Mediation & Arbitration

If you’ve ever been involved in a lawsuit, you know what a headache it can be.  It eats up time, money and energy.  There are simpler ways to arrive at an equitable resolution, without resorting to litigation:  mediation and arbitration.  These are often referred to as Alternative Dispute Resolution, or ADR.

Methods of resolving a dispute fall on a continuum, starting as simply as two people meeting together to talk out and resolve their differences, and ending at litigation.

While a simple discussion between the parties is the least expensive, it may not necessarily the most effective method to resolve differences.  But the next step up the line from that is mediation.

Mediation adds a neutral third person called a mediator to the conversation.  The Mediator facilitates communication between the parties and an agreement is reached only with the consent of the parties.  This can be more expensive than one-on-one discussions, if the mediator is compensated, but done properly can be far more effective than one on one discussion and much cheaper than litigation.

Arbitration is different from both mediation and litigation.  In arbitration, the parties present their positions to a neutral third person.  But unlike a mediator, an arbitrator is given the power to act as a judge.  Arbitration is very much like a trial.  The arbitrator reviews the issues, evidence and witnesses and then renders a binding decision.  It is less formal than a lawsuit, faster and often less expensive.

Litigation is and ought to be the last resort.  It is expensive and time consuming.  In litigation, the parties present evidence to a “finder of fact”, either a judge or a jury.  The judge or jury decides the outcome.

Parties may agree to use mediation, arbitration or a combination of the two after a dispute has arisen.  In other cases, there may be a mandatory arbitration or mediation clause in the contract between them.

In the interests of encouraging settlements before trials, in almost all cases, the State of Florida requires that parties to a lawsuit must engage in mediation prior to that suit going to trial.  Even in small claims court, volunteer mediators will meet with the parties at the pre-trial hearing to attempt to reach a negotiated resolution before the Court will assign a trial date.

The submission of a commercial dispute to mediation may be done voluntarily or at the prompting of a governmental agency or a court.  Mediation can also be a cost-effective way to resolve disputes between neighbors (community mediators), between unit owners and condominium or homeowners’ associations, between family members in family issues involving inheritance or divorce.

In my next post, I will discuss how a mediation is conducted.