Understanding Different Mechanisms Involving Your Dispute
Arbitration and litigation – you may have heard both of these words before and wondered what they mean. On the other hand, you may have given little or no thought to it at all. In either case, a basic understanding of these two very different but related concepts is important because many of us have agreed or likely will agree to one of these two dispute resolution mechanisms at least once in our lives. In addition, as the cost of traditional legal battles has increased over time, parties to a dispute are turning to a third dispute resolution mechanism – mediation.
Litigation is a traditional means of resolving disputes that we are all probably most familiar with. It entails the filing of a lawsuit with what is known as a complaint, followed by a period of investigation known as discovery and often settlement or, in increasingly rare cases, a trial before a judge or jury. Litigation, like the other two dispute resolution mechanisms, has its positives as well as its negatives.
Litigation is supervised by a judge who is paid for by tax dollars. Litigation also provides parties with a right of appeal to an appellate court, should they disagree with a decision at the trial court level. Litigation also allows the parties to engage in far more investigation than they would in mediation or arbitration.
Litigation, however, is often a long, drawn-out process. Depending on the court’s docket and the length of time required to try the case, it is not uncommon for a trial to be at least one year from the filing of the complaint. Litigation can also be costly, not in terms of court fees, but in terms of discovery costs. Discovery costs have only increased over the years, particularly as our lives have become more and more documented with things like computers, email, and social media.
During the litigation process, parties will often get to a point where they attempt the dispute resolution mechanism at the other end of the spectrum – mediation. Mediation is an informal means of resolving a dispute whereby each side submits its case to a third-party neutral person, often called a mediator. Mediators are often experienced lawyers or retired judges. The mediator will discuss the strengths and weaknesses of each side’s case and attempt to reach a middle ground that is satisfactory to both sides. Mediators, of course, cost money, but that amount will often pale in comparison to the amount required to proceed through trial.
Arbitration is a means of dispute resolution that is probably appropriately situated between mediation and litigation. Parties often find themselves in arbitration because they previously entered into an agreement whereby they agreed to submit any disputes arising from the agreement to an arbitrator. Often, agreed-to arbitration is binding, in which case the parties have agreed to waive any right to take their dispute to a court if they are unhappy with the arbitrator’s decision.
Although arbitration is usually a quicker means of resolving disputes, it is also more costly in terms of filing and arbitrator fees. Discovery is also often limited and at the discretion of the arbitrator, a fact that can severely hamper a party’s ability to investigate its case through document requests and depositions.
While a basic understanding of these dispute resolution mechanisms is important, you should always consult a licensed attorney who can appropriately advise you on which one is most efficient and effective for your particular dispute. If you are entering into a contract, pay particular attention to clauses referencing dispute resolution, like binding arbitration clauses, and discuss this with an attorney prior to signing the contract to get advice on how these and other clauses could affect you in the event that a dispute arises.