As an entrepreneur, you’d rather focus on running your business than on arguments and paperwork. Still, a business conflict can arise before you know it: a customer who doesn’t pay, a supplier who delivers late or the wrong goods, a landlord who suddenly raises service charges, or an employee with whom things are no longer working. Annoying, costly and often stressful.
Business conflict vs legal conflict
A business conflict is a disagreement between you and another party, a customer, supplier, landlord or employee that you can’t resolve together. The dispute is still “between you”, without a judge being involved.
It becomes a legal conflict when the situation escalates so far that it ends up in court. Then a judge makes an official decision that both parties must follow. Legal conflicts can be expensive: legal fees can easily reach many thousands of euros, and there’s no guarantee the other party will be ordered to reimburse those costs. All the more reason to act earlier.
Common types of business conflicts
Even if you have clear agreements and good relationships, things can still go wrong. Some common types of business conflicts are:
- Conflict with staff
An employee is underperforming or clashes with the rest of the team. Tensions keep rising, but you can’t simply dismiss them, for example because they have a permanent contract. - Conflict with a customer
You’ve completed an assignment, but the customer is unhappy and refuses to pay. Reminders don’t help and the invoice remains unpaid. - Conflict with a business partner
You feel that agreements are not being honoured, or your partner feels that way about you. A discussion arises about breach of contract. - Conflict with a supplier
Products are defective or delivered much later than agreed. You suffer damage, but the supplier sees the situation differently.
Conflict with (land)lord or tenant
As a tenant, you may suddenly be confronted with a sharp rent increase or hidden defects. As a landlord, you may discover that a tenant is carrying out activities on the premises that are not permitted.
Step 1: Keep the conversation going
The first question is simple: are you still talking to each other?
Plan a personal, one-on-one conversation. Make clear that you’re looking for a solution, not just to be “right”. Try to clarify whether you’re talking about the same problem, whether you agree on the facts and whether there might be something else in the background, such as financial stress.
Explain what you can do to improve the situation and ask what the other party can do. Sometimes the tension already drops when both sides feel heard. Be careful, though, not to make promises that weaken your legal position. If in doubt, get brief legal advice before you sit down together.
Step 2: Know your position
If you can’t resolve things, it’s time to work out where you stand. Look at what you have actually agreed in contracts, emails and general terms and conditions. What do those documents say about your rights and obligations, and about those of the other party?
You don’t have to figure this out alone. Industry associations, your accountant and fellow entrepreneurs can often help you interpret agreements and assess your options. With that insight, you can return to the conversation better prepared.
Step 3: Ask a neutral third party for help
If direct talks don’t help, an independent third party can make the difference. A mediator is a neutral specialist who guides both parties towards a solution. In some sectors, there are also arbitration or disputes committees: expert panels that assess conflicts and issue a decision that can carry similar weight to a court ruling.
If you can’t agree on one mediator, you can each appoint your own negotiator to explore the problem further and bring the standpoints closer together.
Step 4: When legal steps are unavoidable
If even mediation doesn’t lead to a solution, legal steps may follow: a lawyer, legal support from your industry association or help via legal expenses insurance. Together with a legal professional, you weigh your chances in court, the costs and time involved, and the impact a lawsuit will have on your relationship with the other party.
Being proven right is not the same as truly winning. Sometimes the damage to your relationship, reputation or energy is greater than the outcome is worth.
Insured legal help or ad hoc advice?
To strengthen your legal position, you roughly have two options. You can take out business legal expenses insurance, which gives you access to legal support when conflicts arise. Often you start with telephone advice; if the conflict escalates, the insurer can provide further assistance. Not every type of dispute is covered, and existing conflicts are usually excluded, but the monthly premium can be manageable compared to the risk.
The other option is to hire a legal advisor or lawyer only when needed. That can be more expensive per case, but you pay nothing when you don’t use it. The advantage is targeted expertise: a specialist in employment law, tenancy law or contract law, exactly where you need it. They can help prevent conflicts by drafting solid contracts and general terms and conditions, and guide you through negotiations, mediation or court proceedings if a dispute does arise.
Which option suits your business best depends on your sector, company size, the financial stakes in your contracts and your appetite for risk. Whatever you choose, good written agreements, early conversations and quick access to legal advice can prevent a business conflict from turning into an expensive legal battle.
Which choice fits your business?
Whether you’re better off with legal expenses insurance or with individual legal support depends on:
- the industry you operate in (some sectors are more prone to disputes),
- the size of your business and number of employees,
- how often you work with large contracts, long-term assignments or high amounts,
- your own risk appetite and budget.
What you can do today, regardless of your choice:
- Make sure your contracts and general terms and conditions are in good order.
- Always put agreements with customers, suppliers and partners in writing.
- Spot tensions early and keep the dialogue going.
- Know who you can turn to for quick legal advice, before a business conflict turns into an expensive legal battle.
