How Does Arbitration Work? How Does It Differ from Mediation?
When you have a legal dispute, you can file a lawsuit and take your case to trial to get the outcome you want. That can be expensive, though. It can also take a lot of time, as you go through depositions and prepare for trial. There are alternative forms of dispute resolution that can save you substantial time and money, such as arbitration and mediation. How do these processes work? Do you still need an attorney if you go through arbitration or mediation?
What Is Arbitration?
Though the details can vary from jurisdiction to jurisdiction, arbitration is generally a private dispute resolution process, where the parties bring their claims to a neutral third party. The arbitrator—which may be either an individual or a panel—should have special knowledge of the areas of law governing the dispute. The arbitration proceeding may be mandatory (often pursuant to prior agreement) or voluntary, depending on the situation. Furthermore, the parties may agree that the arbitration will be binding (final) or non-binding.
What Is Mediation?
As with arbitration, the details of mediation can vary from state to state. As a general rule, though, a mediator doesn’t take testimony, consider legal arguments, or render a decision. As a consequence, the mediator need not have any specialized knowledge of the law; instead, mediators typically have training, certification, or proven expertise in conflict resolution.
Mediation is almost always voluntary and generally non-binding. The objective of mediation is to get the parties to identify mutually beneficial ways to resolve a legal dispute. The mediator may suggest concessions that a party might make to facilitate the resolution of the dispute, but the mediator will not render any decision or give any opinion regarding how the dispute should be resolved.
What Is the Difference Between Mediation and Arbitration?
Though the processes can have some similarities, there are distinct differences between mediation and arbitration:
- In mediation, the parties determine the result. The mediator does not issue a decision; they attempt only to help the parties reach agreement. In arbitration, the arbitrators/panel controls the outcome.
- The arbitration process involves consideration of and ruling on the law. Mediation is really just a form of negotiation. While an arbitrator often issues a final, binding resolution, the mediator serves only as a facilitator, with no power to decide.
- In an arbitration proceeding, witnesses may give testimony to aid the arbitrator in reaching their decision. Mediation is less likely to involve the statements or testimony of third parties, and when such evidence is presented in mediation, it is done so to support the value or strength of a party’s case for purposes of negotiating agreement or settlement.
- Arbitration is generally a formal process, with legal counsel controlling participation. Mediation is informal and often involves only the parties and the mediator.
- Parties cannot meet privately with an arbitrator. Mediation encourages private meetings between the mediator and a single party, if that helps facilitate a resolution of the dispute.
- In arbitration, one party typically fares better than the other party. In mediation, the goal is to reach a mutually beneficial resolution.
- Arbitration is customarily more expensive than mediation, as it usually requires some discovery, and almost always includes legal counsel.
- The decisions rendered by arbitrators may be available to the public. The mediation agreement can remain confidential.
Do I Need a Lawyer for Mediation or Arbitration?
As a general rule, legal representation is not required in either an arbitration proceeding or mediation. With arbitration, though, it’s extremely beneficial to have legal representation, as the arbitrators will consider and make findings of law. Whether you need or want an attorney at a mediation proceeding depends on how your state approaches the process. In some states, mediation is considered an “extra-legal” proceeding, and the parties are discouraged from having legal counsel present, as attorneys are duty-bound to prioritize the best interests of their clients and may actually get in the way of reaching a resolution. Other states encourage the presence of attorneys at mediation, believing it ensures that the parties’ legal interests are always fully protected.
Mediation and arbitration can help you resolve a legal dispute in less time and with less acrimony and expense than litigation. The two processes are somewhat different, though. With arbitration, you’ll take your claims before a single arbitrator or panel of arbitrators with knowledge and expertise related to the legal principles that govern your case. The arbitrators will consider evidence and render a legal decision, which may or may not be binding.
With mediation, the parties work with a neutral third-party to find a mutually acceptable solution. The mediator doesn’t render any type of decision but makes recommendations and helps the parties resolve disputes amicably. Mediation is typically not binding, but the parties may memorialize their agreement in writing.