Just work it out

Dear Mary, My business partner and I can’t seem to agree, and he’s threatening to sue me. How much does going to court cost and how long does it take?

Reader, I have a better prospect for you to consider.

It’s not that I don’t enjoy litigation, but I can almost guarantee that you won’t enjoy it. The California court system has seen a rise in congestion over the past few years, and like everyone else, they’re doing more with less. With court resources being cut daily, the cost of litigation is increasing.

What if I told you that you could probably work out your issues with your partner without going to court? Save the $100,000 or more that litigating in public would cost your business and think about Alternative Dispute Resolution.

Alternative Dispute Resolution is usually quicker and cheaper than litigation. Alternative Dispute Resolution includes several different types of resolution, including contractually bound negotiation, mediation, arbitration and reference.

The first step in deciding how to resolve your issues is to look at any agreement you may have with your partner. If your partnership agreement requires arbitration, then the decision is made for you. If you don’t have an agreement that specifies how disputes are resolved, then assess your needs and resources to select a method that might actually preserve your relationship instead of destroy it.

Contracts, case law and common sense require the parties to formally consult with each other before initiating litigation or arbitration. Contractual terms that define the dispute resolution process may require the parties to substantiate their claim(s) in writing, or it might require a meeting to discuss the issues. As you can imagine, this kind of negotiation often turns into a conflict. If you could have resolved it, you probably would have.

Mediation looks like negotiation, but it involves an impartial third person who acts as a facilitator to help the parties reach resolution. There are two important requirements: 1) the mediator must be completely impartial, and 2) the mediator must facilitate, not make decisions.

In arbitration, parties attempt to resolve their dispute before an “arbitrator,” who hears and considers the evidence and then renders a final, and sometimes binding, decision. Arbitration is often more efficient than regular litigation.

The reference procedure is a mix between arbitration and litigation. The parties have the court appoint a referee to try some or all parts of a dispute. This kind of procedure is usually quick, but you can still appeal the decision.

To learn more about Alternative Dispute Resolution, call an attorney or visit the court’s self-help center.

Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached at mary@hudsonluros.com or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.