Disputes have traditionally been resolved through lawsuits. Lawsuits are controlled by the court and the binding decisions of the judge. Lawsuits are expensive, time consuming and limited in ability to negotiate and compromise.
Over the last several years individuals and companies have used other options to settle disputes; this is known as alternative dispute resolution. As a matter of fact business contracts often stipulate that Alternative Dispute Resolution (ADR) be the first or even the sole means of resolving conflicts. The objective of ADR is often said to save time, money and relationships; but this frequently is not by any means true. As you consider the option of ADR you need to fully understand what ADR actually involves and if it is best for you. This is the first in a brief series to help you understand ADR and to give you enough information to know what questions to ask your legal advisor.
There are a number of ADR procedures, but they break down into arbitration and mediation.
Mediation is the process by which the disputing parties engage or hire a so-called “neutral.” A neutral or mediator is often an attorney or other specialist with knowledge and background in the area of dispute resolution (or dispute law) who will work cooperatively with participants to reach a settlement.
The neutral helps the participants see areas of agreement and disagreement, and find common grounds to settle the dispute. The mediator will often invite the parties to his/her office. Sometimes all the participants will meet around the conference table to discuss the general nature of the disputes. If the disputing parties are antagonistic toward each other, the mediator may opt to place the parties in different offices so the parties can avoid direct contact. The mediator then goes from room to room to discuss with the parties their views, positions and disposition to settle. The mediator then transmits information back and forth between the participants until a settlement is reached.
It is important to understand, that a mediator will not and cannot force the parties to settle a dispute. The mediator does not enter a “ruling” or a “decision” which binds the parties to his/ her opinion of the strength or weakness of the respective participants positions. As a result mediation by definition is not a “binding” process. If a settlement is reached, good mediators will insist that a settlement contract be written and signed before the parties leave the mediation. In some cases, the ‘settlement agreement’ is binding and resolves all issues.
Arbitration is a process by which a “neutral” that is an attorney or other person with special expertise considers all involved parties’ stories, facts, and applicable laws and enters a final binding decision. In most cases, the arbitrator will hold a “hearing” or review written memoranda somewhat like a “trial.” The arbitrator considers the evidence; the parties’ positions, and the law to reach a decision. The arbitrator then enters what is usually a final binding decision much the way a judge would enter a decision at trial. The decision reached can be taken to a court and enforced in a court of law.
The arbitrator is a go-between who works with both parties and seeks to find common ground. Arbitration is an actual decision-making process. Procedures may vary when an arbitration is conducted. The parties exchange information, somewhat similar to the process in a court hearing. However, the procedures are usually considerably limited compared to court.
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Gregory L. Miles, an AV Preeminent attorney and co-founder of Davis Miles McGuire Gardner, does business, commercial litigation and real estate. In future articles, Mr. Miles will discuss how to use ADR to your advantage. If you have questions feel free to contact Mr. Miles at glmiles@davismiles.com or call 480-344-4589. Remember contacting Davis Miles McGuire Gardner PLLC does not mean that you have retained their attorneys or their services.