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The fear factor in business litigation

Hindsight is of course always 20-20. You may very well realize now what steps you could have taken to avoid a dispute about business ownership.

In a small business, however, it's easy to overlook all of the scenarios you may need to plan for. For example, if you had to do it over again, you could have had a clearer clause about options for one partner or shareholder to buy out the other or others when certain contingencies occur.

But now that you are in a dispute, what type of approach is most likely to help you get it resolved most effectively?

Understanding motivation

To reach a favorable resolution to a dispute, it's important not just to be aware of the result you're looking for. You also have to understand what motivates the other side. That motivation usually includes fear of losing something important.

At first glance, you may think that litigation is entirely about taking up the sword and going into battle. You may think that the drawn sword will get the other party to give in.

Sometimes that may be true. Other times, however, it can make the other side dig in their heels even deeper. This can lead to escalation of the dispute rather than de-escalation and run up your legal costs.

This is why arbitration and mediation have to be part of your tool kit, along with the shiny sword of litigation. To be sure, those approaches have their limitations, which will explore in future posts. But they also offer many efficiencies compared to courtroom litigation.

Seeking favorable settlements

But let's say you aren't using mediation or arbitration in your particular case. How are you most likely to get the other side to settle on terms that are beneficial to you, without having to go through the unpredictability and expense of a full-blown trial?

The answer is that you can use that very unpredictability to your advantage. The opposing party or parties may be very anxious and uncertain about the outcome that could come at trial. Fear of this uncertainty can create the openness to a favorable settlement.

In short, effective resolution of a business dispute involves much more than a willingness to engage in courtroom jousting if necessary. You should be aware of how fear of the unknown is affecting the other side and how you can use that to your advantage.

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Chodos & Associates
1880 Century Park East
Suite 615
Los Angeles, CA 90067

Toll Free: 866-986-7255
Phone: 310-598-3405
Fax: 310-203-3866
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