When it appears that you are on your way to court over a business disagreement that has spiraled out of control, or you anticipate disputes over your final wishes, you may want to consider the concept of alternative dispute resolution (ADR).

Two processes are part of ADR: Mediation and arbitration. How does the ADR process work and when should you use it?

Settling business conflicts

Mediation is an approach that many companies use successfully because it is a less painful way of resolving business disagreements than a court battle. A neutral third-party mediator helps you and the other party collaborate on a solution to your problem.

If instead, you must resolve your differences in front of a judge, you are at the mercy of the court’s docket schedule, which could affect your bottom line. The protracted journey through the justice system will also cost you more in legal fees, which may be an uncomfortable stretch for your financial resources.

Resolving disputes between heirs

When it comes to matters such as settling an estate, emotions often run high. If you worry about disagreements over inheritances after you are gone, you might insert an ADR clause into your trust document. This requires your beneficiaries to use arbitration in settling any differences they might have over the distribution of trust property, rather than allowing them to sue each other. 

They present their cases to a neutral third party serving as arbitrator, and this person determines the results rather than a judge. Like a judge, his or her decisions are legally binding.

Seeking professional help

Because of its versatile applications in the legal arena, ADR has become increasingly popular. However, even though it saves you time and money, it is a process of law that you may not want to navigate alone. An attorney may mediate your dispute, help you draft a clause in your estate plan that is legally binding or assist you in preparing evidence to present to an arbitrator.