1.13 Non-Judicial Dispute Resolution Alternatives

The trial and appeal processes can be very expensive and time consuming for the parties involved. Access to legal remedies has become the province of the rich, and the average person is foreclosed from the legal system due to those high costs. To avoid expense and delay, many persons in dispute with each other employ alternatives to trial, which include negotiation, mediation, and arbitration.

Negotiation

Negotiation is the process in which the parties attempt to settle disputes through compromise. This often happens before a lawsuit is even contemplated, but it may also occur during the pretrial and discovery phases of a trial, during the trial, or even immediately preceding a decision by a court of appeal. Compromise and settlement through negotiation are the cheapest and most efficient ways to resolve disputes. Sometimes, if a negotiated settlement is reached during litigation, the settlement agreement—the formal document that outlines the terms of the compromise—will be approved by the trial judge and will constitute the judgment.

Mediation

At times it is helpful for a neutral third party to assist opposing parties in resolving disputes because that person can be objective and has no personal interest in the outcome of the matter. The process of involving a neutral third party is called mediation. In mediation, the disinterested mediator, who is often an expert in the law in dispute, meets with the parties separately and then together, and offers compromise solutions that the parties may accept or reject. The mediator has no power to bind the parties. Just as in negotiation, if the parties reach compromise, a binding settlement agreement is prepared and executed.

Arbitration

In arbitration, the parties hire an arbitrator, often a retired judge or legal expert, to hear the matter and impose a resolution upon them. Arbitration decisions may be legally binding if agreed to by the parties or required by law. In such cases, the arbitrator’s decision is final and may have the effect of a trial court judgment. If the arbitration decision is a nonbinding one, either party may pursue a lawsuit if it does not agree with the decision. To reduce litigation costs, many business contracts require arbitration, either binding or nonbinding, as a first step in the event of a dispute.