When a person gets into an accident, suffers a loss, or attempts to remedy a wrongdoing, there is a mistaken belief that most cases culminate in a trial at district or superior court. This is a falsehood. Many cases are resolved between the parties through alternative dispute resolution such as arbitrations or mediations. In some situations the court requires the parties to mediate, in other situations the parties have bound themselves to be before an arbitrator to adjudicate the case on the merits much like a judge and jury would. Mediations and arbitrations are very different and have vastly different results. We will look at each in turn.
To begin with, the ultimate hope for an arbitration or a mediation is that the parties resolve the matter. This is called a settlement. A settlement is normally effectuated by the parties dismissing the underlying action, or agreeing to waive any right to a trial by jury to pursue their causes of action, in return for the requested relief. The requested relief is typically a sum of money that may or may not be disclosed depending on the confidentiality agreements the parties sign at the end of discussions. Attorneys typically encourage settlement prior to litigation as juries are unpredictable. Some of the greatest attorneys have lost what appear to be the best cases due to perceptions and insights of the members of the jury. In many situations it is necessary for the parties to go to court when they cannot agree on what a person may (or may not) be entitled to. In the event that the parties are open to meaningful settlement discussions they can come in two flavors: mediations and arbitrations.
Mediation is a process in which an impartial person helps the parties reach a solution that they find satisfactory. The parties will enter a room, or rooms, and each have their turn at telling the mediator his or her side of the story. The mediator will typically go back and forth between the parties and play devil advocate in an attempt to get one or both sides to budge in terms of their expectation of the resolution. This may mean that the Plaintiff may have to lower the amount of money they are seeking and that the Defendant may have to admit some liability and agree to pay a certain amount in order the dispute to go away. In the event that a settlement can be reached and parties agree, a settlement agreement will be signed. In the event the parties cannot have a meaningful meeting of the minds- each party walks away in no different position when they started. In other words, mediation is non-binding.
Unlike mediation, arbitration is binding. Whereas mediation is typically an informal process, arbitration of a claim is much more formal. After the parties mutually agree on an arbitrator, they each are in the same room and present their theory of the case as if they were in court room. Rules of evidence are typically followed and the parties may call witnesses to testify. The arbitrator is usually a retired judge or a respected member of the legal community who has the capacity to understand what can occasionally be complex legal issues. While the parties to a mediation may walk away at the end of the day, an arbitration is a full and final decision. The arbitrator will write a memorandum to the parties indicating what his or her thoughts are and the ultimate disposition of the matter. While arbitration may take control away from the parties, it is a cost effective alternative to trial.
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