Business Law Archives - Dawda PLC

Why Mediation Should Be Your First Choice for Business Disputes

Kendra Corman — Wed, 09 Jul 2025 00:28:53 +0000

Business disputes are a fact of life in today’s business environment. Contract disagreements, construction delays, real estate conflicts, and partnership disputes can drain resources, damage relationships, and distract from core business operations. While litigation remains an option, smart business leaders increasingly turn to mediation as their primary dispute-resolution strategy.

Understanding Today’s Mediation’s Role

Mediation has evolved from a niche alternative to a mainstream business tool. Unlike traditional litigation, which can drag on for years with unpredictable outcomes, mediation offers a structured yet flexible approach to resolving commercial disputes. The process allows parties to maintain control over both the timeline and the final resolution rather than surrendering that control to a judge or jury.

The key difference between mediation and arbitration lies in the outcome. While arbitration results in binding decisions imposed by a third party, mediation is essentially a facilitated negotiation. The mediator guides the conversation and helps identify solutions, but the parties themselves make the final decisions about any settlement.

How Effective Mediation Works

Successful mediation starts with thorough preparation. This includes analyzing the legal merits of each party’s position, understanding the factual disputes, and identifying the underlying business interests at stake. Parties should also assess their litigation alternatives and potential exposure to help establish realistic settlement parameters.

The mediation process typically involves both joint sessions where all parties meet together and private caucuses where the mediator meets separately with each side. This structure allows for open dialogue while also providing opportunities for confidential discussions about sensitive issues, settlement positions, and litigation risks.

Experienced mediators bring valuable perspective to these discussions. They understand how similar disputes have been resolved, can provide realistic assessments of litigation outcomes, and help parties move beyond rigid positions to explore creative solutions that address underlying business concerns.

The Business Case for Mediation

The financial benefits of mediation are compelling. Complex commercial litigation can easily cost hundreds of thousands or even millions of dollars in attorney fees, expert witness costs, and discovery expenses. These costs multiply when cases drag on for years, which is common in business disputes involving multiple parties or complex legal issues.

Mediation typically resolves disputes in days or weeks rather than months or years. This speed translates not only to lower direct costs but also to reduced opportunity costs. Management teams can focus on running their businesses rather than managing litigation, and companies can avoid the uncertainty that prolonged disputes create for strategic planning and business operations.

Beyond cost savings, mediation offers significant risk management advantages. Litigation outcomes are inherently unpredictable, even when parties believe they have strong cases. Mediation allows parties to craft solutions that address their specific business needs while avoiding the all-or-nothing outcomes that characterize trial verdicts.

Protecting Business Interests Through Confidentiality

One of mediation’s most valuable features is its confidentiality. Unlike court proceedings, which create public records that competitors and customers can access, mediation discussions remain private. This protection is particularly important for businesses concerned about proprietary information, competitive intelligence, or reputation damage.

Confidentiality enables parties to have frank discussions about sensitive business matters, financial information, and strategic considerations without fear of public disclosure. For publicly traded companies, this privacy can also help avoid disclosure obligations that might otherwise arise from litigation settlements or adverse judgments.

Preserving Business Relationships

Perhaps mediation’s greatest strategic advantage is its ability to preserve and even strengthen business relationships. Traditional litigation operates on an adversarial model that often permanently damages commercial relationships, making future business impossible.

This relationship preservation is particularly valuable in industries with ongoing relationships, repeat transactions, or limited market participants. Construction companies working on multi-phase projects, landlords and tenants with long-term leases, and business partners with continuing obligations all benefit from mediation’s collaborative approach.

Mediation for Different Types of Business Disputes

Commercial contract disputes often involve complex interpretation issues, performance standards, and damages calculations. Mediation’s flexibility allows parties to address these issues creatively, potentially modifying agreements or restructuring arrangements rather than simply determining who wins or loses.

Construction disputes typically involve multiple parties with overlapping interests and ongoing project requirements. Mediation can address not only past disputes but also future performance issues, helping projects move forward rather than getting bogged down in litigation.

Real estate conflicts frequently involve long-term relationships where future business opportunities may be at stake. Mediation helps preserve these relationships while addressing immediate concerns about property transactions, lease terms, or development issues.

