Mediation or arbitration: what’s the difference?
When parties cannot reach an agreement on their own, it may seem that they are destined to face off in a courtroom. That outcome does not have to be a foregone conclusion, however. Another option is available to help legal professionals guide their clients to successful resolutions.
Mediation and arbitration offer alternatives to expensive, time-consuming litigation. Which one is right for your client? That depends on the situation, and while most legal professionals are at least familiar with the two approaches, they don’t always fully understand the intricacies. Here is an overview that should help answer those questions.
Mediation is a way to settle a case and still allow the parties to maintain control of the outcome. The process is voluntary and is much less formal than arbitration. That usually results in a speedier conclusion and lower cost to both parties.
Typically, the attorneys and their clients meet first together with the mediator. The mediator normally allows each counsel to make a brief statement outlining their position on the issue. Any information disclosed or discussed is kept confidential, but attorneys should keep in mind that certain evidence also may be used if the case goes to trial.
The parties are then put in different rooms and the mediator begins shuttle diplomacy, moving back and forth between the two to try to bring the parties to an agreement. The mediator must discover what the plaintiff truly wants, what the core goals of the litigation are. The mediator will then approach the other party to see what they are willing to do to resolve the case and how flexible they can be.
Mediators often will try to get parties to agree on lesser issues first in order to build trust and create momentum. Once cooperation is established, a successful mediation often takes on a life of its own, guided by the mediator. As fewer issues remain and the mediation ball starts rolling, parties are more likely to want to do what needs to be done – resolve the case and move on with their lives.
A mediator may need to be creative, working with the attorneys for each side to come up with alternate ways to resolve a case that will satisfy both clients. Though the plaintiff wants A, if the defendant won’t budge on A but is flexible with B, maybe both sides can resolve the case if the plaintiff can get B and C.
The parties must come to an agreement that is acceptable to both sides; a mediator cannot impose a decision and require the parties to adhere to it.
Arbitration is a more formal process and removes from the two parties the ability to control the outcome. An arbitrator, or a panel of arbitrators, makes the final decision. An arbitration proceeding is much more formal than mediation and is often not voluntary.
Arbitration is commonly used by businesses to resolve legal disputes. A company or a person may enter into a contract requiring that any legal claims be resolved through arbitration. The parties sometimes can agree whether the final decision is to be binding or not. If it’s not binding, the case could still proceed to litigation, though it should be a wake-up call to the losing party that a trial may not go their way.
Though very similar to litigation, an arbitration proceeding does not have all the formalities of a courthouse trial. Both sides present evidence, including witness testimony. Attorneys for both sides can cross-examine witnesses. A court reporter should be present to create an accurate record of the proceeding. Both sides make arguments and submit briefs. The arbitrator, or panel of arbitrators, then reviews applicable law and the evidence to reach a decision. Unless there are serious defects in the proceeding, the decision in a binding arbitration will not be reviewed by the court but will stand as final.
Mediation and arbitration are not necessarily mutually exclusive; the two methods could, in fact, be used in the same case. Some of the issues could be resolved through mediation, and whatever final hurdles remain could be decided through arbitration. Both solutions, however, should be less expensive and time-consuming than a trial.
To see if alternative dispute resolution can help resolve an issue for you or your client, please contact our office.