Contracts play a significant role in business relationships; they can act as both a blueprint and a safeguard for the mutual interests of all parties involved. By clearly and deliberately setting forth the expectations of the parties in the contract, the contract can serve as the foundation of professional relationships. Many critical components should be considered in every contract to ensure that you are protected. However, for today's blog post discussion, we will limit the discussion to a critical measure that business owners should consider in handling dispute resolution and potential litigation. 
One strategy gaining popularity, and for good reason, is the pre-suit mediation requirement. This form of alternative dispute resolution can produce tremendous results for business owners by resolving disputes early in the process before parties become entrenched in their positions through the long and expensive litigation process. Pre-suit mediation enhances early discussions and efficiency and fosters collaboration between the parties to resolve disputes. In this blog post, our contracts lawyer explores several key benefits of including a pre-suit mediation requirement in your contracts.
Six Key Benefits of Pre-Suit Mediation:
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Enhances Dialogue and Mutual Understanding
By facilitating an early dialogue between parties, pre-suit mediation sets the stage for a deeper understanding and cooperation, often preempting the escalation of disputes. Once litigation commences, parties frequently become entrenched in their positions and have difficulty seeing the other side's point of view. This proactive communication strategy not only clarifies misunderstandings but can also fortify partnerships by fostering trust and collaboration.
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Cost-Effective
The financial implications of litigation can be staggering, encompassing not just legal fees but also court expenses and the potential drain on resources over an extended period. Presuit mediation can be a more economical alternative, curtailing costs by steering disputes towards resolution before they burgeon into full-blown litigation, expensive discovery, and unknown results. Mediation often conserves financial resources and spares businesses from the unpredictability and expense of courtroom battles and drawn-out litigation costs.
The unpredictability of litigation outcomes can pose significant risks to businesses. Presuit mediation acts as a buffer against these uncertainties, offering a more controlled environment for dispute resolution. By resolving issues before they escalate to court, businesses reduce the risk of unfavorable judgments and the potential for significant financial repercussions.
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Streamlines Dispute Resolution
Time is a precious commodity in business. Traditional litigation can be a protracted process, diverting valuable time and attention from business operations. A typical civil case takes 18 to 24 months (on a fast-track schedule) to get to trial. Presuit mediation, by contrast, is designed for expedience, often leading to quicker dispute resolutions. This rapid turnaround ensures businesses can swiftly return their focus to their core activities, minimizing the operational disruptions caused by extended legal disputes.
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Preserves Vital Business Relationships
The adversarial nature of litigation can strain if not outright sever, professional relationships. Presuit mediation, emphasizing mutually beneficial outcomes, offers a pathway to preserve and strengthen business connections. By prioritizing agreement and understanding over contention, pre-suit mediation helps maintain the integrity of business relationships, which are often crucial for long-term success.
Incorporating pre-suit mediation into contracts signals a business's dedication to resolving disputes through cooperation and good faith. This commitment can set a positive tone for the entire business relationship, showcasing a preference for collaboration over confrontation.
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Safeguards Confidentiality and Proprietary Interests
Unlike the public forum of a courtroom, mediation sessions are private and confidential. This confidentiality is paramount for businesses eager to protect sensitive information, trade secrets, and competitive advantages. Presuit mediation ensures that disputes' details and resolutions remain shielded from public scrutiny, safeguarding the business's proprietary interests. Once a lawsuit is filed, practically anyone with an internet connection can view the case's key filings, parties, attorneys and other documents. Mediation is a confidential process, and the discussions shared in mediation cannot be used later. 
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Customized Solutions and Empowers Parties to Control Outcomes
The flexibility of mediation allows for creative, tailor-made solutions that are often unattainable through court verdicts. Mediation imbues parties with a greater sense of control over resolving their disputes. Unlike court decisions handed down by a judge or jury, mediation outcomes are collaboratively reached by the parties involved. This sense of empowerment can lead to more enduring and satisfactory resolutions.
This approach enables businesses to address their specific needs and circumstances, crafting agreements that are pragmatic and aligned with their strategic objectives, and ultimately craft solutions that make sense for all parties involved.
Conclusion
Incorporating pre-suit mediation clauses in business contracts is a forward-thinking strategy that underscores a commitment to efficiency, cost-effectiveness, and preserving professional relationships. By embracing this approach, businesses can navigate disputes with greater agility and less disruption, safeguarding their interests and ensuring a more harmonious operational environment. As experienced business law lawyers, we advocate for the strategic use of pre-suit mediation.
We guide our clients in integrating this powerful tool into their contractual frameworks. If you have any questions regarding contracts or business law, please get in touch with us today to schedule your free consultation.
