Why Businesses Can Benefit from Alternative Dispute Resolution

Business professionals shaking hands. Benefits of alternative dispute resolution.

With different projects, teams, management styles, and other factors at play, disputes in the workplace are bound to happen, even when employees and contractors work from home. Using guidance from a skilled Houston business litigation lawyer  you can explore Alternative Dispute Resolution (or ADR) to help resolve these conflicts.

You will probably be aware of a business partnership dispute well before it reaches the need for litigation. ADR methods give all parties a chance to avoid the expense, time, and privacy invasion of a trial. Each side can present their requests and develop an agreement that provides acceptable solutions.

Understanding Alternative Dispute Resolution

Business professionals pointing fingers in a dispute. Benefits of alternative dispute resolution.There are many different ways both small businesses and large corporations can benefit from these techniques. ADR is often a favorable and speedier solution to business disputes, especially as more individuals move towards remote workplaces. While it may not work for every conflict that occurs, many companies benefit from trying these methods before going to trial.

ADR is a sanctioned method of solving business conflicts in Texas. It typically offers a less formal or intimidating environment within which to resolve workplace disputes. Parties are able to work together with a neutral individual or panel to come to a decision resolving the issues in conflict for those involved. Having a good understanding of the problem at hand will inform the decision as to which method is best suited for your situation.

When you turn to ADR before moving to a court case, you may expect that you can easily manage the conversations yourself. However, while you may be highly familiar with your business and industry, ADR is meant to settle disagreements in a legally binding context. This means you will benefit from working with a seasoned team of business dispute lawyers who understand the law and have strong negotiation skills.

Resolving Business Disputes – Three Common Options

Instead of moving straight to the courtroom, many businesses turn to ADR. It is an umbrella term that covers three common methods:


This is often the initial method parties will use. Each party will involve their preferred legal counselors to discuss and decide their desired outcomes. They and their attorneys will then communicate back and forth until a settlement is reached. The parties are in control of the discussions and outcome, with legal guidance. There are no third parties or courts involved.


In this ADR method, a mediator works with all parties to come up with a negotiated resolution. A mediator is a trained facilitator who understands negotiation techniques, human dynamics, and effective listening. The mediator will offer expert advice and ideas for creative options for solutions to the problem, but the ultimate decisions are left up to the parties.


One or more arbitrators can hear from all parties and render either a binding or non-binding resolution decision. All parties must sign an agreement to abide by the arbitrator’s decision. In many cases, a panel of three – mutually agreed to by all parties – is used instead of a single arbitrator.

When the agreement is binding, all parties must abide by the decision. Often, there is a clause indicating that neither party can bring any further legal action in the matter.

Mediation vs. Arbitration

It can be easy to confuse mediation and arbitration. They appear to have similar functions and procedures, such as using a neutral third party to reach a compromise and avoid a courtroom. Each involves all parties working with their attorneys to negotiate an ethical and legal outcome.

However, there are important differences. For example, in arbitration, the third party serves as a private judge. In fact, many arbitrators are retired attorneys or judges, giving them exceptional insight into resolving issues. They review the evidence and issue any necessary findings to finalize the agreement.

Mediation is considerably less formal than arbitration. Arbitration, in turn, is less formal than a courtroom trial. Nonetheless, in arbitration, all parties must adhere to specific processes and actions in preparation. Etiquette and protocol must be followed, meaning attempting this ADR method without an attorney at your side could put you at a serious disadvantage.

Using Mediation and Arbitration in Tandem

Scales of justice tipped towards gavel. Benefits of alternative dispute resolution.When a business dispute arises that cannot be solved by straightforward conversations, most companies will resort to mediation first, then escalate if needed. While mediation can result in a satisfactory compromise, it is not legally binding. If one party decides not to live up to their end of the bargain or causes a lengthy delay in the negotiations, there is little other parties can do without moving to more structured methods.

If no settlement can be reached within the 60-90 days most mediators establish, or there is considerable reluctance by one party, arbitration can be used as the next step. When arbitration is established as legally binding, there is little room for ignoring the agreement or appealing it. If there is still no favorable outcome from arbitration, it will be time to take the dispute to court.

The Benefits of Alternative Dispute Resolution

There are many benefits for businesses that use ADR instead of focusing solely on litigation. ADR allows the parties involved to come to a ‘win-win’ resolution that considers everyone’s position rather than one in court, where often one party prevails over another. These outcomes are often considered to be practical, flexible, and adaptable.

Some of the most significant benefits of utilizing ADR include:

  • Can result in a less severe outcome
  • Decisions are focused on compromise rather than ‘winning’
  • Gives those involved at least some control over the situation and the final result
  • Helps keep business relationships intact by attempting to satisfy both parties
  • Helps parties deal with the dispute constructively
  • Less costly
  • Less disruptive to the business and its ongoing operations
  • Takes less time than going through the court system
  • Typically results in a more concrete decision, as people are more willing to stick to a decision they make themselves

For most parties, the ability to have full control over the process and outcome is especially attractive. With large companies, there is potentially an element of proprietary secrecy for processes and internal structures. With ADR, these matters are kept private among the parties and not made a matter of public record in a trial.

Mediation and arbitration, while less structured than a courtroom proceeding, have a very high success rate. While the processes may seem too “loose” compared to standard business negotiations, they can provide a valuable option to express all concerns in a dispute. In addition, all sides will save a great deal of time, money, and effort compared to the months and possible years needed to pursue a trial.

Determining When ADR Is Right for Your Business

While ADR often leads to faster and more satisfying outcomes, there are many considerations you must examine to determine when and if ADR is right for your business.

Some reasons why businesses can benefit from alternative dispute resolution include:

  • ADR can limit hostility between the parties.
  • ADR methods are usually less costly than a trial but can still be expensive if the discussions stall.
  • ADR uses a simpler method compared to trial proceedings.
  • As many as 90% of cases are settled without litigation.
  • Court decisions are based on precedent, whereas ADR negotiations are addressed as free-standing actions.
  • Discussions and agreements are confidential.
  • Each party can say what the other side needs to hear.
  • Mediators and arbitrators are often highly skilled in the law and your business concerns.
  • Parties may use ADR as a stalling tactic.
  • Scheduling is usually flexible.
  • There is little to no option of appeal with arbitration.
  • Without a binding process, the decision can be ignored or upended.

While using ADR in the workplace can help your organization avoid drawn-out and expensive litigation and help improve a tense work environment, it’s not necessarily appropriate for all situations. In order for ADR to work effectively, all parties must be willing to actively participate and stick with the decision. Having the assistance of an experienced business attorney helps with your conflict resolution needs.

Learn More About Alternative Dispute Resolution in Texas

At Feldman & Feldman, we know the courtroom is not the ideal starting point for every dispute. Our business lawyers have substantial experience counseling clients through informal negotiations and alternative dispute resolution, including arbitration and mediation when appropriate.

Disputes of varying degrees are bound to happen in any workplace, regardless of whether you work from home or in the office. If you are involved in a business dispute and would like to learn more about how we can help you, contact us today.