What is the difference between arbitration and mediation?
Updated: May 31, 2018
It is not at all unusual in a law firm’s practice to agree to mediate or arbitrate a case. Arbitrat
ion and mediation both have the same end – to reach a resolution of a case without having to go to court. Litigation is emotionally difficult, expensive and time-consuming and the outcome is unknown. That’s why clients and their attorneys will consider arbitration or mediation as two possible legal alternatives.
What are the differences between mediation and arbitration?
Both mediation and arbitration rely on a professional and impartial third party to help resolve a legal conflict that can’t be settled between the lawyers for each side. Nonetheless, there are important differences to understand between the two.
Arbitration uses the services of one or more legal professionals (retired judges, neutral other attorneys) to preside over a hearing, taking on the role of a judge. The arbitrators (it’s usually more than one and oftentimes three) will listen to evidence, make decisions about evidence and give written opinions that are either binding or non-binding, within a specified period of time. As in a trial, evidence is presented, arguments made, and witnesses called; however, the the rules and procedures are much less complicated.
There are three different types of arbitration that lawyers for all parties agree to use prior to the hearing.
Binding Arbitration: Binding arbitration is very similar to going to court and having a trial. Both parties agree to abide by the final rulings of the arbitrator(s). In a personal injury case, for example, the parties usually involved in binding arbitration are the injured party and his lawyer, and the insurance company representing the person or company who caused the personal injury accident. No matter how the arbitrator rules, both sides are bound to the settlement.
Advisory Arbitration: Advisory Arbitration is like a dress rehearsal. It is held to give both sides an idea of what will happen if the case goes to trial, and, depending on what strengths and weaknesses are uncovered, help them decide whether to agree in the future to a binding arbitration or court.
Non-Binding Arbitration: Non-binding arbitration is also advisory in nature unless or until it becomes binding. This type of arbitration may become binding with a passage of time if neither party requests further proceedings.
Usually arbitration is binding but mediation, a voluntary legal method to settle a dispute, is non-binding. It will only be binding if the court orders it. It is much more informal than arbitration.
The mediator acts like a runner between the two parties and works hard to try to and negotiate a settlement agreement. The mediator can meet with both parties at the same time, or literally go back and forth between the two parties in different rooms. Mediation can take as little as a few hours or as long as a few days.
Mediators are more like peace makers. Unlike arbitrators, mediators do not make any decision on behalf of the parties. Instead, they attempt to find a resolution to the dispute at hand. They supervise the exchange of information and the bargaining process.
In some heated disputes, it’s not unusual for mediators to be the voice of reason, acting to find common ground for the parties and to deal with unrealistic expectations. Their job is to define each party’s concerns, convey them, and devise a solution.
If a mediator can get both parties to agree, he will often draft the final settlement, which has to be signed by all parties. This signed agreement is considered an enforceable contract. Should one or both parties fail to agree with any solution proffered by the mediator, they are free to pursue their case in other ways, including a trial.
Additional benefits of mediation and arbitration
As mentioned previously, the proceedings of mediation and arbitration are much less formal than in a court of law. They are also faster, less costly and less emotional. In addition, the proceedings are not usually part of the public record. As such, they can remain confidential.
If you have any questions about this topic or any other questions related to personal injury law, please call us at 920-725-8464, or toll free at 1-800-529-1552. Our personal injury consultations are always free.
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