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What’s The Best Way To Deal With A Business Dispute?

by | Nov 15, 2022

What is the best way to deal with a business dispute? Is it through: litigation, arbitration or mediation?
Dispute resolution clauses are contained within your: operating agreements, shareholder’s agreements, partnership agreements, or within your LLC.
If you are simply acting as business partners, typically you will want a dispute resolution clause in any of those agreements. If you do not have one, the default is that you can litigate matters in court, however, when you are looking to figure out the speed resolution clauses, and what they should look like, there are a few things you want to take into consideration.
First, you will always want to make sure that you have an agreement in writing, which jurisdiction laws will govern. For example, if you are a New York company with New York parties that conduct business in the within the state of New York, you are going to state that New York shall govern thus laws.
However, if you are a corporation that is registered in the state of Delaware and you have employees in New York, but perhaps the business address is outside of the state of New York, or even if it is in New York, there may be reasons that you would want to see the laws of the state of Delaware. You will also want to create a jurisdictional location, a venue for claims so that if you are a business operating within New York City, you certainly would be likely to state that any dispute that may arise shall be brought in the state of New York. After figuring out the choice of law and figuring out the forum meaning, the location of where any matter will take place is do, we want to go to litigation in state or federal court or you could even consider arbitration which is really an alternative means of resolving a dispute.
The benefits of going to litigation are that you can file publicly, which you may want to do so, therefore press can see what is going on. The case will be made public, and in the event that you wind up going to trial to try to resolve a claim and if you receive an unfavorable outcome, you can go ahead and you can appeal that decision to the Appellate Division. On the other hand, the negatives of going to litigation have to be considered as well. Litigation can be time consuming, especially if you are in a state where court cases can really drag out and everything is in the public eye, so your name and your company’s name, and anything that happens, can be made public.
What are the benefits of choosing arbitration? Typically 1 to 3 arbitrators will hear both parties cases, and then make a determination. It is conducted a lot like litigation, but it is typically streamlined in terms of length, and a determination can be made far more quickly than what you might see in court arbitration. It is still pricey, but arbitration is less expensive than litigation.
The benefits are that you can keep things out of the public eye — everything is able to remain confidential. However, if you receive a determination that you do not like, it is very difficult to get it appealed so you lose that process of going to the appellate division.
Lastly, the third mechanism for dispute resolution is mediation. Mediation is typically what I consider to be a good idea. Dispute resolution clauses will contain a mandatory mediation provision to say in the event the parties are not able to resolve their dispute they will go to mandatory mediation, which is where you have a mediator listen to both parties, and both arguments from each side and then resolve the claim. It typically takes 1-2 days with the mediator to go over the case in full and for the mediator to come up with a resolution. Once the resolution is determined, both sides may then go their separate ways.
Not every company is the same, and not every company wants to be treated as such. How you choose to go about your business dispute is 100% up to you.
If you are interested in more information and would like to speak with a legal professional at Pitcoff Law Group, PC, call: (646) 386-0990, email: ross@pitcofflawgroup.com, or visit our website: pitcofflawgroup.com today. We would be happy to assist you.