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7. Litigation  

Alternative Dispute Resolution

In the business world, Alternative Dispute Resolution (ADR) is increasingly preferred to litigation. Used to describe the use of arbitration or mediation, either method is typically less costly, time consuming and emotionally draining than going to court.

International Center for Dispute Resolution (ICDR)

A resource for business, organizations, government agencies, and communities seeking to manage human relations issues and harmonize relationships that threaten productivity and performance, especially in the workplace. The ICDR respects individual interests and needs, promotes effective communications, and restores relationships through alternative dispute resolution, education, training and learning programs.


Arbitration is a legal solution to a business-related dispute that usually entails a fraction of the time and money of litigation. Both parties agree to recognize an arbitration panel as a legal authority, and agree that the decision is legally binding. If the losing party fails to pay the award amount, the winner can transfer the decision to a court, which will enforce the award judicially. Arbitration procedures are usually closed to the public. Visit the American Arbitration Association (AAA) or the Global Arbitration and Mediation Association (GAMA) site to find an arbitrator in your area.


In mediation, a neutral negotiator helps both sides negotiate a settlement. Typically, the mediator meets with each side separately until both sides agree to a settlement. Mediated settlements are usually less costly than settlements resulting from litigation. Unlike arbitration, mediation is non-binding; neither side has the power of the courts to enforce the settlement. Visit the AAA or GAMA sites to find a mediator in your area.

Going to Court

Some disputes are impossible to prevent. Being informed about the various options, including litigation, can help control the damage.

Is Litigation Worthwhile?

Deciding whether you have a valid legal basis for a lawsuit is the first priority. A lawyer can help decide whether the most likely outcome of the case is worth the cost of filing suit. If you decide not to file, don't make references to legal action, as empty threats only hurt your credibility.

Lawsuits in Regular Court

Judges not only have the power to grant monetary judgments, but can also order practical remedies such as tenant removal or a stop to patent infringement. Lawsuits are typically much more costly than other forms of dispute resolution. Remember that a settlement is an option at any time, before or after litigation is begun.

Settlement Proposals

Most commercial lawsuits settle before going to court. In your case, would the opposing party be inclined to settle even before a lawsuit is filed? If winning is a possibility, how likely are you to collect the judgment awarded? In the case of monetary awards, there are many ways debtors can protect themselves from collection, so consider the possibility that you may never receive full payment. Finally, let a lawyer help you in your decision.

Small Claims Court

Small Claims Court is usually the best option if the size of the case doesn't justify the cost of hiring a lawyer. Before filing, it is important to make sure that your state courts have jurisdiction over the defendant. In addition, find out what the maximum amount is that can be asked for in your state .

Enforcement Fairness

If your small business has been subjected to unfair regulatory or compliance action by a federal agency, you do have options in addition to litigation. First, make sure you know your rights. Next, you may want to discuss your situation with your attorney, trade association or other small business owners. Once you've armed yourself with the necessary information, register your concerns. Contact someone with higher authority at the agency, file a comment with the National Ombudsman or send an e-mail to your
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