Dispute resolution: reaching acceptable outcomes by flexible means

Business disputes are common – so common, in fact, that it’s the minority of companies who won’t handle any type of dispute throughout their period of operation. From issues regarding contracts to claims of professional negligence to disputes among shareholders – and everything in between – some are quicker, easier and more amicable to settle than others. 

It can be confusing to know who to approach when a dispute arises, let alone when it might be advisable to seek legal advice and action, what the best method of resolution is, or how much it might cost in terms of time and resources. As such, it’s critical for business owners and business leaders to understand how to approach dispute resolution should disagreements occur within their business or with third parties.

What is dispute resolution?

Dispute resolution, also known as alternative dispute resolution (ADR), is the process of resolving disputes between consumers and traders that do not involve court proceedings. Greater access to ADR, together with improved ADR processes and outcomes, can benefit both businesses and consumers. As a process, it has the potential to offer better standards of service to consumers, provide protection to involved parties, and present more efficient, cost-effective options than more-traditional routes, such as litigation. Where family members are involved, it can also have the benefit of helping parties to identify and arrive at solutions more amicably.

In highly regulated sectors such as finance, telecommunications and energy, many dispute resolution services are already well-established and working in the interests of consumers. For example, the Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FoS) are regulatory bodies who seek to settle disputes – fairly and impartially – between financial service providers and their consumers.

Many businesses also build dispute resolution clauses into contracts – with the help of dispute resolution lawyers or other professionals – which specify how parties will resolve any potential disputes that may arise.

Most common forms of ADR

Dispute resolution processes differ depending on the nature of the conflict and how the involved parties wish to address the issue.

There are some common methods of ADR, designed to find solutions to conflicts outside of traditional legal proceedings:

• Negotiation refers to the identification of an issue by the involved parties and the process by which they control and arrive at a suitable solution. Informal negotiation is incredibly common, and is often the first step in an ADR process.
• Mediation refers to the involved parties arriving at a mutually acceptable outcome with the help of an independent third party – a form of assisted negotiation. While mediation can be both formal and informal, it requires a considerable amount of involvement from all sides. The role of the mediator is not to arrive at a decision of who is right or wrong, but to identify a mutually acceptable outcome for the parties. This can be a useful route to take if parties are unable to resolve a dispute amongst themselves.
• Conciliation refers to facilitation by a conciliator – a neutral third party – whose aim is to offer the parties a non-binding proposal to help them arrive at a satisfactory solution. It offers a starting point from which parties can begin discussions. Conciliation is characterised by flexibility, confidentiality and its voluntary nature.
• Arbitration refers to a decision being made by an independent third party that is binding to one or both parties. In arbitration, parties have the ability to set the rules – for example, the fees incurred or the number of arbitrators. While it is a more flexible procedure than one required by a court, arbitration is a more formal route than negotiation, mediation or conciliation. Parties can decide to arbitrate before or after a conflict.
• Private judging refers to the act of authorising an expert – such as a private judge or an attorney – to resolve an issue. After parties have each presented their cases, the designated judge will make a legally binding decision. Private judging is used to help move cases along more quickly and to avoid public visibility of a dispute.

Dispute resolution services, along with law firms and dispute resolution solicitors, can help business owners to identify the best options available to them depending on their requirements and the nature of the conflict. In some cases, multiple ADR methods are adopted.

The future of dispute resolution

It is not appropriate to offer a one-size-fits-all approach to dispute resolution: it is not a binary process.

Systems and services must cater for all types of people and entities who are entitled to access them. Parties involved in small claims generally require quick, cost-free resolutions; in larger disputes, where the parameters are different, parties may wish to invest more time and money to achieve more robust, just solutions.

Our technological landscape is changing. Take the example of an insurance company attempting to seek a resolution regarding a personal injury claim in a road traffic accident. A future in which all vehicles record real-time speed and trajectory data means that there will be no disputing how an incidence of collision or impact occurred. Because of this, experts hazard that instances such as this – as well as other types of dispute, such as medical negligence – may become characterised by the evaluation of indisputable evidence, and associated compensation assessment, rather than anything else. In our digital world, disputes regarding transactional and personal data – including crypto-fraud and identity theft within financial services and personal banking sectors – are likely to become increasingly prevalent as disputes are recorded via chain technologies.

Access to justice is key. The coronavirus pandemic has demonstrated that there are more flexible methods available – within the legal system and other adjudication settings, many in-person hearings and processes became remote or adapted in various ways – and businesses, dispute resolution teams and other parties can all adapt to settle disputes.

Equip yourself with the skills and know-how to navigate various types of disputes

Could an awareness of key legal disciplines support you in your non-legal role? Perhaps you are a lawyer taking the next step in your legal practice? No matter your background, the University of Sunderland’s online LLM Master of Laws programme will equip you with the legal expertise to succeed in your career.

Through flexible study, you’ll develop knowledge and expertise across the breadth of the legal profession, including: commercial disputes and ADR; business law; criminal law; family law and more. Supported by experts, you’ll explore the theory, doctrine and practice of the legal system, gaining transferable knowledge designed to set you apart in your role.