You've been sued by a consumer. Now what?
First things first: What are your business's priorities regarding how and where the dispute is resolved? Should the dispute be resolved by a court, or could it be resolved through arbitration? Is this a matter your business may want to try and settle early? Does your business have a contract with the consumer? Does your contract have an arbitration provision? How can this dispute be resolved efficiently? These are some initial questions your business may consider when facing a lawsuit.
In most cases, it helps to look at your contracts with the consumer to answer some of these questions. Many contracts contain arbitration provisions that, in most cases, will steer any case strategy toward resolving the matter through arbitration. However, knowing what to expect in litigation and arbitration can help answer these initial questions and inform decisions when your business thinks about risk management for this and any potential future disputes. It's always good to understand the risks related to cost, length of time to resolution, and publicity when evaluating or re-evaluating any strategy.
So, back to the basics. What are some of the general differences between litigation and consumer arbitration? This side-by-side comparison should help illustrate those differences.
Now that the major differences between litigation and arbitration are laid out, where does settlement fit in? Litigation and arbitration both allow and encourage settlement discussions and agreements between the parties. With either of these two processes, settlement can be discussed at almost any point in time. However, if costs are a consideration, then settlement discussions at the initial stage may be most beneficial to mitigate exposure and legal costs down the road.
With this broad background in mind, how can understanding the differences between litigation and consumer arbitration inform your risk management and decision-making in potential future disputes? Some considerations could include:
Any business, whether small or large, can benefit from an overview of how legal disputes can be handled. If your company is not familiar with litigation or consumer arbitration, it is never too early to learn about the costs associated with each, the time it can take to get matters resolved, and the potential exposure your business could face. You never know when you may be hit with your first lawsuit. If your company is all too familiar with dispute resolution, then it may be a good idea to take another look at the differences between litigation and consumer arbitration to consider the overall costs to your business, the time involved, and the legal repercussions.
*Gabriela I. Chambi is a senior associate in the Washington, D.C., office of Hudson Cook, LLP. She can be reached at 202.715.2016 or by email at gchambi@hudco.com. Julia K. Whitelock is a partner in the Washington, D.C., office of Hudson Cook, LLP. She can be reached at 202.715.2018 or by email at jwhitelock@hudco.com.
Copyright © 2024 CounselorLibrary.com, LLC. All rights reserved.