Whether it is with a client, vendor or partner, many businesses have to deal with disputes at some point. There are numerous options available to resolve problems, and one may be a better option based on certain factors. 

Litigation is the most familiar type. However, there are alternative processes that are less expensive and more flexible. 


According to Harvard Law School, litigation takes place in front of a judge and sometimes a jury. There is a plaintiff and a defendant, and the judge rules based on evidence each side presents. Parties in a litigation situation often end up settling before a trial can occur. The decision and all information presented in litigation are available to the public. 


Mediation is an alternative way to resolve disputes. A neutral third party, known as a mediator, helps both sides come up with an agreement on their own. Mediation is usually more affordable than litigation, and it allows for more dialogue between the two parties. The resolution made in mediation is nonbinding. 


According to the American Bar Association, arbitration is a combination of mediation and litigation techniques. The arbitrator is a neutral third party, but he or she does make a ruling based on arguments and evidence from both sides. 

Arbitration has a similar format to a court trial, but it is less formal and takes less time. An arbitration can be nonbinding, in which both parties need to accept the ruling first. The process, however, can also be binding. This means the court can enforce the ruling, and the appeals process is only applicable in certain circumstances.