Business transaction disputes often arise from changed circumstances, interpretation disagreements, or performance issues that can be addressed through modified agreements or restructured arrangements that better serve all parties’ interests.

Choosing the Right Mediator

The mediator’s experience and approach significantly impact the process’s effectiveness. Look for mediators with substantive knowledge of your industry and the specific types of disputes you’re facing. Mediators with extensive litigation experience bring valuable insights into the risks and potential outcomes of continued adversarial proceedings.

The best commercial mediators employ a facilitative approach that focuses on problem-solving rather than position-taking. They help parties explore underlying interests and concerns, creating opportunities for solutions that address core business objectives rather than simply splitting the difference between opening positions.

Timing and Strategy Considerations

Successful mediation requires careful timing and strategic planning. Early mediation may lack sufficient information development, while delayed mediation may occur after positions have hardened and relationships have deteriorated. The optimal timing typically occurs after enough factual development to understand the issues but before substantial litigation costs have been incurred.

Pre-mediation preparation should include comprehensive case analysis, clear settlement authority, and strategy development for both joint sessions and confidential discussions. Parties should also consider what information they’re willing to share and what they need to keep confidential.

Making Mediation Work for Your Business

Mediation works best when parties approach it as a business problem-solving exercise rather than a legal proceeding. This means focusing on business interests rather than legal positions, exploring creative solutions rather than simply negotiating over money, and maintaining a collaborative rather than adversarial mindset.

The process also requires commitment from decision-makers with actual settlement authority. Mediation becomes less effective when parties send representatives who lack the authority to make final decisions or when participants view the process as simply a discovery exercise for future litigation.

The Bottom Line on Mediation

Today mediation represents a strategic approach to dispute resolution that aligns with core business objectives. It offers cost control, timeline management, relationship preservation, and risk mitigation while maintaining flexibility for other options if resolution cannot be achieved.

Smart businesses increasingly view mediation not just as an alternative to litigation but as a preferred method for handling commercial disputes. The process allows companies to resolve conflicts efficiently while preserving valuable business relationships and maintaining control over outcomes.

For businesses seeking to minimize risk, control costs, and preserve commercial relationships, mediation offers a proven framework for achieving these goals. The key is approaching mediation strategically, with proper preparation, realistic expectations, and a commitment to finding mutually beneficial solutions that serve long-term business interests.

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Navigating the New Overtime Rule: What Employers Need to Know

Kendra Corman — Wed, 21 Aug 2024 20:27:40 +0000

As of July 1, the Department of Labor (DOL) has implemented a new overtime rule, significantly altering the landscape for employers and employees alike.

This rule, which increases the minimum salary that employers must pay certain white-collar and highly compensated employees to exempt them from federal overtime requirements, has left many employers scrambling to ensure compliance.

How will these changes impact your business, and what steps must you take to navigate this complex regulatory environment effectively?

A Brief History of Overtime Rule Changes

The recent rule change marks the third modification attempt by the DOL in the past eight years, following a twelve-year period of stagnation between 2004 and 2016. The primary focus of these modifications has been on adjusting the salary threshold required for exemption under the federal Fair Labor Standards Act (FLSA), leaving the duties test unchanged.

It’s key to remember that an employee’s exemption status hinges not only on their salary but also on their job duties fitting specific exemption categories.

Employers often mistakenly equate salaried positions with exempt status, which can lead to non-compliance.

Key Changes Under the New Rule

Effective July 1, 2024, the annual salary requirement for executive, administrative, and professional white-collar exemptions increased to $43,888, with a further increase to $58,656 set for January 1, 2025. Similarly, the threshold for the highly compensated exemption has risen to $132,964, with an increase to $151,164 also slated for January 1, 2025. Additionally, the new rule mandates automatic adjustments to these salary requirements every three years, starting July 1, 2025, based on federal labor data.

Strategic Considerations for Employers

Dual Criteria for Exemption: Employers must evaluate both the duties and salary of employees to determine exemption eligibility. Simply meeting the new salary threshold does not guarantee exemption status.
State and Local Laws: The federal FLSA sets a minimum standard, but state and local laws may impose higher requirements. Ensure your compliance strategy encompasses all relevant jurisdictions to avoid discrepancies between federal and state regulations.

