If you run a small or medium size business, one of these days you’re going to have a dispute – with a client, a vendor, customer, or supplier. It will happen. Maybe someone refuses to pay you for the work you did or services you provided. Or they paid you with a check that bounced. Or the reverse ¬– you paid for work that was never completed or supplies that were never delivered.
There are several options for trying to recover this lost money, none of them very satisfying. For small amounts of between $1,000 and $10,000, there’s always small claims court. No lawyers are involved but there can still be hundreds of dollars in filing fees, and even if you win there’s no guarantee (or enforcement mechanism) to ensure your bad debtor actually PAYS you the amount agreed-to in court. Good luck.
For large cases in which the amount at stake is in the millions or the future of the business is at risk, it is often worth the cost of engaging your lawyer to conduct lengthy discovery depositions and attend court hearings. It may take months or years, but can be worth it when a lot is at stake.
Then there are the more common in-between business disputes of between $10,000 up to about $500,000. These are called “limited stakes” cases because the amounts are relatively low and you simply need to get it settled so you can move on and focus on running your business instead of a court case.
Lawyers have another name for them: “dog cases.” They know from experience that trying to recover the money ¬– whether through negotiation, arbitration, mediation or litigation ¬¬¬– will be a long, tedious, and contentious process that in the end may not be worth it, at least for the business owner. While the lawyer may earn $300-$400-an-hour, the legal bill often swamps the amount you’re trying to recover. To avoid these dogs, some conscientious lawyers won’t even take cases below a $500,000 threshold because they know the client will be unhappy that the time and cost exceeds the amount at stake.
So, in the end, many business owners faced with a dispute take the final option: they walk away and swallow the loss.
But there is another way for everyone to win in those limited stakes cases, a way that’s far less expensive, far less adversarial, and far less time consuming or stressful.
It’s NDR which is covered extensively in Rob Christopher’s forthcoming book, Just Right: How Neutral Driven Dispute Resolution Can Close the Gap in American Civil Justice.
Neutral driven dispute resolution (NDR) is an innovative process that delivers real justice to honest businesses and individuals when the traditional adversarial dispute resolution process is too expensive, too time consuming and grossly inefficient. It’s driven by neutral judges, peers, or experts, agreed upon in advance by both parties, instead of dueling lawyers. It’s faster, more affordable, and more collaborative for everyone involved.
The NDR process can be written into contracts at the time of signing. Both sides agree that should any dispute arise, the NDR process will be the one used to reach a settlement. It’s like having a spare tire in your trunk. You may never need it but it sure is nice to know it’s there if there’s a blow-out.
Just Right explains the NDR process and how it has helped many business owners save time, money, and relationships in greater detail.
But for now, if you want to see the true cost of litigation to recover a bad debt, regardless of whether you win or lose, there’s a Total Cost of Litigation Calculator on our website. You can plug in the amounts in dispute and see a rough estimate of what it would cost whether you choose arbitration or a trial. Don’t be surprised if you’re shocked at how quickly legal fees can exceed the amount you’re trying to recover, along with the hidden costs of these dog cases – lost time away from the business, the constant stress and lost sleep, and damage to relationships and reputations often caused through litigation.
You’ll also see how NDR can be a time and money saver. It’s a far more equitable and satisfying process to settle business disputes.
For more information go to our website Just Resolve: The Cure for the Common Lawsuit.