Mediation or Arbitration: What’s the Difference?

more+
less-
more+
less-
Explore:  Arbitration Mediation

When people disagree, they have choices on how to resolve their dispute. They can lawyer-up, file a lawsuit, and let a judge or jury decide who wins. They can also try to resolve the matter between themselves, they can engage in arbitration or they can go through mediation.

Litigation

Litigation is the process of filing a lawsuit and engaging in discovery proceedings and never-ending legal pleadings and attending lengthy court hearings. Eventually, the matter comes to trial after the expenditure of huge sums of money, not to mention the wear and tear on the litigants and their families. A judge or a jury will decide who wins, and the losing party may appeal the decision to a higher court.

As a result of cutbacks in funds available for court administration, courtroom staffs are overworked, and often one set of staff members serves the needs of several judges. Courthouses have closed due to lack of funding. The result is delay, delay and more delay. It is not unusual for a case to take five years to get to trial. An appeal may take several more years.

Arbitration

One alternative is arbitration. This is a process that is initiated because of an arbitration clause in a contract, by an agreement between the parties or by a court order. An arbitrator, or, in some cases, a three-member panel of arbitrators, is appointed by the entity conducting the arbitration. Arbitrators can be retired judges, practicing or retired lawyers, or in some cases industry-specific laymen. The decision of the arbitrator is final and cannot be appealed except in rare instances. The arbitration decision is presented to a court, and an official court order is entered on the court record. It is enforceable the same as any other court judgment.

Arbitration procedures vary from arbitrator to arbitrator. Some are very informal while others allow the parties to conduct discovery in the same fashion as in a litigated court case. Hearings are conducted informally or, depending on the arbitrator, in a very formal, court-style fashion. Rules of evidence are generally not strictly followed. Following the presentation of the case by the parties through their counsel, the arbitrator renders a decision. Arbitration decisions are in writing and can consist of anything from a one-sentence statement to a lengthy, detailed opinion. Considering the possibility of lengthy and expensive discovery proceedings, arbitration can take several months to reach the point of decision.

Mediation

Mediation is a relatively inexpensive and fast way to resolve disputes. It is a process conducted by a trained and experienced mediator, who may be a retired judge or a practicing or retired attorney. The parties, generally through their attorneys, prepare a mediation statement describing their statement of the dispute, prior settlement efforts, legal authorities of precedential value, and a description and interpretation of documentary support for their position. The statements are often exchanged prior to the mediation.

Mediation is a confidential procedure. What is discussed during the mediation and any documents prepared specifically for the mediation remain confidential. If an agreement is reached, it is put into writing and that agreement is not confidential. It is normally embodied in a motion for approval of the settlement and presented to the court in which the case is pending. Sometimes there is no court proceeding, so the parties hold onto the agreement in case enforcement down the road is required.

Every mediator has his or her own procedure to be followed. A joint discussion of the issues may be helpful in setting the tone for negotiations. Following the joint meeting, the parties are provided with breakout rooms, and the mediator engages in mediation-style shuttle diplomacy— narrowing the issues, conveying offers and counter offers, and often pointing out the value of settling as opposed to continuing with court-supervised litigation.

A mediation is generally completed in one day, sometimes less. If there are many issues to be resolved, the mediation can last until the late evening hours or be continued to another day. Resolutions can be as imaginative as the parties can think of, often with the assistance of the mediator. Examples are a formal apology printed in a newspaper a donation to a favorite charity or supplying merchandise at a reduced price. No court nor arbitrator can order such imaginative resolutions.

Topics:  Arbitration, Mediation

Published In: Alternative Dispute Resolution (ADR) Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Buchalter Nemer | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »