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Resolving real estate disputes through negotiation is not backing down

| Jul 28, 2020 | Commercial Real Estate, Construction Defects |

If they work in the real estate industry for any length of time, developers, construction companies, property managers and others will likely face legal disputes. The competitive nature of highly successful real estate professionals may cause them to pursue litigation aggressively and “come out on top.”

That’s one option. Courts exist to help resolve disputes. When differences occur, opposing sides can lay out their version of the matter to a judge or jury and hope the ruling goes in their favor. Trial verdicts often delineate a clear “winner,” but that is not guaranteed. A verdict can be split. What’s more, a verdict can be appealed, and the appeal may be appealed.

There are other ways to resolve disputes

Alternative dispute resolution (ADR) is designed to avoid litigation by getting the two sides to negotiate. A stereotypical hard-charging business leader may see this as backing down or, at the very least, compromising. However, savvy business minds understand that ADR is a smart way to resolve many business disputes. Here’s why:

Quicker resolutions – Litigation is time-consuming. There’s no way around it. There is discovery and probably a round of mediation or arbitration. Then there’s the wait for a court date, pretrial hearings, motions, responses… You get the picture. The competitive nature of real estate means companies must stay focused on their industry and their competition. Litigation can be a huge distraction.

Costs – Lawyers’ time is money. See “quicker resolutions” above and you understand why litigation can become wildly expensive.

Confidentiality – Court cases in the U.S. are public. Corporate reputations can take serious hits even if a verdict comes out in your favor. Agreements reached in mediation or arbitration can remain confidential.

More control over who decides the outcome – Sure, it’s possible to strike some prospective jurors in a trial if they do not appear favorable to your argument. However, you cannot pick the judge who is assigned to your case, and that can have as much impact on the outcome as any other factor. By resolving a dispute through arbitration or mediation, you prevent known unknowns from occurring.

More control over the outcome itself – So-called can’t-lose cases do lose. Mediation and arbitration provide parties more control over the process and the outcome. Unless you sign an agreement to enter into binding arbitration, it’s possible to work to reach a resolution through ADR and litigate if that is not successful.

Working to resolve disputes is not giving in

It’s often stated that a good negotiation is one in which both sides walk away equally unhappy. The preferred outcome in ADR is a win-win feeling.

Negotiating a settlement is not giving in. Compromising is not a sign of weakness. Business leaders, no matter how competitive they may be, must recognize the benefits of negotiating a settlement and the landmines that a trial can present.