How to handle business disputes

Benjamin Franklin is credited with the axiom that “nothing is certain except for death and taxes.”  Another thing that is certain is conflict. Conflict is inevitable among business partners, spouses, family, and friends but conflicts in the workplace can be particularly difficult to resolve. Here are some tips and techniques that you can use to deal with conflicts at the workplace (and at home).

Active Listening

Don’t just listen, engage in the conversation.

Ask Open Ended Questions

Open ended questions are questions that require the respondent to answer in their own words – more than a simple yes or no answer.

Use Mirroring

Mirroring helps to facilitate empathy.

Seek Common Points of Interest

Common ground provides an important pathway for communication.

Develop a Plan for Next Steps

Ideally, you will resolve the conflict and, as a result, your relationship will grow. Sometimes, however, the best path forward is a divergent path. Whatever you decide, plan your next steps.

Document the Resolution

Writing down what you have agreed to will ensure that everyone’s expectations are aligned and will reduce the likelihood of further conflict, at least as to the issue(s) that you just resolved.

Conflict is likely to occur in any business relationship regardless of how well you get along with your partners. Fortunately, there are many strategies that may help to resolve a dispute in a timely and amicable manner. Using these strategies may ensure that your New Jersey company doesn’t have to close or experience lasting damage to its brand because of a disagreement.

Is your business prepared to face a lawsuit?

When a prepared business in New Jersey first gets news of a lawsuit, they should always have a plan in place to handle the fallout. This usually includes managing the company’s reputation, minimizing the legal costs and taking steps to possibly avoid business litigation altogether. When an unprepared company in New Jersey faces legal trouble, they are often left scrambling for the next steps.

For example, there are situations where a business owner can talk to the person threatening legal action against the company. Appropriate mediation in these instances can lead to a swift resolution. In other circumstances, it may be essential that the business owner not communicate with anyone involved. A business owner will need to speak to their attorney to decide on the right course for the best outcome.

Every case of business litigation in New Jersey will be different. Some small business lawsuits are civil while others may be criminal cases. Still, it’s possible to prepare your company to handle a variety of threats ahead of time with an established process in place.

What steps can a business owner take to prepare for business litigation in New Jersey?

Meet with a lawyer to discuss the details of your business. A waste disposal company will need to take different steps to legally prepare than a doctor’s office. For this reason, it’s good to get individual legal advice for your business in your physical location.

Always keep accurate records for your company. While many do this for financial reasons, it’s also a good practice in case of business litigation.

Secure business insurance that covers the potential liabilities in your business. This may include property damage, bodily injury for employees or customers and any specialized insurance required by your industry.

Ideally, business litigation would never be necessary. The reality is that businesses face lawsuits regularly. It’s better to be calm and prepared for the possibility so that your company can continue to work while the legal process plays out.

What you need to know before agreeing to arbitration

Arbitration is a legal method of resolving New Jersey workplace conflicts that can be an alternative to taking a case to court. It can be a better way for you as an employee to handle your workplace dispute, but there are some drawbacks that you should be aware of.

Who gets the final say?

A potential drawback of arbitration is you have to abide by the arbitrator’s final ruling just as you would if the case was litigated in a courtroom. The arbitrator is an impartial third party that you and your employer choose to handle your conflict resolution. They provide a written copy of their final decision to ensure that both parties abide by the terms without any questions about the details.

Stating your case

Arbitration sessions take place in person. You may also bring in witnesses and present evidence to support your case. Arbitration may also include private sessions with the involved parties.

Requesting arbitration

If you and your employer decide to go through arbitration, you will need to submit a request to the New Jersey State Board of Mediation (NJSBM). You must include the contact information of all involved parties and outline the issue that you are arbitrating.

The pitfalls of arbitration

Although arbitration can present many advantages to traditional litigation, there can be some downsides as well. These include:

  • Arbitrators often have other occupations, which means that your case might be delayed if they have time conflicts.
  • Arbitration only works if all parties to the dispute respect the process and act in good faith.
  • While it is often thought of as a cost-saving alternative, arbitration can be – in certain situations – just as expensive as a courtroom trial, and in some cases even more so.

Unlike a trial, arbitration hearings are private. In the event that you prevail and are awarded damages by the arbitrator, you will generally need to go to court to have the judgment enforced.

What is an LLC operating agreement?

When starting a business, there are many things to consider. One of the first decisions that you will have to make is what type of entity you want to form. Is a limited liability company (LLC) better than a corporation? What about a sole proprietorship or partnership?

To further confuse things, some states offer the option to form a limited liability partnership (LLP) or professional limited liability company (PLLC). The pros and cons of each type of entity are varied, complicated and require the advice of legal counsel and tax professionals.

Preparing an operating agreement

As an example, let’s say that you and your business partners decide that an LLC is right for your business after consulting with your lawyer and your accountant. Having done so, one of the first things that you will need to do is to work with your attorney to prepare an operating agreement.

What’s in a name? Well, it is usually simply referred to as an “operating agreement” (the reference to LLC is not necessary but is sometimes used). Some states, like Delaware, refer to it as a “limited liability company agreement.” The name of the agreement, however, does not affect any of the rights, duties and obligations of the parties to the agreement.

What is an operating agreement? An operating agreement is an agreement among the members (i.e., owners) of the LLC and the LLC itself. Yes, the LLC should be included as a party to the agreement since it is a separate legal entity (separate from the partners), but more on that later. The major points of the operating agreement address ownership, voting rights, management, money and the “exit.”

Resolve conflicts before they begin

One of the most important functions of an operating agreement is how it works as a vehicle for conflict resolution. Most conflicts arise from a misalignment of expectations.

