What You Need to Know About Mediation and Arbitration

When most people think about legal disputes, they get images of lawyers navigating a courtroom, raising objections, and addressing the judge and jury.  Most people think about courtroom scenes from television and movies, but the reality is that very few cases make it to the courtroom for the trial.  One of the reasons for this is that most cases are resolved or settled before trial using a process known as alternative dispute resolution (ADR). The two most common forms of ADR are mediation and arbitration. Both mediation and arbitration are ways to settle legal disputes outside of the courtroom. While there are similarities between them, each has its unique benefits.

What is Mediation?

In mediation, the parties select an independent, impartial and neutral person, the mediator, to help the opposing parties work through their differences. The mediator’s job is to help the parties identify issues, reach decisions, openly communicate, limit conflict, negotiate concessions, and ultimately, reach a settlement. In most cases, this mediator is an attorney who knows the law and has usually had extensive training in mediation.  The mediator also usually knows the area and the types of recovery that might be possible in certain cases.

The mediator does not make any final or binding decisions.  Rather, the mediator works with the parties and their attorneys to attempt to reach a middle ground that all parties can live with.  Mediation is voluntary, and any party can walk away.  All things discussed at mediation are confidential and cannot be used against either party if the case does not resolve.

The Benefits of Mediation

Mediation does have its benefits, both practical and financial. These benefits include:

• Less expensive than traditional litigation.
• Avoiding the backlogged court system.
• Informal process allows for open communication and dialogue.
• Mediation is confidential, whereas information becomes a public record upon filing a lawsuit.
• Mediation is suitable in all cases, including commercial disputes, employment issues, family law, etc.

What is Arbitration?

Like mediation, the parties select an independent, impartial, and neutral person, the arbitrator, to oversee the arbitration process. However, unlike the mediator, the arbitrator makes final decisions akin to a judge. The arbitrator analyzes the evidence and will listen to testimony. Like in mediation, the arbitrator is usually an attorney who knows the law.  At the end of the arbitration, they will render a final decision. A court then confirms this decision, which will eventually be entered as a final judgment against the losing party. This decision is binding – meaning a court cannot overturn it unless there was some error in the process.

There is non-binding arbitration. In this instance, the parties agree (before the start of any proceeding) that the dispute can still be brought before a court after the arbitrator makes a final decision.

Another difference between mediation and arbitration is that arbitration is often mandatory. This is because there are contracts with arbitration clauses that say all disputes must be arbitrated. On the other hand, mediation, for the most part, is voluntary.

The Benefits of Arbitration

Arbitration shares some of the same benefits as mediation, including:

• Reach quicker resolutions than going through the court system. For example, the parties do not need to rely on a court’s scheduling system or the availability of judges. They can schedule the arbitration whenever they can find a mutually agreeable time.
• In arbitration, the parties choose the arbitrator. You have no control over which judge gets assigned to your case in court.
• Evidence and other information presented in arbitration do not become a public record. This is an excellent benefit for high-profile clients or in cases with sensitive information.
• Arbitration is less formal than litigation. Therefore, procedures and rules of evidence are streamlined, leading to efficiencies. These efficiencies may save clients significant money.
• Since most decisions in arbitration are binding, the legal dispute can be resolved without adding years of appeals and other procedures.