Mediation Vs Arbitration - What's The Difference
A couple decades ago, the legal system in general, became weary of the standard methods for resolving legal matters in US. Standard litigation proved to be costly, time consuming, and at times, unnecessarily complex. In response to this, alternative ways of resolving legal disputes were developed.
As of the early 2000's, courts and lawyers were increasingly employing these alternate methods, as they found the methods to be quicker and less costly, compared to conventional means. In actuality, less than 5 percent of all lawsuits ever end up in court - the other 95 percent are settled prior to the actual trial. Ironically, today, it's commonplace to think of so-called alternative legal dispute methods as the norm, and going to trial as the alternative.
So-called "dispute resolution" includes a wide range of techniques and processes - most with not very much in common other than that each is a way to avoid an all out litigation. Legal professionals are perpetually changing these processes to adapt to the unique needs of their legal deputes. That is to say that the definition "alternate dispute resolution" is always evolving.
Two of the most widely used methods are mediation and arbitration. Now, many outsiders are under the impression that mediation and arbitration are basically the same thing - a third party comes in to help settle a legal dispute. While this is true, there are certainly some major differences to be pointed out.
In mediation, a neutral third party (usually an attorney) helps the disputing parties come to some sort of settlement regarding the issue at hand. Basically, it's the mediators job to have the attitude, "come on guys, can't we all just get along?" The mediator must help the parties find common ground - and they're generally not supposed to make any decision about the dispute.
Because there's no one ultimate decision maker in mediation, the environment tends to be a lot less stressful and informal than a trial. The goal is for the disputing parties to peacefully talk through their problems, and attempt to arrive at a solution of which all involved parties are content. No one can force parties to take part in mediation, but sometimes it's a required step in a larger process of resolution. It's usually the case that at any time, a party is fully able to walk out and not take part. Suffice it to say that mediation is a process for parties who have the desire to take care of their legal disputes quickly and, often times, relatively painlessly.
Common format of mediation is as follows. The parties involved tend to sign an agreement with the mediator, saying that everything said during the process will be completely confidential. Next, the mediator will often ask the parties to write a mediation statement, outlining their cases, as well as their goals for mediation. The mediation process official begins when both parties, their lawyers, and the mediator meet together. Subsequently, both sides are then able to make their cases heard. At times, the disputing parties will be separated so that they can each spend some one-on-one time with the mediator - typically called a caucus. Finally, on the condition that the parties are able to come to an agreement, a settlement agreement is then drafted and signed.
It's important to note that mediation is not legal legally binding, yet it is still found to be extremely successful is resolving disputes such that both parties are happy with the outcome. The American Arbitration Association reports that 85 percent of mediations result in a settlement.
Even though mediation is not binding, it is still very successful in resolving disputes to the satisfaction of both parties. According to the
Just like mediation, in arbitration, a neutral third party is called upon to be the go-between in a particular legal dispute. However, unlike mediation, the third party's job here is to play the role of judge and come to an ultimate decision regarding the matter. Although the procedure is much more formal than a mediation, it still has many advantages that a typical trial does not. For instance, arbitrations often yield prompter resolutions, and they're also more cost-effective than taking an issue to trial (discovery and motion practices are more costly under court rules than in arbitration). Unlike a mediation, where there's only one go-between, arbitration typically has a panel of three arbitrators - another reason why it's more expensive than mediation.
In mediation, you're able to walk out of the room at any time, but with arbitration, once you sign the required contract prior to the commencement of the procedure, it's binding. It's also vital to know that the arbitrator's decision on the resolution is usually binding, as well. If you happen to not like what the arbitrator decides, you can't decide to go to court later, on the matter. In appropriate cases, the two parties will lay out the details of the process - for instance, the laws that will be used, etc.
Although the arbitrator's decision is usually binding, the parties are free to choose their own arbitrator to manage the case - that is, if they can agree on one.
While arbitration generally involves evidentiary hearings with sworn testimony of witnesses and the submission of documents, strict court rules of evidence don’t apply and there is no required discovery process, other than the forum rules. As such, arbitration is far less formal, faster and, therefore, it is usually far less costly than court proceedings.