The recent changes to the overtime rule underscore the importance of staying informed and proactive in managing compliance risks. Employers must carefully review their payroll practices and exemption classifications to align with the new requirements. By doing so, businesses can mitigate potential legal exposure and ensure fair compensation practices.

Are your current payroll practices compliant with the new DOL rule? How will you adapt to the forthcoming changes in 2025? Taking action now can safeguard your organization against future regulatory challenges and reinforce your commitment to lawful and ethical employment practices.

For further guidance on navigating these complex changes, contact Dawda. Our team of experienced attorneys is here to provide expert legal counsel and support tailored to your business needs.

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New reporting requirements for small businesses under the Corporate Transparency Act

Editor — Mon, 18 Dec 2023 21:35:06 +0000

As of January 1, 2024, many entities conducting business in the United States will face new reporting requirements for both the entity itself, and those individuals who exercise “substantial control” over the entity. These new reporting requirements come from the Corporate Transparency Act (CTA), which is part of the National Defense Authorization Act. The aim of the CTA is to reduce the use of small business entities for terrorist financing, tax fraud, money laundering, and other illicit activities.

The CTA will require many entities and their owners to disclose certain information with the Financial Crimes Enforcement Network (FinCEN) to accomplish these goals.

Will my business be affected?

Maybe. The reporting requirements imposed by the CTA apply to businesses that fit the criteria of a “Reporting Company” as defined by the Act. The statute defines a Reporting Company as a corporation, limited liability company, or other entity that is (1) created by filing a document with the secretary of state or similar office under the laws of that state or Indian Tribe, or (2) formed under the laws of a foreign country and authorized to do business in the United States by filing a document with a secretary of state under the laws of any given state or Indian Tribe. While this definition seemingly includes every conceivable business, there are a number of exceptions. The exceptions are fact specific.

Of note, the reporting requirements will apply to most business entities that are privately owned, maintain fewer than 20 full time employees and report $5,000,000 or less in gross revenue, and are not otherwise an exempt entity.

Specifically, there are 23 types of entities that are exempt from filing with FinCEN:

Issuers of reporting securities;
Governmental authorities;
Banks;
Credit Unions;
Depository Institution Holding Co.;
Money services business;
Securities broker or dealer;
Securities exchange or clearing agency;
Other Exchange Act registered entity;
Investment company or investment advisor;
Venture capital fund advisor;
Insurance company;
State-licensed insurance provider;
Commodity Exchange Act registered entity;
Accounting firm registered under §102 of the Sarbanes-Oxley Act (SOX);
Public utility;
Financial market utility;
Pooled investment vehicle;
Tax-exempt entity;
Entity assisting a tax-exempt entity;
Large operating entity;
Subsidiary of an exempt entity; and
Inactive entity.

What information will I be required to file?

“Reporting Companies” must file a statement with FinCEN containing the entity’s full legal and any trade or assumed names, address, jurisdiction of formation, and the federal taxpayer identification number.

Additionally, “Beneficial Owners” of reporting companies will be required to file a similar statement. The CTA defines a Beneficial Owner as any individual who, directly or indirectly, either exercises substantial control over such Reporting Company or who owns or controls at least 25 percent of the ownership interests of such Reporting Company. The regulations make clear that substantial control is a low threshold. Additionally, while entities cannot qualify as Beneficial Owners, an individual might have substantial control over an entity where that individual has substantial control over another entity, which maintains substantial control over the Reporting Company (i.e., when an entity holds an ownership interest in another entity). Similarly, in some cases an individual may indirectly have substantial control over an entity by way of a trust. These rules are still developing.

Who will have access to this information?

The information collected by reporting companies will be collected and stored with FinCen. The reports will not be accessible to the public and are not subject to the Freedom of Information Act. However, select government agencies will have access to the information, including: (1) federal agencies engaged in natural security, intelligence, and civil and criminal law enforcement; (2) the Department of Treasury; and (3) state and local law enforcement agencies in connection with criminal or civil investigations.

When do I need to report, and what happens if I don’t?

