Alternative dispute resolution (ADR): Mediation vs. arbitration

What is alternative dispute resolution? As the name suggests, “ADR” provides an alternative means of resolving legal disputes, including personal injury cases, outside of a trial. The principal forms of ADR are mediation and arbitration. There are similarities and differences between them, and each is appropriate for different circumstances.

How are mediation and arbitration similar?

The two methods are similar in that:

• Both involve the use of a neutral third party, typically a lawyer or a retired judge.
• Usually, the parties select the mediator or arbitrator by agreement and split the cost. Most mediators or arbitrators charge by the hour, although a few sometimes charge a flat fee.

What are the differences between mediation and arbitration?

The differences between the two forms of ADR are:

• The role played by the third party. In mediation, the mediator facilitates a collaborative approach between the parties in which they attempt to come to a mutually acceptable resolution of their dispute. In arbitration, the parties agree that the arbitrator will resolve their dispute. Sometimes the arbitrator resolves the matter based solely on considering written submissions, and other times the arbitrator also hears testimony and oral arguments at an arbitration hearing.
• Typically, the parties and their lawyers meet together with the mediator. The mediator explains the nature of mediation and how it will proceed. Each party or their attorney signs a mediation agreement. Then each side presents its view of the case. The two sides then separate and the mediator moves between the two groups conveying offers and counter-offers. The process is similar to “shuttle diplomacy,” where a neutral diplomat will meet with representatives of different countries to try and get them to an agreement. The parties determine whether a case will settle. I contrast, the arbitrator’s decision is virtually always binding on the parties. In this sense, arbitration is more like a trial, although the rules of evidence and procedure are typically somewhat relaxed and the proceeding is less formal than an actual trial.

• The mediator does not have the power to resolve the dispute without the agreement of the parties. If the parties fail to reach an agreement, the mediation ends, the dispute remains unresolved, and the matter proceeds to trial. Thus, one advantage of mediation is that all parties must agree to the settlement, so no one is bound to a resolution they did not agree to accept. Another advantage is significant cost savings, compared to paying experts to testify at trial and paying other witnesses and exhibit costs for trial.[1] Of course, the need for agreement of all parties is also a disadvantage of mediation, because the matter will not be resolved unless everyone agrees. Sometimes, however, progress made in the mediation may lay the foundation for a later pre-trial settlement, so the mediation may still be helpful in getting the case resolved.
• The main advantage of using arbitration is that expert testimony (for example, a doctor’s testimony) can be presented through the expert’s written records rather than through deposition or live testimony, which can result in substantial cost savings. Thus, arbitration has the advantages of lower cost and prompt resolution without going to trial; the disadvantage is that the arbitrator’s decision is final with no right of appeal.

Mediation vs Arbitration

Your attorney can be helpful in determining if mediation or arbitration may be helpful in getting your case resolved, and are appropriate under the circumstances of your case. If one method of ADR is appropriate, your attorney will also be helpful in determining the best time for this to be done.

At Allen and Allen, our personal injury attorneys are knowledgeable and experienced with these methods of alternative dispute resolution, and frequently use them to resolve our clients’ personal injury cases more quickly and less expensively.