Government launches alternative dispute resolution guide for businesses

This year sees the 25th anniversary of the case of Liebeck v McDonald’s, the US lawsuit more widely known as the ‘hot coffee’ case, which heralded a new age of consumer litigiousness. In the case, 79-year-old Stella Liebeck suffered serious burns after spilling a McDonald’s coffee in her lap. In spite of media coverage labelling the case spurious, however, Liebeck was awarded a significant sum, and the rules of the game when it comes to consumer-business disputes changed forever.

What does this have to do with the present day? For a start, statistics suggest that in our online-focused world, up to three percent of ecommerce transactions end up in a dispute. In the context of the uncertain future faced by the UK’s small businesses, dominated by Brexit confusion and economic swings, it’s clear that an increasingly combative atmosphere is not something retailers need right now. 

So what can businesses do to protect themselves and mitigate the worst effects of this trend? The hot coffee case has something to offer in this respect: the jury in that trial awarded significant punitive damages because McDonald’s refused several early opportunities to settle the case outside of the court system. Had the parties settled earlier, the damages would have been much smaller, and the same is true today. Indeed, UK courts often insist on alternative dispute resolution (ADR) before a case can even be heard, such are the cost and efficiency savings it offers to all parties.

Peaceful resolution

In light of the increasing importance of ADR in the modern business world, Business Companion – a free resource created by the Chartered Trading Standards Institute (CTSI) haslaunched a new Business in Focus guide in partnership with the department for Business, Energy and Industrial Strategy (BEIS) to help sole traders and limited companies in all sectors get to grips with the system and understand its benefits.It starts with an introduction to ADR, explaining the basic concept of it as a process that uses a neutral third party to resolve disputes between consumers and traders without going to court. The guide also explains the advantages ADR, including cost savings, goodwill from consumers, and avoiding negative press.

Practical issues are also explored, including an explanation of mediation, conciliation and arbitration, the different types of ADR available. The guide also looks at the requirements for traders, which includes internal processes and communications, alongside case studies to give businesses a practical sense of the requirements. Finally, there is a summary of the online dispute resolution platform, which businesses of all shapes and sizes should be aware of. This serves as a platform for consumers to records details of a dispute, and facilitates communication between the consumer, trader and ADR body in a dispute. By following the guide, businesses will get a better understanding of how to deal with disputes, with preparation being half the battle in surviving this turbulent period and avoiding getting burned.

Keep up with the top stories from Reader’s Digest by subscribing to our weekly newsletter.