For example, you might expect to be the CEO of the company and earn a large salary, but so might your partner. Working through the provisions of the operating agreement will allow for an open dialogue about what each of you expect from the partnership, therefore reducing potential conflict. Should a conflict arise, you will be able to turn to the operating agreement for guidance.

What if I don’t have business partners?

One interesting quirk about operating agreements is that even if you are “single member” LLC – meaning you are the sole owner of the LLC and have no partners – it is still advisable to have an operating agreement. But why? One of the main reasons why people incorporate a corporation or form an LLC is for the protections, or “limited liability,” that these entities provide business owners.

As a general rule, the shareholders of a corporation and/or members of an LLC are not personally liable for the debts and obligations of the corporation or LLC. In order to enjoy this protection, the shareholders and members must respect the separate legal status of the corporation or LLC.

One of the elements that a court will look at is whether you have an operating agreement. Since the LLC is a separate legal entity, even if you are the sole owner, you still need an agreement with the LLC to cover how the LLC will operate.

Working with your attorney to draft an operating agreement takes time and requires a lot of from you, the client. However, it is a critical first step in your journey as a business owner. By taking the time to draft a well-crafted operating agreement, you can minimize problems down the road and make sure that everyone knows their rights and responsibilities.

Ups and downs of running a family business

Family-owned businesses make up a majority of the world’s businesses. Thousands of people operate businesses with their family members in New Jersey. There are major benefits along with disadvantages to consider when pursuing this venture.

Natural leadership

Every family has one or two natural leaders who make the most important decisions, pay the property’s bills and provide personal advice to each member. There is a hierarchy of leadership that is assigned from ascending to descending ages. The parent or guardian is the top leader followed by older relatives, the older children and the younger children. As a result, running a family business is easier when this hierarchy has already been set.


Hiring family members is very different from hiring regular employees. The process is more informal, and many of your family members have other jobs and social lives. They may show less loyalty and commitment to running the business than professionals that are hired outside of the family.

Lack of compliance

Your family needs to understand that the law is above everyone’s actions, thoughts and desires. Your family member is a paid employee who must understand and follow every business law in the state and country.

Close proximity

A family business can be located in the family home. Your relatives will live in close proximity to the business’s clients and the equipment that are needed to perform their jobs.

Conflicts within family

Families are more likely to quarrel than employees and coworkers. Family members have to invest more time, energy and money in each other. They are more likely to run into conflicts that go back for years.

The family business is one of the most important sources of income for a nation’s economy. Working with family members brings a strong sense of familiarity and loyalty. On the other hand, you face more serious conflicts that could divide the family members for a long time. Overall, there are more benefits than disadvantages of having this type of business.

Conflicts about New Jersey litigation finance disclosures

In all states, laws require buyers and sellers to follow certain disclosure obligations in monetary transactions. These obligations sometimes extend to plaintiffs and defendants in lawsuits. However, New Jersey laws are sparking a new debate about the importance of providing financial disclosure about specific cases versus protecting privacy.

Conflicts with disclosure rules

New Jersey litigants claim that the federal courts want them to be too open about their financial affairs. A rule requires plaintiffs to inform their opponents whenever they receive third-party investment funds to cover the costs of their lawsuits.

Filed complaints

Litigation finance companies have filed complaints that the proposed rule is unfair since it requires plaintiffs to disclose information about their litigation finances. In reply, the U.S. Chamber of Commerce stated that the proposal was necessary to promote business litigation that is fair, ethical and transparent.

In previous cases, the disclosure of funding has not been a question. The judges may decide to ignore a request from the other party to acquire information about litigation finance. They often rule the information as protected or irrelevant to resolving the litigation. If the New Jersey federal court approves the recommended rule, both legal parties have to disclose the source of their funds, the type of funds and whether or not the funding is essential to winning the case.

The costs of litigation

A proposed rule requires that a financial disclosure should provide information about funds that are used to cover litigation. The federal courts may require the disclosure of information; however, it’s not always guaranteed that the disclosure is necessary and helpful for any side to win its case.

How the business litigation process works in New Jersey

If you are a business owner in New Jersey, you may need to go to court at some point. The business litigation process can be complex and confusing, especially if you have never been through it before. Here’s a quick overview of how the process works and what to expect if your business is involved in a lawsuit.

The type of lawsuit you could face

The litigation process you will go through will depend on the type of lawsuit you are facing. Generally, there are two types of suits: civil and criminal. Civil lawsuits involve two or more parties in dispute over a legal issue, like violating a copyright or company trademark. On the other hand, criminal business lawsuits involve allegations of illegal activity, such as if your company fails to follow New Jersey’s regulatory requirements for hazardous waste storage or disposal.

The process of business litigation

The process of small business litigation begins with filing a complaint with the court. This document lays out the facts of the case and asks the court to take action. The defendant will then have an opportunity to respond to the complaint, usually by filing an answer within 35 days.

The court will then begin to rule on the various motions filed. These motions can include requests for discovery, which is a process where both sides can request information from each other in order to build their case. The court may also schedule a hearing to take testimony from witnesses or to consider the evidence.

In the hearing, the jury will listen to the plaintiff’s and defendant’s arguments and then decide. If the final verdict finds you guilty, the court will ask you to make the necessary adjustments for the other party, and you could also face significant financial damages. If you’re ruled innocent, you may be able to counter sue for malicious prosecution or abuse of process.

Business litigation can be costly and time-consuming, but these matters are essential in ensuring justice. You can also consider alternative dispute resolution methods if the issue is rather small.