Reporting companies created or registered prior to January 1, 2024, will have until January 1, 2025 to comply with the CTA filing requirements. Reporting companies created or registered January 1, 2024, and beyond will have 90 days following receipt of their creation or registration documents to file their initial reports. The failure of an entity or individual to comply with the CTA, as well as false or fraudulent reports, could result in civil fines of $500 a day for every day of noncompliance, as well as criminal penalties up to a $10,000 fine or two years in jail.

How can Dawda help?

Complying with the CTA may seem like a daunting task, but the corporate attorneys here at Dawda are well versed in the CTA and its reporting requirements. Contact us to see whether your business must comply with the CTA reporting requirements.

This summary publication is for informational purposes only and does not constitute legal advice nor does it create an attorney-client relationship. Please contact your Dawda attorney with specific legal questions.

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Transitioning Away from LIBOR: What’s Next?

Lauren Daigle — Thu, 19 Nov 2020 21:51:49 +0000

The transition away from LIBOR, the abbreviation for the London Interbank Offered Rate, has left many asking, what is next? LIBOR is set to be phased out at the end of 2021. As of June 2017, the Alternative Reference Rates Committee (“ARRC”) of the Federal Reserve Bank of New York (“Federal Reserve”) has designated the Secured Overnight Financing Rate (“SOFR”) as LIBOR’s replacement here in the United States. The use of SOFR as the replacement for LIBOR is not mandated by federal law, but rather recommended by the ARRC. Other replacements to take LIBOR’s place include the United States Prime Rate and Ameribor. However, SOFR, with its backing from the ARRC, appears to be the front runner.

LIBOR has served as the benchmark interest rate for over 30 years and is currently tied to over $200 trillion in contracts and debt obligations. LIBOR serves as the underlying interest rate for multiple types of contractual obligations including business loans, mortgages, and even student loans. However, given the recent LIBOR rate setting manipulation scandal and its declining reliability, the United Kingdom’s Financial Conduct Authority has agreed to stop publishing the LIBOR, and banks will no longer be obligated to make LIBOR submissions, after December 31, 2021. SOFR is calculated daily based on overnight cash lending between banks collateralized by the United States Treasury in the repurchase agreement market. According to the Federal Reserve, SOFR is much more resilient than LIBOR is numerous ways including its transparency and the fact that it is more representative of the way financial institutions fund themselves today. The Federal Reserve began publishing daily SOFR rates on its website on March 2, 2020.

The ARRC has created the Paced Transition Plan to give guidance and encourage the adoption of SOFR here in the United States. The ARRC has recommended that contracts stop referencing LIBOR as the benchmark interest rate starting as early as this year in order to facilitate a smooth transition to SOFR by the end of 2021. Some financial institutions have already begun the transition process to SOFR, such as Freddie Mac, which will no longer purchase LIBOR Adjustable Rate Mortgages beginning January 1, 2021.

In addition to providing a transition timeline, the ARRC recommends that LIBOR contracts should, as soon as possible, include ARRC recommended, or substantially similar, fall back language. Two approaches for fallback language have been enumerated by the ARRC for those instances where a contract is still using LIBOR as an interest rate or for those previously executed contracts that do not provide for an alternative to LIBOR. The first approach, the “hardwire approach”, specifically sets forth a replacement benchmark interest rate that will be applied at the end of LIBOR and indicates the procedures that will be used to calculate and institute the new interest rate within the contract. Alternatively, the “amendment approach” permits the parties to a contract to amend the agreement at a future date, once LIBOR is phased out, and determine the new interest rate then, while still outlining the procedures that will govern selecting the replacement index. The hardwire approach eliminates the need for an amendment down the road for LIBOR based contracts by including language that addresses the potential replacement, while the amendment approach may work best for those older contracts that may not have anticipated the end of LIBOR. Either way, it is imperative that both approaches address how the new interest rate will be determined.

Whether it be assistance amending an executed contract or current debt obligation that does not include replacement language for LIBOR, or assistance navigating new contract negotiations and loan agreements, our experienced team of attorneys here at Dawda are ready to advise and help guide you through the transition away from LIBOR.

Written by Associate, Kathryn Kaleth.

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