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A prudent business manages litigation costs and risks

On Behalf of | Jun 6, 2024 | Business Litigation

Many growing and mid-sized businesses in the Dallas area will at some point get involved in a legal dispute.

Ultimately, running a successful business is about turning a profit — that is, bringing in more income than the cost of running the business. Practically, this means a prudent Texas business owner must weigh the cost of litigating a dispute against their overall goals.

Commercial litigation is expensive in terms of both out-of-pocket costs and time and other resources. Moreover, it is also risky.

No outcome in court is ever certain no matter how strong a business might think their case is or how well-prepared their lawyers are. An unfavorable outcome can in the worst case make it impossible for a business to continue to operate.

Sometimes the best course of action is to take a case before a jury or judge, but a business should understand their alternatives so they can cut down on both expenses and risk.

What are cost-effective alternatives to a jury trial?

There are many types of alternative dispute resolution, or ADR. As the name implies, no matter the method, ADR involves trying to resolve a legal dispute without going to court. Whether ADR is right for a business in a particular case will depend on the circumstances.

Two common types of ADR are mediation and arbitration.

In a mediation, the parties in the dispute will work with another attorney, retired judge or other qualified person who is not otherwise involved in the case themselves. This person does not make decisions for the parties, but they will help the parties negotiate.

Mediation is both confidential and voluntary. If both sides are sincerely trying to negotiate, any party can walk away from the negotiation table at any time. They should not have to worry about what they said or offered at mediation later being used against them.

Arbitration also involves resolving a dispute outside of a courtroom but with qualified experts. However, unlike mediators, arbitrators do hear evidence and issue decisions.

Often, an arbitrator’s decision will be binding, meaning that except in special cases, the parties will have to live with the decision. Still, arbitrators do not use the same rules and formal procedures that courts do.

Of course, Dallas-area businesses should not overlook what might be the most common type of ADR; they are always free to negotiate directly with the person or business with whom they have a dispute.