Disputes arise every day―at work, at home, and in the marketplace. In a single day you might have a dispute with your boss about a promised promotion; a dispute with your ex-spouse about child support; a dispute with your phone company about being overcharged; and a dispute with a neighbor about who should fix the wall dividing your properties. Depending on the circumstances, each of these disputes could potentially end up in court.
Litigation, however, is both time-consuming and expensive. The process can also place pressure on relationships, which can be problematic for divorced parents who need to continue raising their kids together, neighbors who need to continue living next to each other, and business partners who have an interest in continuing to work together. Many disputes, large and small, can be resolved quickly, cheaply, and amicably without going to court―through negotiation, mediation, or arbitration. These processes for resolving disputes are discussed in more detail below; your lawyer can give you information about the best strategy for resolving your dispute.
Negotiation takes place every time two or more people bargain for what they want. Most adults negotiate every day. Negotiations offer great flexibility. Parties are free to negotiate an issue as far as they wish, and can walk away without investing a great deal of time or money if they cannot reach agreement.
If two people successfully negotiate, they may wish to formalize their agreement in a contract. For example, in an employment negotiation in which a salary is negotiated, the parties often put the agreement in writing. Such a written agreement is usually legally enforceable. This means that, if one party does not comply with the terms of the contract, the other party can sue him or her either to enforce the agreement or to collect money damages. Your lawyer may be able to help you formalize an agreement after a successful negotiation.
Not all successful negotiations end in a contract. For instance, if you are purchasing a bicycle from a store or a yard sale, you might bargain over the price, money may change hands, and you might ride the bike away without ever signing a contract. Similarly, if the tenants in an office building negotiate a 10 percent discount with a local coffee shop, a contract is probably unnecessary.
Negotiations are a natural first step in resolving a dispute. Because the parties are in control of the negotiation, there are many potential outcomes. When you negotiate, you can focus on your own interests while also accommodating the interests of others. Negotiating a dispute can also preserve the relationships between the parties involved in a dispute.
Mediation is a form of negotiation that is facilitated―but not decided―by a neutral third party. In the mediation process, parties meet jointly with a neutral mediator, and each party presents his or her side of the dispute. The mediator then meets with each party separately and facilitates discussion to encourage them to reach an agreement. The mediator can help focus the discussion on each party’s needs and interests. However, the parties are ultimately in control of the agreement reached, if an agreement is reached at all.
Mediation is both cheaper and faster than litigation and also offers a broader range of settlement opportunities than a traditional trial. Mediation offers parties the chance to create a mutually beneficial outcome. For example, suppose that neighbors Luis and Steve have a dispute about a fallen tree. The tree originally stood on the dividing line between their properties and, when it fell, it damaged Steve’s house. Steve sues Luis for $5,000, which is half the amount that it will cost to fix Steve’s house. If Steve and Luis end up in court, a judge will issue a decision. Depending on the judge’s decision, Steve will either get $5,000, a smaller amount, or nothing. Mediation, on the other hand, would give Steve and Luis the opportunity to try to come up with a mutually agreeable solution that both can live with. They could agree to work on the house together or decide to split some costs. If they are able to reach a solution that both can agree on, their relationship at the end of the dispute will be a lot better than if one wins and the other loses in a court.
Many common disputes can be mediated, including workplace disputes, neighbor disagreements, family custody issues, and business disputes. Sometimes mediation is appropriate if parties have been negotiating and reach an impasse. Your lawyer may suggest that you try mediating a dispute before progressing with a law suit. Sometimes contracts specify that any disputes under the contract must be taken to a mediator. Sometimes judges will order mediation before a case goes to trial, in the hope that the parties will be able to reach agreement. Mediation is generally a voluntary process: you choose whether to come to an agreement through mediation, and the mediator cannot force you to reach an agreement.
Any agreement reached in mediation may be submitted to the court, or it may be kept private between the parties. Most mediation agreements are as enforceable as any other contract, meaning a party can ask a court to enforce the agreement if one of the parties does not comply.
The parties normally share the cost of the mediator, and in many regions you can obtain free or sliding-scale mediation at a community center. The costs of mediation are higher than the costs of negotiation, because mediation involves a third person, but they are still considerably less than either arbitration or litigation.
In arbitration, the parties to a dispute agree to participate in a private hearing with a neutral third person, the arbitrator. The parties may agree in advance on the rules that will apply during the arbitration hearing and the selection of the arbitrator.
In an arbitration hearing, the arbitrator listens to the details of a dispute between the parties, considers all evidence presented, and issues a ruling. In binding arbitration the arbitrator’s decision is filed with a court within twelve months. The court then confirms it, and the decision becomes an order of the court. This means that, if a person refuses to follow the decision, he or she can be found in contempt of court and fined or imprisoned. Appeal from a binding decision is only allowed in very limited circumstances, for example, if the arbitrator was obviously biased. In non-binding arbitration, the arbitrator’s opinion is only advisory, and parties may adhere to the opinion, continue to litigate the dispute, or settle under different terms.
Usually both parties to arbitration have lawyers to represent them. The arbitrator controls the process, which is very similar to a trial, and decides the outcome in a role very similar to that of a judge. The arbitrator’s final decision is based on the evidence and testimony of all parties at the hearing. Unlike mediation, in which the parties are not obliged to reach an agreement, the arbitrator will come to a decision. Unlike court proceedings, arbitration is held in a closed and private court, and the parties can keep the outcome confidential. This confidentiality necessarily means that the decision only binds the parties in that particular case―the decision has no value as a precedent in subsequent cases, even in cases with identical facts. These characteristics of arbitration make it an attractive dispute-resolution process for many commercial parties.
Your lawyer can give you more information about arbitration and whether it might be an appropriate means of resolving your dispute.