When litigating an issue, the Court will likely order the parties to consider alternative dispute resolution or “ADR.” There are two methods of ADR: arbitration and mediation.
If the parties’ contract provides for arbitration in a specific jurisdiction, the Court will order the parties to proceed with arbitration. Also, the arbitration clause within the contract will state the location of the proceeding, what discovery will be permitted, the number of arbitrators, the rules to be followed during the arbitration, and the general costs and fees.
Advantages and Disadvantages of Arbitration
One of the benefits of arbitration is that it costs less than litigation because there is limited discovery. Another benefit of arbitration is a faster process in comparison to the typical litigation process. Additionally, the parties can select an arbitrator who has experience in a particular area of law. Finally, the arbitration process is final and of course private to the parties.
On the other hand, there are disadvantages to arbitration. First, some attorneys who participate in arbitration treat it as if it were Court proceeding. For example, the attorneys engage in a lot of discovery, such as depositions, interrogatories, requests to produce documents, and requests for admissions.
Engaging in discovery may lead to an increase in time and cost. Another disadvantage of arbitration is that it may be difficult to appeal an arbitration award because the non-prevailing party must show bias or fraud by the arbitrator or that the arbitrator failed to hear evidence that was relevant to the case.
Mediation is an informal settlement conference. During the mediation process, the parties can take full control to reach a solution to their dispute. The mediator is there only to guide and assist the parties to reach that solution.
Advantages of Mediation
If the parties mutually agree to a settlement, the parties can save a substantial amount in attorneys’ fees and costs. Additionally, unlike arbitration, where it can last months, the majority of mediations only last one day. Furthermore, when compared to arbitration (where it can be costly), the cost of mediation plus the costs for the attorneys are on the lower end.
Finally, if the parties can reach an amicable resolution at mediation, the parties may be able to continue the business relationship in the future, and this may not have occurred during a long drawn out litigation case or during the arbitration.
Arbitration and mediation are just two ways to avoid the time and cost of litigation. If you are a party in a litigation case and would like to discuss alternative dispute resolution options, please contact Kimberly M. Soto at 321.972.2279 so she can further advise you.