Litigation vs. Arbitration: What's Best for Your Business?

Arbitration and litigation both have a place in resolving business disputes. Each one serves a different purpose and leads to a different outcome. A business litigation lawyer can help you determine which avenue might be best suited for your specific business situation and advise on the most effective actions to take. 

At Thorsnes Bartolotta McGuire, we help companies protect their business interests and recover millions in losses. Our team understands that there is a lot at stake for your company, and our experienced lawyers know how to confidently guide you through business law to get you results. Schedule a meeting with one of our business litigation lawyers today when you call us at (619) 236-9363 or contact us online.

What Is the Difference Between Arbitration and Litigation

Litigation and arbitration share many similar features and approaches. However, each one provides a distinct method for dispute resolution. What may be effective in one situation may not be in another. 

Litigation is used when a business matter must go to court in order to be resolved. In court, the arguments of each side are heard by a judge and jury, followed by a decision to settle the matter between both parties. The decision can be appealed if one or both parties do not feel the decision was fair. 

Conversely, arbitration is used to settle a business dispute without having to go to court. In this instance, an objective third party, known as an arbitrator, hears both sides of the issue and makes a decision. Their decision is binding and may not be appealed. 

When to Use Arbitration vs. Litigation for Your Business

There are several key differences between arbitration and litigation, and they are designed to meet different goals and outcomes. Two key differentiators are cost and level of privacy. Below is a closer look at the advantages and disadvantages of each.

Pros and Cons of Arbitration

There are many benefits to choosing arbitration over litigation for your business dispute. This method is more informal and can settle a variety of issues. Some of the pros of arbitration are that it keeps the issue private and resolves it faster with less expense. Arbitration also allows your case to be heard by a neutral third party whom you and your lawyer have a say in selecting. 

On the other hand, arbitration can have its drawbacks. Depending on what your issue requires, arbitration may not be conducive to resolving your business dispute. Some cons of arbitration are that you are allowed to present less evidence and cannot appeal a decision once it has been made. Additionally, both parties must agree to arbitration before it can proceed.

Pros and Cons of Litigation

Litigation is a more formal and traditional way of settling. It can also provide a few options that arbitration does not. Some advantages of litigation include the ability to appeal a decision you may feel is unfair, and you are allowed more evidence in your case. You can also force the other party to go to court to resolve the issue. 

Despite its useful role in resolution, litigation may often be used for major issues that are not easily settled. As such, these cases can be more involved and require more resources than arbitration. The disadvantages of resolving matters through litigation can mean that it is a costly and drawn-out legal battle. Your issue is also heard publicly by a judge assigned to your case rather than selected. 

Types of Business Disputes That Can Be Subject to Arbitration or Litigation

A myriad of disputes can arise throughout business interactions, and not all are easily resolved. For those instances when you and another party have reached an impasse, another party has infringed upon your rights, or someone has acted in bad faith during your business dealings, a knowledgeable business litigation lawyer can be a valuable and essential asset. 

Arbitration or litigation can help you settle some common business issues, such as:

• Breach of contract
• Competition or business advantage disputes
• Infringement

They can also help settle issues between partners, shareholders, and employees, as well as issues concerning intellectual property, real estate, business development, succession, or fraud.

Thorsnes Bartolotta McGuire safeguards your business assets and ensures you and your case receive the attention it deserves. Our team is wholeheartedly dedicated to supporting our business clients and helping them get the representation they need. 

When you contact us or call us at (619) 236-9363, a business litigation lawyer can provide specific counsel on your situation and the laws that govern it. Since each has different legal requirements and considerations, a unique strategy is needed for each type of dispute. 

What Can Be Recovered Through the Use of Arbitration and Litigation

Regardless of what method you use, the purpose of settling a dispute using arbitration or litigation is to recover what you have lost or suffered through a dispute or infringement. 

