Small and Family-owned Business Dispute Resolution

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Small Business Dispute Resolution

Small Businesses and family-owned businesses face unique challenges when it comes to resolving disputes with their vendors, clients, partners & employees. 

Small businesses don't generally have a legal department to rely upon, and even if an attorney is kept on retainer for such matters, the cost of legal counsel to address disputes may have significant impact on the financial profitability. 

Another common concern relates to the potential risk of a damaged reputation in the community if the dispute becomes publicly known.  Court verdicts are routinely publicized and often highlighted on the media's nightly news and blogs.

Conflict takes the joy out of business. It may be challenging to know how to resolve disputes without compromising a valued relationship; additionally, there are times when no relationship exists and resolution of the dispute is the only priority.   Mediation is a confidential processes that allows smallbusinesses and family-owned businesses to address disputes in a less formal, confidential manner, while retaining the enforceablility of a court order when a written agreement is reached and formalized in mediation.  When agreement is reached, a a signed Memorandum of Understanding, referred to as an MOU, is drafted during mediation, and parties are encouraged to sign the agreement to finalize the negotiation.  The MOU can be submitted to court for enforcement.  We include a Legal Review Provision for the protection of all mediaiton participants.

Contractual Provisions for Mediation or Arbitration

ADR contract provision

Alternative Dispute Resolution clauses, also known as ADR provisions or clauses, are commonly written into business and commercial contracts. Most people have agreed to mediate or arbitrate whether or not they are aware of having done so. Examples include:

  • software and internet service agreements
  • real estate transaction contracts
  • phone service agreements
  • credit card and loan applications

Mediation resolves conflicts while preserving relationships.  Mediation is increasingly recognized as a preferred way to address disputes and to avoid litigation.  Mediation yields agreement in the vast majority of cases (estimated at 90-95% on multiple sources.)  In Colorado, mediation is often a mandatory step prior to other binding processes, such as arbitration or setting the date for final hearing in court.

Arbitration provisions, when included in a signed contract, require parties' participation in arbitration, thereby eliminating filing the dispute in court, if parties have a dispute arising from the terms and agreements of the contract.

By mutual agreement, parties may also voluntarily submit a matter to arbitration in the absence of an arbitration provision when a dispute arises.

Specific Arbitration Rules:

Arbitration is conducted according to the procedural rules of Colorado Mediators & Arbitrators, a low-cost arbitration service, unless other procedures are identified in the arbitration provision.

Arbitration is a creature of contract, and parties may agree on many aspects of how the arbitration is conducted: 

  1. The specific rules of procedure,
  2. Governing law (federal or state specific),
  3. Where and how the hearing will be conducted
  4. Other specifications addressed in the arbitration provision

Sample Arbitration Clauses

A sample arbitration clause can be referenced at /sample-arbitration-clause.

Recommended Use of Mediation

An estimated 90-95% of disputes filed for arbitration resolve before the hearing. For this purpose, Colorado Mediators & Arbitrators encourages parties to consider mediating prior to arbitration  or a judicial process.

Non-Use of Legal Proceedings Coinciding with Arbitration

Parties are prohibited from filing any legal action through the courts on the same disputed matters submitted to arbitration during the tenure of the arbitration case.

 

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