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Dispute Resolution Strategies: Litigation & Arbitration

Both litigation and arbitration are effective dispute resolution strategies that serve important – and somewhat similar – roles in our communities. However, they are not the same. This post will review some – but not all – of the differences between litigating and arbitrating a dispute.

Agreements to arbitrate

One of the most significant differences between litigation and arbitration is that neither party needs the other’s permission to resolve a dispute through litigation. However, a party cannot force another party to arbitrate, unless the parties have signed an agreement that includes an arbitration provision.

The terms and specific language used in the arbitration provision are central to determining whether one party can force another party to arbitrate a dispute. The general rule is that, even if the parties have agreed to arbitrate, if they have not agreed to arbitrate the specific issue in dispute, arbitration may not be compelled, and litigation may ensue.

Selecting the Decisionmaker

If the parties have an agreement to arbitrate and the dispute is one that falls within the scope of an arbitration provision, one of the first things the parties will want to do is select an arbitrator (or multiple arbitrators, depending on the terms of the agreement). The ability of the parties to select the person(s) who will decide how the dispute will be resolved can be a persuasive factor in choosing to agree to arbitration.

In litigation, judges and juries are the ultimate decisionmakers in disputes that are not resolved through settlement. When a lawsuit is filed, however, other than selecting the venue (e.g., location) for the filing, the parties do not have much control over who the judge will be. This may be important if the parties would prefer a judge who has particular expertise, knowledge, or education in the subject matter of the lawsuit.

Through an agreement to arbitrate, the parties can specify whether one or more arbitrators are deemed appropriate for a potential dispute and agree upon the kind of background and experience the parties desire a potential arbitrator to have.

Timing for Arbitration

Trial judges oversee and manage many cases at the same time which can delay when the lawsuit is tried. In many courts, a lawsuit can stay on a trial court’s docket for a year or more before the first trial setting is reached.

Private arbitrators typically manage fewer cases and have more flexible schedules. It is not uncommon for arbitrators to consult with the parties’ counsel to find a mutually agreeable date for a final hearing, within a reasonable period of time.

Having a say – that is, some control – over the timing of a final hearing may be especially important to parties in the wake of COVID-19’s impact on court dockets. Before 2020, it was generally accepted that parties could expect a first trial setting about one- to one-and-a-half years after the lawsuit was filed. In early 2021, the Chief Justice of the Texas Supreme Court indicated that civil lawsuits are not immune from the COVID-induced delays impacting many trial courts’ dockets.

Confidentiality

Confidentiality is often one of the primary considerations weighed by parties in their decisions to arbitrate or not. Unlike a lawsuit and trial, the filings made and hearings conducted in an arbitration are not matters of public record.

Cost

Cost is an important difference between litigating and arbitrating and is sometimes a reason parties resist arbitrating. Unlike in litigation, where the judge and jurors are compensated through public funds, parties to an arbitration proceeding are responsible for paying the arbitrator’s (or arbitrators’) fees (which may be based on an hourly rate) and, when an arbitral tribunal, like the American Arbitration Association, handles administrative tasks in the proceeding, administrative fees are also paid by the parties.

Felicia Harris Hoss

is an attorney-mediator, arbitrator, and early dispute resolution (EDR) neutral, with more than 20 years of legal experience. Through the years, Felicia has helped parties resolve disputes both inside and outside of the courtroom in a wide range of industries involving a broad spectrum of claims. Felicia is available to assist parties and their counsel through online, hybrid, and in-person mediations, arbitrations, and EDR processes.

Dispute Resolution Strategies: Litigation & Mediation

Both litigation and mediation are effective dispute resolution processes that serve important roles in our communities. Sometimes they are used in conjunction with each other, and sometimes they are not. When and why to litigate and/or mediate are decisions a party should make with the help of a lawyer. The following are just a few strategy insights to consider.

Before strategy-talk, it’s useful to understand some basic similarities and differences between litigation and mediation.

The similarity first. Litigation is another word to describe a lawsuit. Lawsuits are simply one avenue available to parties to resolve disputes. Mediation, like litigation, is also a dispute resolution process. Both are effective dispute resolution techniques; but, that’s really about where the similarities end and the differences begin.

So, the first difference to understand is the nature of the process.

Lawsuits are by their nature adversarial proceedings. Lawsuits get filed when parties are not able to agree on a way to effectively resolve their differences. Within the confines of a lawsuit, lawyers argue their respective client’s positions to persuade a decisionmaker – either a judge or jury – to agree with their respective client’s positions. The parties do not control how the trial will end. Instead, through a lawsuit, parties are essentially asking a branch of our government – the judicial branch – to decide for them how and when a dispute will be resolved.

