Two Ways to Avoid Heading Off to Court

Filing a lawsuit is not the only way to resolve a dispute. In fact, the overwhelming majority of disputes never get to court. Even the ones that wind up as lawsuits are usually resolved by a settlement or a judge-ordered dismissal rather than a full-scale trial.

There are two other useful methods in the legal world that can help end the acrimony of a fight: arbitration and mediation. There are some similarities between the two, but they are distinct.

They are alike in that the parties involved must agree to the procedure. In a court battle, the parties (plaintiff and defendant) do not have to agree on the court as the final arbiter. The plaintiff sues, and the defendant must appear and respond. If the defendant doesn’t formally and legally reply, a default judgment will be entered, and he loses without a fight.

The mutual decision to arbitrate can be made even before a dispute arises, in a contract that provides that the parties will arbitrate in the event of a dispute. More and more businesses, and even some doctors, are putting such a provision in their standard contracts. The agreement often specifies how the arbitrator is to be selected and other mechanics of the process. An organization like the American Arbitration Assn. is often used to facilitate the procedure.

In an arbitration, the parties agree that the impartial third party, the arbitrator, will essentially act as a judge and make the decision. Some agreements allow some sort of appeal process, but usually the arbitrator’s decision is the final word. Rules of evidence are informal, and costs are usually split between the parties.

Mediation is different. The parties, after agreeing to mediate, appoint a mediator who does not decide. The primary function of the mediator is to facilitate an agreeable resolution of the controversy. If an agreement is reached, a settlement agreement is drafted just as in a lawsuit. If the dispute is not resolved, the parties may then turn to arbitration or litigation.

Mediation is fairly open-ended, conducted in a manner determined by the mediator. There may be statements and explanations, and attorneys are sometimes present, but the hearing is more like a discussion, in a conversational setting, rather than like testimony on a witness stand.

For example, “it’s my mother-in-law who is making my sister pressure me into what she says she wants” may be an acceptable topic in mediation, but might not be considered legally relevant in court.

In mediation, the parties may consider what effect the proposed agreement will have on each of them, but in court, the personal effect the decision will have on the parties is not considered as part of the decision-making process.

Mediation can result in a decision out of reach of a court judgment or arbitration, such as giving an apology, offering a future business opportunity, or having the claimant agree to accept services instead of money.

If you have a claim against someone or a corporation, consider alternate dispute resolution methods. The State Bar of California publishes a helpful pamphlet, “Should I try to Settle my Problem Out of Court?” which you may find informative.