Most parties engaged in a legal dispute prefer to avoid a trial, which can be lengthy, expensive and often complicated. Mediation and arbitration are the two most common forms of Alternative Dispute Resolution (ADR), but there are significant differences between them.
Mediation is an informal process wherein a neutral third person or mediator guides the disputing parties in reaching a mutual agreement or solution to their issue. The mediator leads the parties toward a settlement by helping them clarify their underlying interests and concerns, and encouraging compromise and trade-offs based on the relative significance of each point to each party.
Some of the unique characteristics of mediation include:
- Parties control the outcome;
- Settlement is reached only with party agreement;
- Process is informal;
- Privacy is maintained; and
- Costs are lower.
Arbitration is an ADR procedure where two or more parties agree to have an unbiased, neutral, third-party serve to hear evidence and render a final decision regarding the legal issue. In many respects, arbitration is a simplified version of a trial with modified legal rules and procedures.
Some of the features of an arbitration proceeding include:
- Third-party decides outcome;
- Decision is final and can be made public;
- Proceedings can be binding or non-binding;
- Typically found in common contracts, such as employee contracts, goods or services contracts, partnership agreements, operating agreements, purchase and sale agreements, or license agreements; and
- Costs are higher than a mediation, but often lower than a court trial.
Deciding whether to choose mediation or arbitration depends largely on the legal matter at hand, the accompanying circumstances and the desired outcome. For example, mediation is highly recommended for civil and domestic disputes, such as divorce or child custody hearings. Many business matters are also meditated in an effort to preserve relationships once the dispute has been concluded and/or to facilitate the parties having an opportunity to voice their positions and reach a negotiated resolution without the uncertainty of a costly trial.
When you need help deciding what ADR procedure is right for your case, Shane Coons can advise you. Shane Coons is an experienced mediator and arbitrator and will assist you with all your legal questions. For more information, contact him at 949-333-0900 or visit his website at www.ShaneCoonsLaw.com.