Updated: October 18, 2019
When faced with a conflict that simple negotiation cannot solve, there are several dispute resolution processes at your disposal. Three of the most common are mediation, arbitration, and litigation. In order to evaluate which is best for you, it’s important to have a thorough knowledge of each method and its potential applicability to your case.
Mediation and arbitration fall under the category of Alternative Dispute Resolution (“ADR”), which involves finding a resolution outside of court. The parties in dispute will often opt for one of these practices to avoid long waits for a court hearing and to reduce costs. The range of disputes that these two programs can address includes employment, personal injury, environmental, family, and housing disputes, and many others.
Let’s delve deeper into these two ADR processes and explain how they differ from litigation – and each other.
In the simplest terms, mediation involves a neutral third party (the “mediator”) who facilitates discussion and negotiation between the parties in conflict. The mediator does not decide the case and does not serve as a judge—he or she simply is a facilitator through which the parties can attempt to settle the dispute amongst themselves. The mediator does not come to a conclusion or issue a judgment, and the parties do not have to reach an agreement. In this sense, even court-mandated mediation is still a “voluntary” process.
The resolution reached by the parties in a mediation is binding only if it’s memorialized into a written contract signed by the parties.
Mediation can be an ideal option when the dispute is amongst family members, business partners, or neighbors—people who have a long or otherwise previously-friendly history with one another and will continue to be interconnected going forward. It can also be a useful way to level the playing field between two parties who may have an uneven power dynamic, since all parties need to voluntarily agree to reach a resolution. Most of a mediation tends to take place in a joint session with all parties present, although some discussion may happen with each party separately speaking with their counsel and the mediator. Mediation is confidential, except in certain cases that uncover certain aspects, such as criminal acts.
Mediation has become a valuable tool in a wide range of industries and scenarios. Mediator fees may be similar in scale to those of an attorney, but resolution is typically reached far more quickly than it is in a litigated case, significantly reducing costs. The fees of the mediation itself tend to be shared by all parties.
Arbitration is a more formal process than mediation that more closely resembles a trial, with some notable differences. Rules of evidence are simpler (hearsay may be admissible, for example) and the discovery process tends to be more limited. The terms of the process are usually established in an arbitration agreement which can specify the rules, fees, number of arbitrators, and where the arbitration will take place. Arbitration is particularly common in the construction, labor, and securities industries.
Unlike litigation, which typically takes at least a year, arbitration will usually require significantly less time. Its streamlined process may allow for a resolution in weeks or even days, depending on the complexity of the case.
An arbitration concludes with the arbitrator or arbitration panel issuing an award, which can range from a “bare” award (a simple announcement of the result) or a “reasoned” award (more details are provided). In New York state, an arbitration award has the same weight as a court order, but an important distinction is that it can only be appealed or overturned in very rare circumstances. An important feature of arbitration over litigation for many parties is that decisions are not automatically public record, and both parties often require confidentiality as a term of the agreement.
Arbitrators may be lawyers, but they can come from any field that is applicable to the dispute at hand. The parties may choose someone with a background in health care policy for a medical dispute, for example, or an engineering expert to serve as an arbitrator regarding a dispute in the construction industry.
While typically more costly than mediation, arbitration expenses are still usually significantly less than those of a trial. These include fees for the attorneys, the arbitrator(s), and administrative costs. The parties typically share the latter two fees, and cover their own attorneys’ fees.
Service organizations such as the American Arbitration Association (AAA) or JAMS, an organization made up of retired judges and attorneys, are available to provide administrative support for arbitration proceedings.
If mediation or arbitration prove insufficient (or are not desired by the parties or appropriate to the case), litigation, the most formal and traditional method of dispute resolution, is likely the best route to take. Disputes are settled in the court system and presided over by a judge and/or jury. The process involves the full rules of evidence, a set of hearings and orders, and, as a result, typically takes longer than various Alternative Dispute Resolutions.
Whereas ADR processes are conducted in private, litigation is public. It is possible to petition the court to seal very limited aspects of the process, but this is not guaranteed and many judges are not willing to doing so without a compelling reason. Costs tend to be higher, and the parties have little to no sway over the appointment of the judge who will oversee the trial.
The benefits of litigation include full discovery and disclosure of evidence, the opportunity to call and cross-examine witnesses, the transparency of a public proceeding, and the option to appeal a decision.
Mediation or arbitration vs. litigation: choose wisely
Every case is unique and requires its own approach in order to find an efficient, favorable outcome. Mediation, arbitration, and litigation are the most common options available to parties seeking to resolve a dispute. The differences between them are significant, however—so proper research and sound legal advice are essential for choosing the option that’s right for you.
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This Blog is made available by Romano Law PLLC for general informational and educational purposes only, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and Romano Law PLLC or any individual contributor. You should consult a licensed professional attorney for individual advice regarding your own situation.