Mediation vs. Other Forms of Dispute Resolution

Mediation is just one of a variety of ways to resolve a dispute. The legal system lumps together every method of resolving a dispute outside a courtroom—that is, all alternatives to litigation—under the heading “alternative dispute resolution,” or ADR.

Arbitration (see Section D1, below) and mediation are the two best- known types of ADR available. However, the growing popularity of mediation and arbitration has spawned variations of each that can be attractive options for certain types of cases. In addition, there are several other methods of dispute resolution, including negotiation, fact-finding, conciliation, mini-trials, and private judging.

1. What Is Arbitration?

People sometimes use the word “mediation” interchangeably with “arbitration,” another popular method of resolving disputes outside of a courtroom. However, these two procedures are very different.

Arbitration is an out-of-court procedure for resolving disputes in which one or more neutral third parties, called an arbitrator or arbitra­tion panel, hears evidence and arguments from both sides, then reaches

Mediation, Arbitration and Litigation Compared

Source: “Mediation and Prepaid Legal Plans,” by Kenneth Cloke and Angus Strachan, Mediation Quarterly, No.

a decision. An arbitrator’s job is to conduct a contested hearing—much like a court hearing—where each party will present witnesses, evidence, and arguments. Then, acting as a judge, the arbitrator makes a decision.

Arbitration has long been used to resolve commercial and labor disputes, but its popularity is growing as a means of resolving problems of all kinds. The arbitrator (sometimes called an “arbiter”) is often an expert in the topic of the dispute, such as construction defects, labor­management relations, or securities fraud.

Arbitration can be binding or nonbinding. In binding arbitration, the arbitrator or panel issues a decision that both parties are legally obligated to follow, just like a court order. In nonbinding arbitration, either party is free to reject the arbitrator’s decision and take the dispute to court, as if the arbitration had never taken place. Binding arbitration is far more common.

2. Variations on Arbitration and Mediation

There are some hybrid forms of arbitration and mediation. A few that you might consider or hear about include:

• Mediation With a Recommendation: If mediation ends without a settlement but the parties respect and trust the mediator, they can ask the mediator to make a written recommendation as to how the dispute should be resolved. Assuming the mediator agrees to do this, the parties are then free to accept the recommendation or use it to further their own negotiations.

• Mediator's Proposal: Some mediators offer their recommendation in the form of a mediator’s proposal. In these situations, the mediator writes down a proposed settlement of the dispute—often simply a dollar figure. The mediator shows this proposal to both parties, who then have a certain amount of time to let the mediator know whether they accept or reject the proposal. If both parties accept the proposal, the mediator informs the parties and the dispute settles on those terms.

• Med/Arb (pronounced "meed-arb"): The disputants consent to mediation. However, they also agree that if mediation does not produce a settlement, the mediator (or another neutral party) can act as an arbitrator and make a binding decision. Med/arb gives assurance that, one way or the other, the dispute will be resolved: The parties will either reach their own agreement or one will be imposed on them.

• High-Low Arbitration: Like most types of arbitration, high-low arbitra­tion is binding on both parties. However, to reduce the risk of an unacceptable award, the parties agree in advance to high and low limits on the arbitrator’s authority. For example, they might agree that the arbitrator can award no less than $300,000 and no more than $500,000 to the winning party.

• Baseball Arbitration: Along with evidence and arguments, each party gives the arbitrator a figure for which he or she would be willing to settle the case. The arbitrator must then choose one party’s figure or the other—no other award can be made.

• Night Baseball Arbitration: As in baseball arbitration, each side chooses a value for the case and exchanges it with the other side. However, these figures are not revealed to the arbitrator (the arbitrator is kept in the dark, which is why it’s called night baseball). The arbitrator makes a decision about the value of the case, then the parties must accept whichever of their own figures is closer to the arbitrator’s award.

OTHER TYPES OF ALTERNATE DISPUTE RESOLUTION

Here are a few other methods of ADR:

• Negotiation: In negotiation, the disputing parties talk directly to each other to try to reach an agreement. When it is successful, negotiation is the most efficient way of resolving a dispute because there is no cost or delay associated with the intervention of a third party.

• Conciliation: The conciliator's aim is not so much to resolve the dispute as to reduce tensions and get the parties talking. Parents often play the role of conciliator when their children are fighting. “I'm sure you two can work this out. How about something to eat while you sit and talk it over?” Conciliation is used fairly frequently in family and other interpersonal disputes, when a family member, friend, or a member of the clergy is asked to try to help the parties solve a dispute.

• Fact-Finding: When negotiations between the parties have reached an impasse, the parties may invite an independent “fact-finder”— often an expert in the field of the dispute—to analyze the issues (or sometimes just a single issue) and present findings of fact and recommendations for a solution. Fact-finding is most often used in labor disputes, although the process can easily be adapted to more general types of disputes. For example, if a construction dispute concerns a collapsed roof, the parties might agree to hire a physical engineer to examine the roof and report on what caused the collapse. The parties would then use the report to further their own negotiations.

• Mini-Trial: This method is most often used in disputes between large businesses. Typically, lawyers for each side are given the chance, within strict time limits (often half a day), to present their best case before top executives from both companies and a neutral advisor. The neutral advisor gives an advisory opinion to the executives, who then meet privately to negotiate a settlement based on what they've heard. For more on mini-trials, see Chapter 11.

OTHER TYPES OF ALTERNATE DISPUTE RESOLUTION, continued

• Private Judging: In about half the states, the law allows parties in non-criminal cases to try their case before a judge whom they choose and pay for jointly. To use this “rent-a-judge” procedure, the parties generally pick a retired judge or private attorney to decide their case. In other states, a real judge appoints the private judge (sometimes called a “referee”). Either way, the private judge usually has authority to decide the case as a real judge would. Most private dispute resolution companies that provide arbitration can also arrange for private judging. ■