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Mediation, Arbitration, Litigation: What is Best?

stock-photo-4786200-handshake-at-the-business-meeting.jpgThere are three forms of formal dispute resolution to resolve a legal dispute which informal negotiations have fulfilled: mediation, arbitration, or litigation. Understanding the benefits and drawbacks of each is important to decide which method is best to resolve a dispute.

Mediation.

Mediation is a process where a neutral third party assists in resolving the dispute. Mediators are typically lawyers or retired judges who have extensive experience in the field in which parties have a dispute. The decision to settle is always up to the parties. Mediators do not have the power to issue a binding decision. Instead, mediators can often provide their opinion on how they believe matters will be resolved through a litigation or an arbitration and lead the parties to agree by explaining the strengths and weaknesses of each others’ case.

Mediators will often ask the parties to submit confidential written statements and documents that support the parties position to the mediator before the mediation. On the day of the mediation, the parties will meet at a pre-arranged location with the mediator. The process typically involves the parties providing a short explanation of their side of the case to the mediator. The parties will then break into separate rooms and the mediator will shuttle between rooms to discuss the dispute and a resolution.

Mediation is typically confidential. Mediations resolve disputes quickly and are far less expensive than arbitration or litigation, and allow the parties to control the outcome.

Arbitration.

Arbitration utilizes a neutral third party to decide a dispute. In arbitration, a dispute is submitted to an arbitrator who makes a binding decision. An arbitrator will review the evidence submitted by all parties and then render a binding decision which can then be entered by a court and enforced. Both parties must agree, typically in writing, to submit to arbitration in order to obtain a binding judgment. Arbitration agreements are controlled by the Federal Arbitration Act and the New Jersey Arbitration Act.

Arbitration is typically less expensive and faster than litigation. Discovery of information between the parties is typically limited to the exchange of relevant documents, thereby further reducing costs. Arbitrations themselves are conducted like trials, but less formal and in private.

Arbitrations are conducted by one to three arbitrators depending on the complexity of the matter. Arbitrators are then compensated for their time by the parties. Generally, an unfavorable arbitration ruling cannot be appealed, but that finality can make arbitration less expensive.

Litigation.

The most conventional method of resolving legal disputes is through litigation. Litigation refers to the resolution of disputes between parties in state or federal court.

Generally, litigation is conducted in phases, consisting of pleadings (a complaint and answer), discovery, pretrial motions, trial, and possibly appeal. The party initiating suit file a complaint with the court and pays the appropriate fee. Once the complaint is filed, it must be served on the defendants, who are then given between 20 and 35 days to file an answer. Once the complaint and answer are filed the case moves to the discovery phase.

Discovery provides the parties with the opportunity to ask questions to obtain information from the other side about the claims and defenses that are asserted, and see their evidence in advance. Discovery is conducted by applicable state or federal rules. Typically each party will be required to provide answers to written questions, called interrogatories, and produce documents that each party intends to rely upon at trial. The parties are also provided with an opportunity to depose witnesses. A deposition is an opportunity for a party to ask another party or witnesses questions, under oath, for later use in court.

Once discovery is completed, the parties typically file motions for summary judgment. A motion for summary judgment is a request, by the party filing the motion, that it should win the case because there are no disputed facts which require a trial so it is entitled to a decision in its favor.

Trial is the final step in litigation if the case not is not resolved with a summary judgment motion. A trial can last anywhere from one day to several months, depending on the complexity of a case. The parties can obtain money damages or “equitable” relief such as injunctions and restraining orders. Parties can appeal the verdict.

How Do I Mediate, Arbitrate, or Litigate?

You should always seek experienced counsel early in a legal dispute. Parties can always agree to mediate a matter to obtain an expedited resolution. An experienced attorney can represent the parties in mediation to lead them to a positive outcome.

If parties intend to have an arbitrator resolve a future dispute, they should see an experienced New Jersey contract attorneys. Experienced attorneys can carefully draft arbitration agreements requiring parties to arbitrate future disputes, and can zealously represent their interest in arbitration.

A party is always entitled to litigate if it does not want to mediate or the parties do not have a written arbitration agreement.

Our attorneys regularly represent people and businesses in mediation, arbitration, and litigation, including drafting arbitration agreements, and litigating disputes about the enforcement of arbitration agreements. To learn more about what we can do to help, e-mail us or call one of our lawyers at (973)890-0004.