Small businesses are the backbone of every economy, around 99% of all enterprises worldwide. They employ local workers, bring innovation to life, and help communities thrive. Yet, despite their importance, small and midsize enterprises (SMEs) face an ongoing challenge: one dispute could be all it takes to stall growth – and could potentially derail an entire business, resulting in its closure.
Traditionally, when a contract is broken, an invoice goes unpaid, or a regulatory issue arises, justice for SMEs can be distant, slow, or simply too expensive. Many walk away from valid claims because the cost of legal action outweighs the potential recovery. The result is more than lost revenue — it’s lost livelihoods, constrained opportunity, and weakened economies. Behind every small enterprise are people: families, employees, and communities who rely on fair and timely resolution of disputes to sustain stability and growth.
In today’s rapidly changing business environment — accelerated by AI — access to justice is not only a legal right but an economic necessity. For SMEs, securing fair and timely resolution of disputes is essential to their stability and growth.
When the Cost of Justice Becomes a Barrier
Consider a small manufacturer facing a $25,000 unpaid invoice. Pursuing litigation may require attorney fees, document production, depositions, court appearances, and months—if not years—of delay. The business owner must weigh the invoice against the cost, time away from operations, cash-flow impact, and the uncertainty of the outcome to determine their next steps. In short, a business owner must ask: Is recovering the loss worth the disruption and cost to the business?
Far too often, the answer is no. Not because the claim lacks merit, but because the legal system is not designed with small businesses in mind. Each abandoned claim is more than lost revenue; it erodes bargaining power with future clients, stifles growth and investment opportunities, and weakens trust in commercial relationships.
For micro-enterprises, the impact is even more dire. If a freelance designer’s intellectual property is misused, a contractor’s work is disputed, or a small retailer is harmed by an unfulfilled supply agreement, a remedy may be entirely inaccessible, and the loss may shutter their business.
This reality is part of a wider issue, a global justice gap affecting more than 5.1 billion people and businesses whose disputes remain unresolved. It is a moral issue—but it is also a deeply economic one.
Alternative Dispute Resolution: A Lifeline for SMEs
For SMEs facing unresolved disputes, their faith in legal and government systems is undermined, and the costs of lost productivity, disrupted relationships, and foregone investment weaken the broader economy. For these businesses, alternative dispute resolution (ADR) can offer a lifeline and create more predictable, efficient ways to resolve conflict, so they can focus on what matters most: running and growing their operations.
The American Arbitration Association® has spent nearly a century helping businesses of all sizes – including micro-enterprises and SMEs – resolve disputes efficiently, privately, and fairly through arbitration and mediation. For SMEs, arbitration benefits are unmatched: disputes are resolved far more quickly than in court, costs are reduced through streamlined procedures, processes can be done virtually, and parties can choose neutrals with industry-specific expertise. Mediation, when chosen, can also help parties settle their dispute while preserving important business relationships.
While straightforward, arbitration and mediation processes allow small enterprises to navigate disputes with greater confidence and often without extensive legal representation, depending on applicable state law.
Complementing these services, the AAA-ICDR Institute™ advances the broader infrastructure of access to justice through research, training, and thought leadership. Its innovation-focused initiatives provide courts, small businesses, community groups, and practitioners with practical tools to navigate conflict more effectively.
Together, these benefits provide small businesses with resources, predictability, and financial stability, allowing them to remain focused on growth rather than courtroom battles.
AI as a Catalyst for Accessible Justice
While ADR has long been a proven mechanism for efficient dispute resolution, the growing role of AI in legal introduces new opportunities to make justice more accessible and affordable at scale.
When used responsibly, AI can:
- Simplify legal information into clear, plain-language guidance
- Offer multilingual access
- Automate routine drafting and filing
- Streamline case intake and management
- Help parties understand their rights and prepare and summarize materials more effectively
These tools can help demystify the justice system for small businesses, many of which lack formal legal departments or resources to navigate complex legal frameworks. The American Arbitration Association and the AAA-ICDR Institute are actively exploring responsible AI tools that support parties throughout the dispute resolution process. These efforts promote transparency and fairness, allowing AI-powered tools to work alongside and for the arbitration process.
During a recent webinar hosted by the Hague Institute for Innovation of Law, experts emphasized a crucial point: AI can enhance access to justice, but only when paired with strong human oversight. As Margaret Satterthwaite, UN Special Rapporteur, noted, AI may support the human right to justice, but “humans must remain in the loop.”
A Future Built on Both Innovation and Integrity
Globally, innovators are already deploying AI-driven platforms that help SMEs understand legal risks, draft essential documents, or connect quickly with experts. These tools demonstrate how thoughtfully applied technology can bridge longstanding gaps in access.
Yet technology alone cannot solve systemic barriers. Small businesses need ecosystems, supported by governments, courts, investors, and institutions, that encourage responsible innovation without compromising fairness or human dignity.
This is where the partnership between ADR and AI becomes transformative. Together, they create systems that are more affordable, efficient, navigable, and human-centered. And for small businesses, these improvements mean real protection, real remedies, and real opportunity.
As the landscape evolves, the AAA and the AAA-ICDR Institute are committed to driving research, innovation, and standards that ensure ADR remains fair, accessible, and effective. By partnering with policymakers, industry groups, and global justice organizations, the AAA-ICDR Institute is helping create the next generation of dispute resolution systems — ones that seamlessly integrate human expertise, technological advancement, AI governance, and ethical safeguards.
When small businesses have access to justice, they do more than settle disputes. They innovate, grow, hire, and strengthen the communities they serve.