What is a Dispute? Make sure you've got all your bases covered.
Disagreements in life, let alone in business, are unavoidable. From our first days in the playground to our adolescent friendships, right through to our adult business relationships - it’s part of being human to argue and make mistakes.
In a business setting, as unavoidable as it is, there is so much we can do to come out of disputes unscarred (and even sometimes with a new friend!). I believe that our reactions, preparation, and communication can change the course of our business, and lives, in a BIG way.
But first. Let’s get clear. What is a dispute?
The term “dispute” in a business setting covers a variety of unpleasant situations. Many people’s minds immediately jump to litigation – the fancy legal way of saying disputes than end up in court. Yes, disputes can get to the stage where they need to be dealt with in a formal court setting. But disputes can take many other forms before they get to that lengthy, costly and frustrating point.
A disagreement with a business partner over how to spend funds can be a dispute. An argument with a disgruntled client who has written to you demanding their money back can be a dispute. A mistake made by a supplier that turns into loss for you can be the first sign of a dispute.
Basically, any form of disagreement in a business setting, can yes, be a dispute. The key factors are usually clashing of opinions, hurt, pain and anger.
Okay. I get it, disputes are unavoidable. How can I prepare?
1.Get your business legals sorted!
We cannot emphasise this enough at TM Solicitor. Having documents that lay out all of the important stuff clearly from the get-go can be a life saver. There are a few business legal documents (which you can learn about in our podcast here) that we recommend for starting out. Even simple clauses around when and how refunds are available, what the warranty is on a product or even what your cancellation policy is can save you from murky disputes with unsatisfied clients.
In addition to making things clear, your business legal documents should have a dispute resolution clause. This is for when things do go wrong, and one party wants to start mediation or go to court (read more below). These clauses usually lay out what geographic area the dispute should be dealt with, the steps the parties should take and other important rules.
2. Record your interactions in writing
Lawyers love to do this because there comes a point in every type of dispute, where people coincidentally ‘forget what happened’ or ‘see it having happened differently’. Because of this, we (again!) recommend sound legal documents - making sure you have contracts in place with any party you’re dealing with. This includes employees, suppliers, distributors, service providers (like graphic and web designers, consultants).
Another tip is to always follow up any phone or in-person conversation with an e-mail outlining the key points discussed so that if things get heated later, everyone is on the same page with what has transpired.
3.Communicate. Communicate. Over communicate.
Many disputes happen because important details weren’t clarified before next steps were taken. That’s why we always encourage our clients to ask questions if they are unsure, and never feel afraid to re-clarify something.
Another habit we encourage it to outline expectations from the beginning. For example, if you’re starting a partnership with a friend, make sure you have a partnership agreement that clearly lays out the expectations and responsibilities of each party. Sit down with a coffee and talk through any worries, anxieties or again, expectations. Make it clear from the beginning so if things get tough – you have a roadmap.
4.Take a second and control your emotions!
When something goes wrong, our instinct can be to be heard immediately, prove the other party wrong or just be angry. In a recent episode of our Rise Up in Business Podcast, our director Tracey Mylecharane talked about the importance of taking a moment to control your emotions when something goes wrong, and not reacting immediately.
This has a huge impact on the path your dispute could go down. If you react angrily from the get-go, it could lead to the problem being inflated or for the other party to get defensive. Take a second, or preferably a night’s sleep, before you respond. Read some more great tips about interacting with clients in tough situations in our recent blog post here.
I’ve tried all that, but things are still messy.
There is hope! There is a myriad of ways a dispute can, and should be dealt with depending on the events that have taken place, the emotional state of the parties and the issue at hand.
Self-facilitated conversation – essentially, sit down and try and have an adult conversation to sort it out. This could work particularly well for partnership issues, or small issues with disgruntled clients. Sometimes it takes being the bigger person in business, especially with clients, or customers, to ensure long term peace and happiness. Again, record all outcomes in writing and make sure both parties agree to those outcomes.
Alternative Dispute Resolution – this is one step up the seriousness scale. ADR comes in many different forms including mediation, facilitation and conciliation. These approaches involve a third party that takes a set approach in assisting you to come to a solution.
Litigation – our advice is to avoid litigation unless it is completely necessary – which it can be in some situations. The process will be lengthy, painful and expensive. However, some disputes have to be dealt with in the formal court setting because of their subject matter and other factors.
For any sort dispute resolution, we recommend speaking to your business lawyer as a first step so that they can advise you on the most appropriate step forward.
Before things get heated, make sure you invest some time and energy into prevention. You’ll thank yourself later.
You might like to read more of our tips in our Legal Advice for Small Business - Ultimate Guide.
