To Litigate or Not to Litigate: When to Use Arbitration or Mediation

It’s often wise to avoid litigation when you can, especially because the trial process can be a huge strain on your time, your finances, and your emotional well-being. It’s also public and unpredictable, even if you have an outstanding lawyer and a strong case. Alternative dispute resolution (ADR) is an excellent way to save time and money and put the control back in your hands. Two particular forms of ADR are commonly used to avoid litigation: arbitration and mediation.

Both arbitration and mediation involve the use of a third party, but they work in different ways. Another key difference lies in the legal nature of each method: while arbitration is a legally binding process, mediation is non-binding. Here’s what you need to know about each method.

Arbitration: The “Mini-Trial”

When you use arbitration to resolve a dispute, you and the opposing party will choose a neutral third party to attend a hearing and make a decision. Both parties must consent to start arbitration. The third party—who is often a professional, like a lawyer, accountant, or engineer—will hear both sides of the story and eventually make a decision. You might think of it as a mini-trial. The final decision is binding, which means you can’t change your mind or go to court to appeal the decision once the arbitration process is finished.

Pros and Cons: On the one hand, arbitration involves an impartial third party and a private, informal setting. It’s more flexible than the court process, so you can use broader rules of evidence and have some control over the format of your hearing. On the other hand, you will have limited ability to change or challenge the arbiter’s final decision once it is made.

Common Situations: Arbitration is often used to resolve business disputes and other commercial matters, including international commercial transactions, disputes between major corporations, consumer disputes, and employment rights disputes.

Mediation: The Cooperative Approach

Like arbitration, mediation also involves an impartial, independent third party who will help you resolve your dispute with the other party. The mediator’s role, however, is not to make a decision on your behalf. Instead the mediator will work closely with you to reach a compromise for both sides, at which point you will draft and sign a settlement agreement to cement your decision. Mediation is a totally confidential and voluntary process. If you aren’t able to reach a happy medium, you can still go to court at the end of it all to appeal the decision.

Pros and Cons: Mediation is often faster, cheaper, and less emotionally draining than arbitration, and it opens up the possibility of unconventional solutions to your problems. The process is designed to help each party understand the other side’s viewpoint. It’s an excellent choice if you want to maintain an amicable relationship with the other party. One of the few downsides is that you usually have to share the mediator’s fees with the other party, and it doesn’t work if you and the other party really don’t get along.

Common Situations: Mediation has a wide range of applications, including small claims disputes, contract disputes, housing disputes, family law and divorce disputes, personal injury cases, and more.

To make the best possible choice between mediation, arbitration, and litigation, you should discuss the details of your case with a knowledgeable Minnesota lawyer. Jane J. Larson is an experienced Minnesota mediator and litigator who will guide you through every step of the ADR process. Call our law office to reach a creative, intelligent, and effective resolution to your legal dispute.

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Jane J. Larson Associates

Jane J. Larson Associates provides personalized legal services for clients in Roseville, Ramsey, Hennepin, Washington, and Anoka. We’ve been providing essential legal services since 1988 and are ready to put our decades of experience to work on your case. We take stress out of the legal process, and are ready to help you today.

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