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How to Settle a Dispute, Without Going to Court

by | Nov 13, 2019 | Business, Negotiating, Startups

When you hit a major disagreement in a business relationship, any goodwill you’ve built goes flying out the window and suddenly a relationship that was once enjoyable becomes dysfunctional and nasty. While your emotions may be telling you that the best solution is to lawyer up and burn your adversary to the ground, sometimes the most cost-effective, quickest, and simplest way to resolve a dispute is NOT going to court. Here are 8 tips that will help you keep your cool, build confidence in your position, and develop a strategy to reach a resolution.

1. Know the Facts.

First and foremost, before launching a nastygram to your now-adversary, get your facts in line.

  1. Make a timeline of the relevant events.Dig through documents, communications, and conversations that detail the facts surrounding the issue at hand, such as contracts, purchase orders, invoices, email strings, etc.
  2. Determine how you were wronged.Were products shipped incorrectly?  Are your invoices going unpaid?Is your opponent refusing to accept product returns?  Did your opponent contact your customer directly to work a deal?
  3. Identify how the problem occurred.  Was there a miscommunication, mistake, error, omission, or willful misconduct?
  4. Sum it up.  Try to describe the issue in a single paragraph.  Remove any unnecessary facts, like how nice it was for you to send the company a congratulatory cake after you closed your deal, and now they’re being bullies and refusing to accept product returns.  If it’s irrelevant, leave it out.

2. Know Why You Care.

Figure out what the impact is on your business.

  1. What is the tangible or financial impact?  Calculate all costs involved, such as product costs, shipping, replacement costs, labor, fees, lost revenue, etc.
  2. What is the hard-to-measure impact?  Have you lost a contract, missed out on an opportunity, suffered harm to your reputation or image?  Estimate the total value.
  3. Are you holding a grudge?If you performed the above analysis, and found there is no measurable impact on your business, you are likely upset or offended at someone’s behavior.  Take a breath, cool off, and let it go.  Being upset will hinder your success when you get a reputation for being difficult to work with, or generally on bad terms with others in your industry.  If possible, forge a new relationship that can deliver the same benefits without the added hassle of abuse and disrespect.

3. Know What You Want.

If you don’t know, how can you expect to get it?

  1. What is your ideal, best-case scenario for the resolution of this issue?  What is the urgency
  2. What is your worst-case scenario?If you give your adversary exactly what they want, what will happen?
  3. Is there a “middle ground” that you can live with?  If you have to compromise, what are you willing to agree to?  Don’t forget that in business, your most valuable asset is time.  Know what your time is worth and calculate that into your consideration.  If you end up settling, you may still come out ahead if you are able to make a clean break from a soured relationship, open yourself up to new opportunities, and prevent yourself from expending time, money, and energy when it could be better spent elsewhere.

4. Know Your Legal Options.

If you have a signed agreement, is there a clause that specifies a method for dispute resolution, such as mandatory arbitration? Know this going into battle, as it may dictate your legal options. Your attorney can help advise you on the proper steps to be taken.

5. Know to Contact Your Attorney.

When a dispute starts heating up, you should contact your attorney right away to report the issue. It’s better to give your attorney a heads-up now when there is still a shot at resolving it than to wait until the issue compounds and becomes further complicated. You’ve done the legwork to determine the facts and desired outcome, so you should be able to communicate with your legal counsel efficiently. A good attorney will listen to you and offer valuable guidance and an effective strategy for resolution, without going right for the big guns and filing a lawsuit.

6. Know You Are Prepared.

Once you have taken the time to lay out the issue using the steps above, and have the support of your attorney, you should feel certain about your understanding of the situation, desired resolution, and strategy for engaging with your rival. Have confidence in yourself! Being prepared is half the battle!

7. Know Your Manners.

Request some time to speak with your opponent, and do so with a level head. Human beings do not enjoy being told they’re wrong, so your approach must be courteous, thoughtful, fact-based, and accurate. Remember to stay respectful and classy. No one likes a pompous know-it-all! Be polite, lay out the facts, present your supporting documentation and evidence for your position, and request your desired outcome. Do not become emotional, call names, raise your voice, or belittle your opponent. Command respect by being respectful. If your opponent engages in indecent behavior, ask to speak another time when they can communicate with you calmly and civilly.

8. Know When to Hand it Off.

If you find you are repeatedly met with nastiness and your attempts at resolution are unproductive, follow up with your attorney. Your attorney can advise of you next steps and options that meet your budget and time requirements, such as serving your opponent with a formal demand letter, negotiating a settlement, or recommending conflict resolution via mediation. Just because you engage an attorney doesn’t mean the matter has to go to court.

Andrea A. Tarshus, Esq. began Tarshus Law Firm @Tarshuslaw.com in 2015 to fill a void in the legal ecosystem: efficient, accessible, and fair in-house and General Counsel legal services for business owners. Her engagements regularly include business legal startup paperwork, negotiating and executing contracts, administering internal legal and operational controls, and creating legal documents that protect the company’s best interests.

This article is intended to be informational in nature, should not be relied upon by the reader without consultation with an attorney, and does not create an attorney-client relationship between the author and reader.