Solving business disputes without breaking the bank

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Resolving business disputes with mediation, and skipping a costly journey to the courthouse, should be a welcome alternative for cash-strapped firms struggling to get through the recession, some experts say.

New Jersey has mandatory mediation for civil lawsuits: the parties must sit down for at least one hour, in person, and try to resolve their dispute out of court before going ahead with litigation, said Robert McDonnell, president of the New Jersey Association of Professional Mediators.

“The idea of mediation is to sit down and reach a resolution where maybe nobody wins, but nobody loses either,” McDonnell said. A typical case “might be a real estate sale with more than one broker involved, and they have a dispute over the commission.”

He recently mediated the case of a condominium buyer who moved in, unpacked, and found out the building was too noisy, and wanted his money back. Construction has a way of generating legal disputes: when the work doesn’t go as expected, the property owner halts construction and the contractor sues.

“I think people are looking at mediation because it’s more cost effective,” said Anthony Limitone Jr., a Morristown attorney who represents individuals in employment disputes. “Both sides are ready to go into mediation at an earlier stage because of the savings and the effectiveness of the process.”

Limitone said he recently mediated a case where a former employee sued his employer for wrongful termination. “The individuals were out of work and couldn’t afford litigation.” He said mediation also benefits the employer: “If their sales are down, they don’t want to spend a lot of money on legal fees, and they can save a lot of money through mediation.”

Haddon Heights attorney William Donahue Jr. specializes in divorce mediation, and he said divorce can put a catastrophic strain on a small business. Since mediation cuts legal bills, there’s more money left over for a business owner to acquire the spouse’s interest in the business.

“If you have both spouses working in the business and they get divorced, one spouse has to buy the other spouse out of the business, and the other spouse has to go out and get a job in a tough employment climate,” Donahue said. Any money that can be saved through mediation goes directly to the bottom line.

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The print version of this story featured an incorrect spelling of William Donahue Jr. It is now correct in the version above.