By contrast, mediation is a structured negotiation between the parties that takes place either because the parties have agreed to mediate, or a court has ordered the parties to mediate. In other words, while parties may seek to persuade their opponent to the strength of a position in mediation, through the assistance of a neutral mediator, the parties’ goal in mediation is not to over-power their opponent, but rather to build a bridge with an opponent to find a mutually agreeable path to resolve the dispute.

Next, lawsuits and mediated negotiations occur in different settings.

Lawsuits play out in a public forum – the courthouse. And, because the United States has an open courts system, most filings made in a lawsuit, and the related proceedings (for example hearings and trials), are matters of public record. What this means is that just about anyone can get access to information the parties file and the court uses to make decisions in most cases, including transcripts of hearings and testimony, if any are made.

By contrast, mediated negotiations happen in a private setting, like a conference room. And, generally, those negotiations are and remain protected as confidential. What this means is that, subject to a few exceptions, parties can freely negotiate through a neutral mediator knowing that negotiation positions are not going to be the subject of a later trial examination if a settlement is not reached.

Another key difference between a lawsuit and mediation is how the neutral is selected.

In a lawsuit, judges are elected to office by voters, and once on the bench, cases are assigned by the clerk’s office through an impartial process the parties do not control. Similarly, as many of us have seen on Boston Legal, CSI, A Few Good Men, or some other lawyer-like shows, litigants really have very little control over who serves on a jury. It may be that the lawsuit involves a very novel or complex set of facts, or technology, or emotional issues – issues that the randomly-assigned decisionmakers – judges or prospective jurors – may have little or, sometimes, no prior experience with.

By contrast, when parties agree to mediate, not only do they get to select the mediator, the parties, their counsel, and the mediator will work together as active participants in the mediation process. The goal of the mediator is to help the parties — the only decisionmakers in a mediation – to evaluate and decide how they want to end their conflict.

While mediators may also be lawyers, mediators do not give legal advice or make any decisions. Instead, a mediator’s role is to encourage the parties – with the guidance and input from their lawyers – to consider ways they can resolve their dispute. When the parties feel stuck, a mediator may ask questions or make suggestions to help them evaluate their case or brainstorm ways to bridge their differences and find common ground for a resolution.

What can happen at the end of a trial, and what can happen at the end of a mediation, are also two things to be mindful of.

At the end of a trial, the judge or jury will reach a verdict, decisions upon which the court will then enter judgment. Once the judgment is entered, if one party (or both) do not like the judgment, they each have a right to at least one appeal. In essence, the trial judge or jury’s decision may not be the final say.

When successful, mediation ends with a written settlement agreement, which is intended to bring an end to the dispute. In fact, sometimes parties are able to resolve their dispute in a mediation that occurs even before a lawsuit is filed.

If mediation is not successful, a mediator will let the parties know that they are at an impasse, after which the parties are at liberty to continue efforts to resolve their disputes through the court system.

If an impasse occurs that does not mean the mediation was a waste of time. Often, even when the parties are not able to completely resolve their dispute in mediation, they find the mediation process assisted them in narrowing the issues, or at least getting a better handle on the strengths and weaknesses of their respective cases. This insight often leaves open the parties’ interest in continued negotiations in the future.

Most mediators know this and will stay in touch with the parties’ counsel by checking in periodically and offer to assist the parties either with another mediation session, or through informal measures, such as telephone calls and emails.

How quickly a dispute can be resolved through litigation and mediation is a difference that can be measured in time and money.

It’s not uncommon for parties to wait several years before a lawsuit is tried. During the period of time leading up to trial, the lawyers, witnesses, and others will usually spend considerable time and money collecting and evaluating evidence, witnesses, and positions. The whole process can be quite expensive, stressful, and distracting to one’s daily schedule.

By contrast, many disputes have been resolved (as discussed above) through a concentrated and focused effort to meaningfully negotiate over the course of a half- or full-day’s time. The cost of the mediator, and the investment of a few days or weeks preparing for mediation, can be significantly appealing to some litigants.

So whether or not to mediate or file a lawsuit first, when to mediate if a lawsuit is filed, and who to enlist to serve a the neutral mediator are among the things parties, with the assistance of their counsel, consider when evaluating one’s dispute resolution options.

Felicia Harris Hoss

Dispute Resolution EDR Litigation Mediation Strategy