Top 4 Ways Business Disputes Are Settled Out of Court



Business disputes are a point of dread for company owners, investors, and partners. For example, they often mark the end of a once-productive business relationship. They can also be extremely expensive to litigate. Going to court increases legal fees for both sides and takes more time than other settlement options. So, a settlement outside the court is often the best option for all parties involved. Consider these alternative dispute resolution examples as you prepare to handle a business dispute out of court.

Direct Negotiation

Many dispute resolution attorneys begin with a solid negotiation strategy. Despite all the other methods developed by legal experts, a face-to-face discussion is often the most effective tool. You can revisit negotiation at any point during the settlement or litigation process. Even if you and the other party have failed to negotiate a settlement earlier in your dispute, you may find that everyone involved is more motivated to settle as a trial date draws near. No one wants the legal fees, loss of reputation and loss of time that come with litigation. Know what you want heading into negotiation, what you are willing to give up and what your bottom line is.


One option for dispute resolution is arbitration. Arbitration may be contractually required or both parties may agree to it in the search for a mutually beneficial arrangement. During arbitration, both parties come together to discuss their dispute and try to find a solution. The arbitrator is a neutral third party who makes a final decision on the case. Their decision is legally binding, so there is some risk with arbitration. Note, though, that the arbitrator’s decision must follow the law. If it does not, a judge is likely to overturn it.

There are several types of arbitration. High-low arbitration involves both parties setting the upper and lower limits for a monetary award. If the arbitrator’s decision is within that range, their award is legally binding. Non-binding arbitration allows either party to opt-out of the decision if it is not to their liking.


Mediation fits between negotiation and arbitration in terms of risk and expense. You maintain control of the ultimate outcome, much like you do in direct negotiation. There is no risk of a legally binding decision that is unfavorable to you, unlike arbitration. Both parties meet with a mediator, who serves as a neutral party to provide options and fair solutions.

Mediation outcomes vary widely. The biggest factor is typically how willing both parties are to negotiate. If one party wants to settle for a specific amount while the other party rejects the idea of a financial settlement, then mediation probably will not help. If both parties enter mediation with an open mind and are willing to compromise, then this process is often much more productive.

Review Paperwork for Exit Strategies

The end of a business relationship often leads to business disputes. If you worked with a business attorney while establishing these ties, then it is possible that there is an exit strategy in your contracts. However, this is not always the case. Exit strategy safeguards are often neglected when companies draw up paperwork without the help of an attorney. Businesses need to consider what to do if a business relationship breaks down. Therefore, it is critical to hire an attorney to review your business paperwork.


With the help of a Redwood City dispute resolution attorney, you can handle business disputes in a fair and professional manner. We can help you decide how to best protect your interests. Reach out to Winghart Law Group, Inc. at (650) 456-2925 to explore your options.

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