Apply: Litigation Cost-Benefit Analysis

Apply: Litigation Cost-Benefit Analysis

Part 1

In the past, Solar Inc. has launched a lawsuit and ended up losing. In this case, it has the chance of launching a lawsuit against XYZ or pursuing alternative dispute resolution approach. There are many costs and benefits that should be considered before deciding whether to pursue a lawsuit or not. The nine factors that it should consider are summarized in the chart below

Source: Cheeseman (2015)

There are many chances that the chances of winning the case are low. Under the law of contract, XYZ can cite frustration as the reason as to why it could not deliver the service as agreed. Hacking of computer systems is a risk faced even by governments. Based on this premise, there would be no need to engage in a  lawsuit.

There are limited chances that the court will award the organization will be awarded a large sum of money.  It would thus be necessary that the organization pursues alternative approaches to dispute resolution as opposed to filing a suit against XYZ.

The lawyer fees will be very high. As a result, the organization may end up incurring a loss instead of realizing a gain from the lawsuit. The time taken equally reduce the attractiveness of filing a lawsuit (Garg, & Shah, 2018).  Managers and employees may end up losing valuable time in the suit. Reaching a settlement with XYZ company or using alternative dispute resolution such as mediation would be cheaper and consume less time.

A lawsuit has the potential of severing the relationship between Solar Inc. and XYZ. In order to settle the issue and retain the relationship, reaching an agreement on the matter or engage in alternative methods of dispute resolution. The prejudgment interest should also be considered. The prejudgment interest, in this case, would be low. Aggravation and psychological costs may nevertheless be awarded justifying a lawsuit

Due to the uncertainty of the law, it is not possible to predict whether the case will be successful or not. However, using other alternatives such as mediation would have a lower risk of loss. Since XYZ has already indicated that it is not ready to negotiate,  it would necessary that the organization seeks a mediator under the alternatives to dispute resolution. Other peculiar elements to the case should also be considered. XYZ has indicated that it is willing to reestablish the system that was destroyed.

Filing a lawsuit will not be the best option based on the above analyses. The organization should thus consider ADR or reach a settlement with XYZ media. XYZ media have already indicated its unwillingness to negotiate.  An alternative to dispute resolution should thus be adopted via mediation.  The parties should make use of an impartial negotiator who would gather facts on both parties and mediate the matter.  Mediation is employed when it becomes clear that negotiations between the parties would not result in a solution (Cheeseman, 2015). Both parties will offer the mediator permission to make a binding decision. The process will take a shorter time as compared to a lawsuit, will consume fewer resources and would result in continued good relations between the parties that are involved in the case. The above recommendations decision would not change when advising XYZ media CEO as mediation would remain the most viable approach to settling the matter.

Part 2

From: Consultancy Firm

To: Solar Co. CEO

Date: March 29, 2019

Re: Arbitrations as an alternative dispute resolution approach

Arbitration is an essential approach to dispute resolution. Under arbitration, the process is referred to an impartial person who makes a binding decision.  The parties involved in the arbitration process sets the limit of the issues that the arbitrator is expected to address. The arbitration process is usually cheaper and takes less time as compared to engaging in a lawsuit.

The Federal Arbitration Act is an act passed in the United States of America on February 12, 1925 (Columbia University, 2019).  It provides for the judicial facilitation on private disputes through arbitration. It is applied in both the state courts and the federal courts. It provides for a binding arbitration where the parties involved must abide by the decision made by the arbitrator. When parties enter into arbitration, they usually give up their right to appeal once the decision has been made. Once the arbitrator or arbitration panel enters into an agreement and issues an award, the award must be confirmed in a court of law. An award must be confirmed within one year and any objection of the award by the losing party must be done within a period of three months since the decision was made.

During arbitration, the arbitrator may request witnesses to make presentations (Columbia University, 2019).  The fees applicable to such witnesses are the same as that of witnesses in the US courts. In a case where an award is vacated in time and the time set for issuing an award has not expired, the court may seek rehearing of the case.

Based on the above facts, it is evident that arbitration is an essential approach to settling matters. It results in the development of a binding agreement between the involved parties. The solar company should thus make use of arbitration in the future when dealing with clients, subcontractors and employees to reduce legal risk as it  takes less time, its less expensive and results in a binding agreement




Cheeseman, H. (2015). Legal environment of business: Online commerce, ethics, and global

issues. UK: Person.

Columbia University (2019). Federal Arbitration Act. Retrieved from

Garg, S., & In Shah, A. P. (2018). Alternative dispute resolution: The Indian perspective. New

Delhi, India: Oxford University Press

Lavi, D. (2018). Alternative dispute resolution and domestic violence: Women, divorce and

alternative justice. London: Taylor and Francis