Dispute Resolution: Litigation vs. Arbitration vs. Mediation
Conflict is a natural part of business. If you need convincing, just watch the cable TV show Billions. Conflict can arise between neighbors, between family members, and even between perfect strangers. When a dispute results in injury, it may be time to hire a litigation attorney. The primary job of a litigation attorney is to help you resolve your dispute and reach a solution to the conflict. There are multiple methods for doing so, the most popular of which are: in-court litigation, arbitration, and mediation.
While each of these approaches are different, they are not always mutually exclusive. Some cases will attempt all three before reaching a resolution. Others will find a solution after utilizing just one method. But what are the differences?
Litigation is the process of availing yourself of the public court system, state or federal, to resolve your dispute. Each state and the federal government have their own set of procedures and different levels of courts to help individuals and businesses solve conflicts. The subject matter of your lawsuit and the identity and residence of the parties will determine which court system is appropriate to address your dispute.
The litigation process is highly regulated. There are rules for literally everything, from how to begin, to how to collect evidence, to how to present the evidence, to how and when you can seek a judge’s input or decision. It is this complex process, full of procedural pitfalls, that requires the assistance of a lawyer to help you navigate the maze of rules and deadlines.
In litigation, you typically do not get to choose your judge, although you can disqualify a judge if you can prove definite bias against you. Instead, the court assigns your judge randomly, and that assignment alone can affect many aspects of your case. Judges are people and have their own inherent biases and procedural preferences, which can have a significant impact on how your dispute is eventually resolved.
You are also subject to the court’s calendar, meaning that resolution could take a very long time depending on how busy your judge happens to be. However, aside from an initial (usually modest) filing fee, the court costs (i.e. the judge’s time, the court reporter’s time, the court administrator’s time) are all covered at public expense. Though you must pay for your attorney, you get the benefit of public financing for much of your conflict resolution.
Eventually, a decision about your dispute is reached by either a judge or a jury. If you do not like that decision, and there are legal grounds to do so, you can appeal to a higher court. Every state and the federal government have multiple levels of appeal courts, so you can repeatedly make your arguments until you finally get a ruling from the highest court. Of course, appeals can draw out the final resolution for years.
Instead of submitting the resolution of your dispute to the public court system, you and your opposing party can agree to submit it to private arbitration. This cuts out the role of the government and allows the parties to select their own decider. In arbitration, there are fewer procedural and evidentiary rules, and you can have the arbitration wherever the parties are both comfortable with it, regardless of jurisdiction concerns. For example, if one party is from Washington and one party is from California, they could conceivably agree to select an arbitrator from Oregon, and to hold the arbitration proceeding in Idaho (why they would want to do this is questionable, but the point is, they can if they want to).
Arbitration can end up being much faster than litigation in court. The parties, based on their schedules and that of the arbitrator’s, can set a faster pace than would typically be available in court. They can also select a panel of arbitrators, rather than just a single arbitrator.
While arbitration gives the parties much more control over the process and timing, there is typically no public financing available. The arbitrator’s time and costs will have to be paid for by one or more parties. While attorneys are not required in arbitration, you may still want a legal advocate on your side, so you could end up having to pay for your lawyer and the arbitrator. Therefore, you run the risk that arbitration will end up as expensive or even more expensive than litigation. The general attitude is that arbitration is cheaper than litigation, because it can reach resolution quicker and you have less procedural red tape to deal with, but my experience has been that arbitration rarely saves the parties as much money as they hope it will.
Often, arbitration is final and binding, with little to no opportunity to appeal to a higher authority. That means you run the risk of the arbitrator shooting from the hip, not following the law, and handing out a decision that is completely and totally unexpected. And there is not a lot you can do about it. Without evidence rules, the arbitrator can base its entire decision on hearsay testimony or character evidence that would have been excluded in a public trial.
While arbitration can be faster and cheaper than litigation, it can come with dangerously ambiguous rules and no oversight, which means the risk of an adverse result is potentially higher than in litigation. That said, there are arbitration organizations, like the American Arbitration Association, which have developed rules similar, though not as complex and exhaustive, as those of the court system. Arbitrating though these organizations can be more expensive than just picking your own decider and jumping right into an arbitration hearing, but they can provide you with a much-needed framework by which to help resolve your dispute.
Many people confuse mediation with arbitration, but they are not the same thing. Mediation is a dispute resolution process that can be used in place of arbitration or litigation or in conjunction with those avenues. It allows the parties to agree on a neutral third-party who will listen to the arguments and complaints of each side and help them to craft their own resolution to the dispute.
Unlike a judge or arbitrator, the mediator does not make any decisions, and a solution is never guaranteed. But mediation gives the parties more control over the final disposition of their case. They can agree to terms that would not typically be imposed by a court or arbitrator and can reach a middle ground that may not be possible after an arbitration hearing or trial.
The mediator’s job is not to take sides, but to point out the strengths and weaknesses of both sides’ arguments to help them understand the risks they face by submitting the dispute to a court or arbitrator. The mediator can also help cut through the surface problems and get right to the heart of the matter. It is common to see mediated settlements resolve a conflict much more completely and satisfactorily than whatever a judge or arbitrator decides. On the other hand, if the parties do not like the mediator’s suggestions or cannot reach an agreement between themselves, they can choose to go right back into the litigation or arbitration process.
A good corporate attorney will help your business decide the best dispute resolution procedures for you before any dispute arises. A good litigator will help guide you through the process, whatever it may be, and advocate for your interests throughout. Beresford Booth is home to attorneys who excel in both areas, and we stand ready to assist you.