Alternative Dispute Resolution (commonly shortened to ADR) forums like mediation and arbitration have become more popular since the early 2000s as courts continue to get new cases and litigation costs increase.
Statistically, ADR is a mixed bag. In 2016, $72 million in legal fees were saved with ADR, nearly as much as the previous five years combined. ADR also eliminated about 2,733 months of litigation and 26,388 days of staff and attorney time. However, resolution rates (75 percent for voluntary and 52 percent for court-ordered ADR) have remained about the same, and the satisfaction rate has dropped significantly (from 86 percent in 2011 to 70 percent in 2016).
Mediation is very common in personal injury law, whereas arbitration is mostly a commercial litigation process.
What Happens in Mediation?
Car wreck mediation is essentially supervised negotiation. In addition to the attorneys for all parties, a neutral third party works to reach a settlement between the parties. Mediation is often successful. Most personal injury parties agree that there was an accident, and someone got hurt, but they usually argue over who’s at fault or the extent of injury. A mediator helps the two adverse parties reach a mutually-agreeable settlement agreement.
Mediation also gives the parties more control over the outcome. Instead of conducting business according to the court’s calendar, the parties schedule a mutually convenient time and place for mediation. The parties also usually agree as to who the mediator will be for their case.
Mediation usually begins with the attorneys giving a brief opening statement and the parties then retire to separate rooms. The mediator then conveys settlement offers back and forth until the parties agree on an offer. There is no judge, no jury, and no court reporter, adding to mediation’s speed and privacy.
Some Arbitration Basics
Whereas mediation looks like enhanced negotiation, arbitration is a mini-trial. The lawyers present evidence and make legal arguments just like they do in court. But there is no jury and no judge. In arbitration, the arbitrator serves as the ultimate authority. The arbitrator listens to both sides make their case, and they then make a decision, called an ‘Award’.
Arbitration can be either binding or non-binding, mostly depending on the terms of the arbitration agreement between the parties. Furthermore, much like mediation, an arbitrator may be court-appointed or may be mutually-agreed-upon person. However, unlike mediation, the arbitrator’s decision is final. In personal injury cases, this can impede proper compensation, as arbitration may not let the parties complete the discovery process and properly evaluate a case. It also removes a victim’s right to have their case decided by a jury of their peers. You have a right to a jury trial and arbitration eliminates that right.
Thanks to our friends and contributors from Butler Tobin for their insight into difference between mediation and arbitration.