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Arbitration and Mediation Explained in Simple Terms

August 30, 2023

Marie Ignozzi

As litigators, we are expected to handle trials in the courtroom. What many clients often do not realize is that the art of litigation includes other forms of dispute resolution like arbitration and mediation. Like a courtroom with a judge, arbitration involves using a neutral third-party, the arbitrator, to decide which party in the dispute “wins” the case. One or both parties pay the arbitrator’s fee, which can vary depending on the length of the hearing and whether the parties want a written decision. Trials and arbitration involve a hearing where the parties submit evidence by way of documents and witnesses who testify and then we argue why our client rightfully deserves the victory. Both are expensive and time consuming, follow federal or state rules, and culminate with a decision made by someone who does not know you or your interests and goals.

Mediation is another form of dispute resolution, and one that often gets overlooked. Mediation is a dialogue that aims to help the parties understand each other's perspectives, interests, and needs, and to explore options for resolution. The purpose of mediation is to empower the parties to make their own informed and voluntary decisions. The mediator facilitates a conversation between the parties to help the parties themselves find a solution to resolve their issues.

The key difference between mediation and arbitration is that the mediator does not decide which party is right or will win. There is no proceeding with witnesses who testify and no evidence to introduce, unless the parties mutually agree to exchange certain documents. Because the mediator does not make decisions for the parties, the mediator does not judge, advise, or advocate for either side. The mediator's role is to guide the process, ask questions, identify and clarify issues, and assist the parties in communicating effectively and respectfully.

Mediation also provides benefits that are not available in arbitration or litigation. Although many cases involve payment of money to resolve the dispute, oftentimes there are other issues lurking in the background. Indeed, mediation helps parties realize they have other goals like salvaging a personal or professional relationship, keeping their business disputes private and away from the media, or simply hearing an acknowledgment of contrition. We often find mediation is particularly effective in scenarios where the parties know each other, such as in family or business disputes, and they want to maintain that relationship after the dispute is over.

Mediation can be a constructive and cost-effective way to reach a mutually acceptable solution and, perhaps most importantly, mediation is confidential. If you are involved in any type of dispute, you should consider mediating before instituting litigation or during its pendency, including inserting it in business contracts. If at any time you can resolve a dispute privately and efficiently, the parties have already won.

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