5 Ways Start-ups Can Benefit From Mediation

2nd October 2017 Resolution Centre

Craig Dunford BL outlines how start ups can benefit from mediation to resolve disputes…

The atmosphere of life in a start-up can be like a pressure cooker. 

There is a lot riding on the success of your company, and – with team members making massive investments of time and money to get an idea or product off the ground – when tempers flare, the entire company’s future – and its investors’ money – could be put in jeopardy.

That’s why a growing number of start-ups across the UK and Ireland are turning to alternative dispute resolution, or mediation, to resolve problems and issues faced along the way. Here are 5 ways start-ups in crisis can benefit from recruiting the skills of Accredited Mediators like Craig Dunford BL, who specialises in commercial and alternative dispute resolution at The Bar of Northern Ireland’s new Resolution Centre.

1. Avoiding Escalation
When faced with an internal conflict or even one having to do with mergers and acquisitions once your start-up is off the ground, mediation can avoid a dispute escalading or getting out of hand. Not only can turning to mediation save your business a lot of money by keeping a situation out of court, but mediation clients can also decide the terms of their own agreement with the assistance of the mediator.

There is no final agreement unless both clients agree to it, and mediation allows you to eliminate the possibility that a judge will order something that makes no sense to you or puts you at a disadvantage.

2. A Non-Adversarial Solution
A major benefit of mediation is that it can preserve relationships between businesses. The way the courts are set up, is that there will always be a perceived ‘winner’ and ‘loser’ of a dispute should it be settled by a judge. When two parties engage in mediation, a neutral party comes in as opposed to a court in which one lawyer is on one side and another advocating for the other side.

The mediator helps participants focus on effectively communicating with one another as opposed to attacking one another and avoids language and positions like ‘right’ and ‘wrong.’ Not only can this method avoid one party feeling let down by the outcome, but it can also salvage a troubled business relationship around. This is vital if the partnership must continue for the sake of the business.

3. Preserving Reputation
One wonderful thing about mediation is that the whole process is confidential. By engaging in mediation, you will be able to keep your dispute out of the courts (which are publically accessible) and instead meet your mediator in the privacy of The Resolution Centre, which provides sound-proof conferencing and meeting facilities, secure print and wi-fi services, and even its own private lift access. By engaging with such a discrete method of problem solving you can lessen the reputational impact of the dispute, and have a better chance of keeping your dispute out of the public sphere. Mediation clients can decide what goes into the paperwork which could limit any potential embarrassment or sensitive information entering the public domain.

In litigated cases, you often risk having ugly allegations and personal information ending up in the public record. Keeping a dispute private and off the record will help to limit damage when creating future collaborations or when seeking additional investment, acquisition or mergers in the future.

4. Lower Cost Route to Solving a Dispute
Traditional litigation is incredibly expensive, with highly unpredictable costs once your case has reached the court. In mediation, you will spend your time trying to resolve the issues at hand rather than constantly filing motions against each other.

Additionally, litigation clients run the risk of having to pay the other side’s legal fees as well as their own, if ordered to do so by a court. Mediation can be much more cost-effective, because the focus is on constructive resolution, not winning against the other side. Further, if you have investors or funders backing your project, mediation is a much more favourable route to take to solve a problem, as there is a greater chance of recouping their investments rather than money being lost in the legal process.

5. Encourages Self-Reflection and Communication
When two parties enter into mediation, it’s essential that they are willing to reflect on their own shortcomings as well as being open to change going forward. Because mediation is more of a conversation with a final agreement rather than a black-and-white dispute with a winner, the process of mediation can help to shed light on business practices or ways of thinking that need to be adjusted for future success.

As a result, both parties typically walk away from mediation with an understanding of their shortcomings, which they can address to avoid future issues. This less confrontational approach to solving a problem can also help to preserve a partnership. After all, working in a start-up is all about building relationships, and the last thing you want to do is damage the most important connections you have in early days of your project. In many cases, two business partners who enter into mediation can move beyond the conflict at hand and successfully continue their collaborations!

If your start-up could benefit from the intervention of an Accredited Mediator or Arbitrator, contact The Resolution Centre at theresolutioncentre.co.uk