Business disputes happen all the time. Whether it’s a disagreement between business partners, a professional who failed to meet industry standards, a violation of confidentiality agreement, or a labor and employment issue, finding a resolution to a business dispute will depend on the nature of the disagreement.
In some cases, the best resolution is one that happens quickly and quietly, with as little disruption to the business as possible. In others, the business relationship cannot be salvaged, and the only resolution will involve legal action.
Many disputes can be avoided through sound planning, getting agreements in writing, the inclusion of dispute resolution processes in contracts, and avoiding miscommunication. But despite best efforts, business disputes are inevitable.
A business lawyer can proactively help you avoid issues with risk management strategies and assist you with dispute resolution when they do arise.
Common Business Dispute Causes
Business disputes are a part of running a business, and our lawyers have seen them all. To protect your business and plan for how you will resolve business disputes, it is helpful to understand the most common causes of business disagreements and different ways to resolve them.
Breach of Contract
Contracts are used to hold businesses together and to outline agreements with service providers and other businesses. But when one party does not uphold their end of the bargain, the result is a breach of contract. Breach of contract disputes can come from lack of payment, missed deadlines, or obligations that were not performed.
Resolving a breach of contract dispute will depend on the type of agreement that was breached and the motivations of the parties involved.
Business owners may disagree about the direction the business is taking, misuse or abuse of company funds, breach of fiduciary duty, conflict of interest, disagreements over hiring or other management decisions, or financial issues and debt. These disagreements can arise in businesses large or small.
Some shareholder disputes can be resolved with little disruption to the business. One partner may choose to leave, and the business will carry on. Other times the business will dissolve and cease operations. Depending on the complexity and severity of the dispute, legal steps will need to be taken to ensure the governance procedures and applicable laws are followed.
If your business hires a professional and their work is not performed with the appropriate level of quality or violates a professional standard, the professional may have been negligent. The business may claim that the professional breached their duty of care and the business was damaged as a result.
Some claims of negligence can be resolved quickly without the need for legal action. But when the professional claims they did nothing wrong or is unwilling to compensate the company to fix the problem, the only option may be legal action.
If confidential information or other trade secrets are stolen by a competitor or misused by a former employee or business partner, a business may have a claim whether or not there is a confidentiality, non-solicitation, or non-compete agreement. Business owners need to act quickly with sound legal guidance to protect the valuable intellectual property of the business. This may require filing an action with a Court to immediately stop the other party from using or disclosing the business’ proprietary information.
Labor and Employment
When running a business with employees, labor and employment issues are bound to come up. Each company has unique needs and risks that can change over time and growth. A business lawyer will be able to assist with proactive planning steps that fit your company culture - like employee handbooks or employment - but even then, there is no guarantee that an employee will play by the rules. When problems with employees arise, sound counsel is essential to know how to navigate those issues and keep the company’s workforce going strong.
Resolving Business Disputes
Resolving a business dispute will depend on the nature of the disagreement and the objectives of the disputing parties. The methods used to resolve disputes often overlap. For example, a failed negotiation may lead to arbitration or litigation, and then a breakthrough occurs and the disputing parties will ultimately arrive at an agreement through negotiation.
To successfully resolve a business dispute, it is helpful to understand different methods of dispute resolution.
In the early stages of business disputes, communication is key. Business owners, often with the assistance of their lawyers, can negotiate a solution to the disagreement, and the matter will be closed. A meeting to discuss the disagreement may be all that is needed to make necessary changes, and the business can continue moving in the right direction.
A slightly more formal method of resolving business disputes involves the use of mediation. In mediation, disputing parties work with a neutral third party to help negotiate the dispute. A mediator is trained in dispute resolution strategies and can help the disputing parties find a middle ground that allows them to move forward.
Other times, a business may need to submit a dispute to arbitration. In arbitration, the disputing parties present their side to a panel of impartial arbitrators who evaluate the case and make a decision. Sometimes arbitration is binding, while other times it is not. Oftentimes, arbitration proceedings are private and confidential.
In an arbitration, the rules of evidence do not apply and there is no formal discovery. Arbitrators may ask to review relevant documents and to hear from representatives of both sides of the dispute.
Some business contracts include an arbitration that requires disputing parties to submit to arbitration.
Litigation is the formal process of taking a dispute to court. A complaint is filed, the parties exchange information through the process of discovery, and the case is scheduled for trial.
As the parties learn the strengths and weaknesses of their cases, they may consider trying to resolve the issue through mediation or arbitration. During litigation, negotiations are often ongoing.
Litigating business disputes can be expensive. It also offers very little privacy, as documents filed in court become matters of public record. But in some cases, a trial is the only way to resolve a disagreement.
Contact RKPT for Assistance Resolving Business Disputes
Whatever the nature of your business dispute, the corporate lawyers at RKPT can assist you in finding a resolution. With offices in Cincinnati, we represent clients through the United States.
Learn more about our litigation practice and contact us today to schedule a confidential meeting with one of our attorneys to discuss how we can help.