Mediation and arbitration – alternative ways to resolve legal disputes

When parties are involved in a legal dispute, oftentimes they will be better served resolving their dispute in ways other than in a trial. Litigating cases in court, with a jury or a judge deciding who wins and loses, has many downsides:

1. Litigation is time-consuming. It can often take a year or more to get a case to trial.
2. Litigation is costly. Each side can easily spend tens of thousands of dollars, or more, in legal fees and costs before a case is complete.
3. Litigation is uncertain. No one can predict with certainty how a jury or a judge will rule.
4. Litigation is risky. If a party loses, it can be costly, whether that means having to pay a significant sum of money or losing important property rights.

Rather than have a trial in a courtroom, there are other ways parties may be able to resolve their disputes. These are often called “alternative dispute resolution” methods, otherwise known as ADR. The two most popular forms of ADR are mediation and arbitration. A brief explanation of each is offered below.

Some courts require parties to engage in ADR before proceeding with a trial. Also, if the dispute involves a contract, sometimes contracts require the parties to engage in ADR before filing a lawsuit and proceeding with a trial. In almost all other cases, both sides of a dispute have to agree to use mediation or arbitration. It cannot be forced upon them.

Mediation

With mediation, the parties meet with a neutral third party, the mediator. The mediator is often an experienced or retired lawyer or judge, although they do not have to be. The parties almost always must agree on the person to use as a mediator.

The mediator’s role is to help the parties try to reach a settlement agreeable to both of them. The parties must agree on any settlement and always retain the right to agree or not agree. The mediator does not decide who wins and who loses or who is right and who is wrong. Instead, mediators help the parties understand the strengths and weaknesses of their cases, the risks involved, the possible outcomes, and help the parties come up with settlement ideas and offers.

Typically, the parties will be in separate rooms and the mediator will shuttle back and forth between them. The parties often do not meet in the same room or discuss directly with each other during the mediation. However, sometimes joint sessions may be helpful and the parties can meet in the same room if they both agree.

Mediation is less costly than proceeding with litigation in the courthouse. It is also private, whereas court proceedings are public. A big benefit of mediation is that the parties, with the help of the mediator, can craft creative solutions to their problems. Sometimes, legal disputes can be resolved through non-legal means, and settlement in a mediation can help accomplish that. Whereas in trial typically one side wins and one side loses, the parties can reach whatever kind of compromise and agreements they want in mediation.

Arbitration

Arbitration is different. Here, the parties agree that a neutral third party, the arbitrator, can decide the dispute. The arbitrator acts like a private judge. Again, the arbitrator is often an experienced or retired lawyer or judge. The parties almost always must agree on the arbitrator. Depending on the parties’ agreement, there may be a single arbitrator or there may be a panel of arbitrators (often three).

The arbitration process is like a mini, private trial. It often takes place in a conference room at the office of the arbitrator or one of the lawyers. Each side presents their evidence and arguments to the arbitrator. Typically, the arbitration rules are more relaxed and less complex and burdensome than a court’s rules. At the end, the arbitrator will issue their decision.

One of the main benefits of arbitration is it is quicker and less expensive to get a decision in arbitration than it is to litigate a case to a decision in a traditional court of law. Also, like mediation, arbitration is private. Depending on the parties’ arbitration agreement or the court’s rules requiring arbitration, arbitration can be binding (meaning there are no rights to appeal) or nonbinding (some rights to appeal).

Benefits

Parties involved in legal disputes should consider these alternative methods to resolve their disputes. They are often quicker, easier, more efficient, and less costly ways of resolving disagreements than the traditional method of litigating in court through a trial.