even if you end up paying for a mediation session by the hour, you will be splitting the costs with the other party. Lastly, mediation only lasts a few hours (compared to the hundreds of hours that an attorney might bill you for), which allows you to save time and can get you back to running your business sooner than if you had filed a lawsuit.
If you are involved in a dispute that you cannot seem to settle by simple discussion, you should probably start looking to find a mediator if the other party agrees. Many local bar associations (city and county) often have listings of mediation services in the area. In addition, you can check your local phone book under “mediation” or “conflict resolution.” The internet is also a great place to find mediation services in your area. Lastly, some private attorneys also offer mediation services in addition to their regular practice.
If your small business is involved with or a member of a local small business association (such as a chamber of commerce or the Better Business Bureau), you should check there first. Oftentimes, these associations have mediation services that are designed for small business owners. This is helpful, as you will not have to spend time explaining to a mediator why certain aspects of your small business are more important than others.
In most situations, mediation will end in a settlement between the two sides. If you have a successful mediation, you will probably leave with an agreement that has been signed by both parties to the mediation. In other successful mediations, the parties leave with a memorandum that sets out what you and the other party have agreed to. In some circumstances, you can take your agreement to a court to have it officially enforced, but this is not always the case.
Even if you do not end up reaching an agreement or a settlement after mediation, you will have at least learned what the other party’s biggest complaints are. Also, having an unsuccessful mediation does not prevent you from filing a lawsuit in the future.
Mediation is very efficient and a great way to resolve disputes between small business owners. One of the other great benefits of mediation is that you will probably not have to deal with public relations problems. Mediations occur very often and are mostly kept out of the public eye. So the next time that you have a problem that you can’t seem to work out on your own, consider mediation over a lawsuit.
Mediation is a great alternative to litigation in certain situations and is used quite a bit by businesses.