There are several ways you can recover your business losses. Some common ways you can be compensated for your losses include:

• Compensatory damages: Compensation provided for monetary losses incurred due to another party’s actions. The amount is based on the financial value of said losses. 
• Nominal damages: A small amount of money claimed by the plaintiff whose rights were infringed upon, but does not have significant losses and has not established the burden of proof necessary to receive compensatory damages.
• Liquidated damages: A designated sum of money that must be paid if one party breaches their contract. It is designed to compensate the other party for harm caused by the broken contract.
• Incidental damages: Payment for losses that arise from another party’s failure to perform their duties satisfactorily.
• Punitive damages: Additional compensation for the plaintiff when excessive harm or loss was caused by another party. These damages also serve as a punishment for the defendant. 
• Consequential damages: Damages paid to the plaintiff for any harm they suffered as a consequence of another party’s actions. 
• Reliance damages: Provides compensation for losses that resulted from one party breaking their agreement or contract with another party who relied on their services. 

Talk with your business litigation lawyer to understand the value of your losses and what type you may be entitled to receive. Your lawyer will negotiate on your behalf and fight to ensure you receive fair treatment throughout the dispute-resolution process. They will work to protect your business assets as well.

Additional Types of Remedies Used to Resolve Business Disputes

In addition to receiving monetary damages to recoup your losses and protect your contracts, property, finances, and rights, a number of other remedies can be applied to your situation. These are known as equitable remedies and are designed to restore the relationship between both parties. Some of these remedies include the following:

• Covenant not to sue: An agreement between two parties where one who may have a right to sue, agrees not to take legal action. Additional conditions may be applied to this agreement.  
• Injunction: An order by a court forcing a party to take an action or cease action altogether. Injunctions may be temporary, permanent, or preliminary, depending on the nature of the case. 
• Specific performance: Requirement by the court for one party to carry out the obligations and responsibilities outlined in their contract to the best extent possible, rather than just providing monetary compensation.
• Constructive trusts: A trust created by the court for the purpose of transferring assets back to their rightful owner from a party they do not belong to. It is used to hold the assets for transfer and does not act as a typical trust. 
• Accounting for profits: Legal action by which a defendant must relinquish any profits they made through dishonest or illegal actions.
• Reformation: Contract modifications intended to more accurately reflect each party’s goals and intentions following an error in a previous version. 
• Restitution: Payment owed to the plaintiff by the defendant to provide compensation for the losses the plaintiff suffered as a direct result of the defendant’s actions. 
• Quiet title: Used to determine property ownership. Occurs when a property owner pursues a legal action against anyone who attempts to claim the property. Once established, the property’s title may no longer be questioned. 
• Rescission: Ends one party’s contractual obligations and reverts the relationship to its pre-contract state. This remedy is often used in cases where important and relevant facts were misrepresented or misconstrued. 

Preventing Business Litigation

Preventing disputes can go a long way toward avoiding the need for arbitration or litigation. Having the right tools, documents, and processes in place can help set you up for success if and when a dispute arises. A lawyer can help you by advising on what items to have in place, as well as drafting the appropriate documents. 

One common issue that often requires arbitration or litigation to resolve is disputes between business partners. To reduce the chances of these issues escalating, there are a few things every business partner needs to know. To prevent disputes, it is important that partners are equally committed to their business, they can rely on each other, and they determine methods for conflict resolution ahead of time. 

Additionally, business litigation can also arise between businesses and customers. This may occur through breach of contracts, vendor issues, issues with products, and defamatory online business reviews, to name a few. Legal contracts and clearly defined processes can help mitigate these types of legal disputes. 

Thorsnes Bartolotta McGuire Protect Your Business Interests

When facing a business dispute and deciding between arbitration vs. litigation, Thorsnes Bartolotta McGuire is ready to represent you and your organization’s interests. A lawyer will thoroughly investigate your case to determine the most effective resolution method, strategy, and supporting evidence. They will fight for you aggressively and tirelessly, regardless of which dispute resolution method is used. 

With over 47+ years of experience, our team will protect your rights and fight for you and everything you have worked so hard to build. Contact us online or call us at (619) 236-9363 today to learn more about our team and how we can resolve your business dispute.