I believe in the rule of law. While the law is not perfect, it is the best method of last recourse to decide contentious issues that arise between entities -- whether they be individuals, corporations, or governments. It is far better than resorting to violence or war.
For a great perspective on the rule of law, please read or listen to: http://www.npr.org/templates/story/story.php?storyId=5442573
While the rule of law is important, it should also be the last resort after other avenues are exhausted, because it can be very expensive (resource intensive) to decide a matter through the rule of law.
First of all, it is best to avoid legal conflicts altogether by centering on a good set of values or ethics. This keeps you on the high road and provides a good role model for others. Examine your values closely and stick to them.
If necessary, also establish a reasonable set of policies which keep people well within the bounds of laws. This mostly applies to organizations (and families). Be very careful with policies to make sure they are reasonable, enforceable, and legal. If you cannot really enforce a policy, don't make it a policy.
If this still does not suffice, talk it out. What goals and what issues really exist? It is most unfortunate when one party or the other is not able to engage in discussions, but it does happen.
When all else fails, then we are lucky to have a balanced legal system as the ultimate arbiter. And it is important for us to continue to refine and improve our legal system so that it stays balanced and reasonable.