Mediation or Arbitration Instead of Litigation

Litigation is an expensive, frustrating, and generally inefficient way to resolve disputes. Instead, consider mediation or arbitration as solutions to your legal disputes.

Litigation is an expensive, frustrating and generally inefficient way to resolve disputes. That's why alternative dispute resolution (ADR) is becoming an increasingly popular means of resolving lawsuits before trial and even avoiding litigation altogether.

ADR includes both arbitration and mediation. Although they are different procedures, their goal is the same: to minimize the expense and delay associated with litigation. Numerous public and private organizations provide both mediation and arbitration services.

Arbitration is an adversary proceeding in which parties present competing evidence and arguments before a neutral third party (or panel), who then decides the dispute much like a judge would in a trial. An arbitrator can be a judge, but is more often an attorney or non-attorney expert, depending on the subject matter of the conflict. Usually, the parties agree on the arbitrator beforehand.

Arbitration can be voluntary, judicially mandated or contractual; and the outcome of an arbitration can be either binding or nonbinding (advisory). In binding arbitration, the parties agree in advance that the arbitrator's decision or monetary award will be final. It's a substitute for a court proceeding and cannot be reviewed or overturned, except under very limited circumstances. In nonbinding (advisory) arbitration, the arbitrator's decision is not final, but rather intended to help guide the parties toward settlement of their dispute.

Many contracts today, including collective bargaining agreements and health care benefit packages, contain provisions that compel binding arbitration of potential disputes. Indeed, in negotiating any contract, parties may agree in advance to arbitrate almost any potential dispute. Read Arbitration Clause in Contracts for details on how to structure agreements for this type of dispute resolution.

In mediation, a neutral third party attempts to facilitate communication and compromise between two or more parties in conflict. Mediation is not a legal proceeding, although it can occur during the course of a lawsuit. Unlike arbitration, the neutral party's role in mediation is not to decide who wins, but to bring the parties closer together and help overcome obstacles to settlement. The actual structure and conduct of a mediation is usually much less formal than an arbitration.

While an arbitrator's role is generally passive, a mediator may become aggressively involved in trying to settle a dispute. Many mediators will meet privately with each side and point out the strengths and weaknesses of their respective positions. The mediator also will typically communicate settlement proposals back and forth and help the parties react to those proposals.

Mediation is almost always voluntary and cannot be imposed on the parties, although some courts may require the parties in a lawsuit to attempt to mediate their dispute before the case goes to trial. Read Where Can I Get More Information on Mediation? for resources that further explain the process.

Arbitration vs. Mediation

Whether to pursue mediation or arbitration depends on the attitudes and relative circumstances of the parties. To have a successful mediation, both sides must want to settle their dispute and participate in good faith. Mediation is unlikely to be effective when there is a great deal of hostility between the parties, if they have radically different evaluations of their cases, or if one side has no incentive to compromise. In such circumstances, arbitration may be the only hope of avoiding litigation and trial.

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