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Litigation With A Positive ROI
ADR as an Alternative to Litigation
As American courtrooms have become more and more clogged with civil lawsuits, Alternative Dispute Resolution (ADR) has become increasingly more attractive. ADR is not the best option for every case, but its advantages to litigation have made it far more popular over the past several years.
Alternative Dispute Resolution can be one of several different forms. The two most widely used forms of ADR in America are mediation and arbitration. Each form has its own set of advantages and weaknesses, but each offers some shared benefits over litigation. ADR, whether in the form of mediation or arbitration, is much quicker and generally less expensive than litigation, which can take years to come to a final resolution. ADR allows the parties to have more control over the process than they can in litigation. ADR also is governed by rules ensuring confidentiality.
Mediation is a collaborative, cooperative effort in which both parties attempt to come to a mutually acceptable solution with the aid of a third party, a mediator. In some cases, the two parties and the mediator are in the same room and attempt to hash out a compromise. In other cases, the mediator goes back and forth between two rooms where the separate parties do not communicate directly. The mediator attempts to facilitate acceptable compromises until a solution is reached.
This form of dispute resolution is fundamentally very different from litigation. In litigation, two parties argue to a judge or jury that their position is the right position and their opponent is wrong. The outcome is generally that one party wins and the other loses, with the ultimate solution decided upon by a judge or jury.
Mediation provides an opportunity for parties to have at least some choice, even if compromised, in the ultimate outcome. Litigation is often an all-or-nothing proposition. More than that, even the winning party has the “damages” or resolution decided by a judge or jury who likely is not well-versed in the type of business or dispute. Mediation, on the other hand, is a contract decided by the two parties using a mediator, to which they have mutually agreed. In some cases mediation can even lead to a better result than a “win” in litigation. Also distinct from litigation or arbitration where the issue is decided by looking at the facts and applying the law, parties may decide the outcome based on business interests. They can make decisions based on the future and relationships, and not just on a single past act or dispute.
Mediation is low-risk for parties because the mediations are confidential and non-binding. The contents of the proceedings and even the fact that they are taking place can be completely confidential. Further, any admissions or disclosures that the parties make in attempting to come to an agreement cannot be used in future litigation if the mediation is unsuccessful. Finally, the parties may abandon the mediation at any time and decide that litigation is the better option with no negative effects. Mediation often serves to clarify the issues and assist in streamlining litigation, even in these situations where the mediation is unsuccessful and litigation eventually occurs.
The difficulty with mediation is that it requires compromise from both parties. In some cases, one or both parties are simply unwilling to budge. When this is the situation, mediation will likely be fruitless and arbitration or litigation may be the more appropriate option.
Arbitration is closer to litigation than to mediation, in the sense that both sides argue a case to a third party decision-maker who makes a binding ruling. However, it can be preferable to mediation in certain cases and sometimes has advantages over litigation. The parties enjoy much more control over the process, and arbitration can be conducted much faster than traditional litigation within the court system. This shorter time period can mean a large savings in costs, and the parties need not endure years of unresolved conflict.
Arbitration decisions are usually binding. Further, an arbitration decision carries more finality than a judgment in litigation. Although a binding arbitration decision can be challenged in court, the court is extremely limited on grounds upon which it can vacate or disregard the arbitration decision. Thus, appeals after arbitration are uncommon.
Whether you decided to go with litigation, mediation, arbitration, or something else, that decision is likely to have a major impact on the outcome of your case. The AZ litigation attorneys at Gunderson, Denton & Peterson can guide you through the process in deciding which option is best for your unique situation.
Written By Brad Denton
40 N. Central Avenue, Suite 1400-1532
Phoenix, AZ 85004
GDP Business Blog
Mesa, AZ 85213