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Legal Mediation vs. Arbitration

Alternative dispute resolution (ADR) is a flexible, cost-effective, and accessible alternative to costly and protracted legal battles. The two most popular and successful ADR processes are mediation and arbitration. With most legal issues and matters involving asset distribution following divorce or bereavement, you can settle the matter without the involvement of the court.

Through mediation, the two parties try to resolve their dispute and come to an agreement with the help of a mediator.  On the other hand, arbitration is a private court hearing of a more formal nature where parties agree to be bound by the decisions of the arbitrator. 

Both types of ADR have their benefits and drawbacks, and the most effective dispute resolution method depends on the parties as well as the nature and complexity of the dispute.

What is Mediation?

Mediation uses a neutral or unbiased third party to find an agreement between two parties, utilizing their expertise. It’s a non-binding process. This simply means that the parties can’t be forced to accept a specific resolution or decision but must voluntarily agree to accept any settlement or resolution. 

The mediator doesn’t decide on the case. Rather, they are there to improve communication and facilitate an agreement. 

Benefits of Mediation

• While pursuing litigation may take months or even years, mediation can be undertaken and completed within a couple of days. This can save significant time.
• Because of the time savings, most matters and issues can be resolved efficiently, saving both parties significant costs.
• With mediation, the parties have more control over how they proceed with their personal or business matter since they can decide which form is most suitable for their interests. 

What is Arbitration?

Arbitration is a type of ADR where an impartial and fair arbitrator makes a final decision to settle a dispute or matter between the parties. The arbitrator’s decision is binding. People and businesses use arbitration as an alternative to litigation to resolve disputes without involving the courts.

Arbitration is quite similar to a trial in federal or state court. And like court, the process involves the presentation of legal arguments and evidence. 

Advantages of Arbitration

• As a whole, the arbitration process is faster than court proceedings.
• In disputes where the issue or subject matter is highly complex or technical, you can appoint arbitrators with an appropriate degree of expertise.
• Arbitral awards are usually non-public and also can be made confidential.

Difference between Mediation and Arbitration 

While mediation and arbitration both have the same goal, there are a few significant differences that both parties should understand before proceeding. The key difference between mediation and arbitration is that in arbitration, the arbitrator hears arguments, evaluates evidence, and makes a decision. 

On the other hand, in mediation, the process is basically a negotiation facilitated by a neutral third party. This means that the parties don’t reach a resolution unless all parties agree.

Cost of Arbitration vs. Mediation

In most cases, the parties split the cost of arbitration or mediation equally. This means that both parties divide the cost of hiring one professional. Keep in mind that this is considerably less expensive compared to each party paying for their own lawyer in a complicated lawsuit. 

However, arbitration is often more costly than mediation and might involve some of the same costs and expenses as going to court, like:

• Several meetings with your lawyer
• Presenting your story in affidavit form
• Drafting the application
• Drafting, compiling, serving, and filing formal information statements for your arbitrator in addition to the pleadings

Why Should You Mediate First?

There is no doubt that mediation should almost always be the preferred first step in working toward resolving a dispute. This is because mediation is an economical and swift process. 

In contrast, arbitrating a dispute is more time-consuming, expensive, and emotionally taxing. And more importantly, mediation allows the disputing parties to reach a mutually agreed-upon resolution with the terms and conditions they create. 

Final Thoughts

Arbitration and mediation are viable, effective, and affordable alternatives to litigation. If you believe that you and the other party can reach an agreement with the help and guidance of a third-party professional, it is better to consider mediation. However, if you think that you can settle the legal matter outside the courts but still require somebody to make the final decision, arbitration is better for you.

Before your litigation advances, you should work with an attorney to determine if mediation suits your case. For legal assistance with mediation or arbitration, you should consult a lawyer.