Mediation, Arbitration & Litigation: The Differences
Anyone who has ever been involved in litigation knows that it is financially, emotionally and mentally draining. When you participate in litigation, the judge or jury makes the final decision, and neither party has any influence over the outcome. Those who wish to avoid the pain and length of litigation are turning to alternative solutions, such as mediation and arbitration.
Arbitration and mediation both involve a third party serving as an intermediary between the two disputants. While mediators are usually there to listen and help put facts into perspective, an arbitrator takes the position of the judge and makes decisions based on the testimonies of both parties. Mediation is often used as a precursor to litigation, in case it can be resolved peacefully, while arbitration is typically an alternative to litigation in which the decision of the arbitrator is binding.
While some arbitrators work alone, there are often three arbitrators in the room at once, leaving one head arbitrator and two to represent the disputing parties. It is a combination of the decisions of each of the three arbitrators that concludes the proceedings and renders a judgement.
Conversely, mediation is usually handled by a single mediator who makes no judgements about either party. He or she will help facilitate a dialogue so that the disputants can reach a mutually agreeable solution.
According to recent statistics, mediation is effective in approximately 75% of all cases, and is preferable to litigation because it provides a neutral, confidential environment in which disputants can work out differences of opinions. They benefit from the experience and the calming assistance of the mediator, who will not take sides but will help both parties to understand each other.
Sometimes, a judge will require mediation before a particular case ever sees the inside of a courtroom. This is growing more popular because it decreases the dockets of most courts and provides a healthier environment for disputants to argue out the case. If mediation can facilitate a resolution, the lawsuit can be absolved and neither party ever has to go to court. They are also spared the expense of hiring counsel to represent them in litigation.
Arbitration can also save on the costly expenses of counsel, but arbitration cases are usually binding at their conclusion. This means that if one party is not satisfied by the decision, he or she cannot turn around and file another lawsuit. Once the arbitrator(s) have made a decision, the case is closed and the disputants must abide by it. Some states allow appeals while others do not.
Both mediation and arbitration have limits on the monetary amount that a disputant can collect. This is why many employers require staff to sign an “Arbitration Agreement”. In signing this document, if the employee ever has a legal dispute with the employer or company, he or she is legally bound to resolve it in arbitration. This protects businesses from multi-million dollar lawsuits.
Before you choose your method if dispute resolution, consider your case carefully and contact a trusted attorney for advice. If you feel that you are entitled to a large sum of money – more than a million dollars – then litigation is the only way to go. Litigation should also be used in cases where the facts, figures and documentation are too expansive to warrant time in mediation or arbitration. If you are required by the court system to attend mediation, however, it is best to solve it there rather than go to court and wage war.
