Business | Franchise | Employment | Litigation

Understanding Alternative Dispute Resolution Options

When legal disputes arise, many people assume that the only way to really resolve them is through litigation—that is, filing a lawsuit and having your day in court to air your grievances and allow a third party who is thoroughly versed in the law decide the issue for you. Litigation, however, is an expensive, time-consuming business that rarely ever leaves either party truly satisfied in the end. There’s a reason why litigation is sometimes known as the “scorched earth” option, because it can be used solely to lay waste to the enemy rather than actually achieve some equitable outcome.

It is partly for this reason that alternatives to litigation have become so popular in the last few decades or so. The theory behind alternative dispute resolution (ADR) is that a legal problem or dispute is fixable, provided the parties are willing to work together to reach some negotiable settlement, while not spending the GDP of a small nation on legal fees.

The main ADR options are arbitration and mediation. Each has its own benefits and drawbacks and may be more useful in certain situations rather than others.

The benefits of ADRs, regardless of which version is chosen, is that the proceedings are generally not adversarial. That is, there are still two sides, but rather than butting heads to determine a winner, they try to reach a mutually beneficial solution that solves the problem and allows both parties to get at least some of what they wanted. The proceedings are also usually private, meaning the details at issue are not made public as they would be in litigation. ADRs also allow for a lot more out-of-the-box thinking in terms of solutions, as they are not constrained by only what the parties are willing to agree to.

This brings us to arbitration. You have probably heard how many large corporations now require consumers to give up their right to litigation in favor of arbitration, without really explaining what arbitration actually entails. Arbitration is loosely related to a trial in that an impartial third party is called in to hear the dispute between the two parties. However, in arbitration, as with other ADR methods, the parties can agree that the decision is not binding on them and can agree as to who will be the arbiter. Arbitration is favored by businesses in service and other related contracts as it is more formal than mediation and the results can be binding, provided both parties agree on this ahead of time.

Mediation is about more of a meeting of the minds in that the impartial third party works with both parties to reach a mutually agreeable outcome. The decisions are rarely binding but usually don’t have to be, as the purpose of mediation is to allow each party to walk away with something important to them, in addition to reaching a larger solution to the problem. In this respect, mediation is more collaborative than arbitration as the parties work together to find a solution, albeit with a third party guiding the proceedings.

Contact Us

Arbitration and mediation are both viable alternatives to litigation and can solve a problem with a lot less expense, stress, and time. Often, lawyers make excellent arbiters and mediators and can provide their services for a fraction of the cost of full litigation. If you have a situation that would be better suited to arbitration or mediation, contact the legal team at the Trembly Law Firm today so we can help you get started.

Follow Us on Social Media

Title of the book
Stronger Business Begins with Stronger Contracts

Stronger Contracts

Download our free resource today for practical tips that will make your contracts even stronger. Specifically, we cover five clauses that MUST be present in each contract – which could save you a significant amount of money and time in the event of a legal dispute.

Miami's Preeminent Business Firm

Best of the Best
Best of the Best