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Scales of Justice

Mediation, Arbitration, and Litigation: Understanding the Differences

In business, the most common legal option you hear about is probably litigation, which is when you hire a business attorney and file a lawsuit against another party. Whether the issue in question is an internal business dispute or the injury of a disgruntled customer, it always seems to come down to a lawsuit or a pre-trial settlement. However, you might talk to your company lawyer and read up on the alternatives to litigation, which are mediation and arbitration.

Resolving a Business Dispute or Corporate Lawsuit with Mediation

Mediation and arbitration are alternatives for resolving your business dispute or corporate lawsuit that greatly speed up the process and help parties reach a resolution. Both involve hiring a neutral third party to help the parties come to a resolution, but mediation is usually non-binding, which means the decision is not enforceable if one party doesn’t agree to the outcome. In mediation, a single mediator facilitates discussion and resolution of the case at hand. Sometimes, mediation is used to try to resolve a corporate dispute before litigation.

Resolving a Business Dispute or Corporate Lawsuit with Arbitration

Arbitration differs from mediation in a few ways. First of all, the setup most commonly involves each side picking an arbitrator, with both of them then agreeing on a third. Next, arbitrators are generally intended to mirror the role of a judge, which means they pass judgment on the case and issue opinions, rather than trying to facilitate a common resolution. Because of this difference, arbitration is more often a binding procedure like you’d find in a courtroom. For those who don’t feel that it’s realistic to reach any kind of common ground with an opposing party, arbitration is useful as a way to get the problem decided more quickly and cheaply than with business litigation itself.

Resolving a Business Dispute or Corporate Lawsuit with Litigation

Of course, sometimes it comes down to litigation. The main reason is that both sides have to reach mutual agreement to go with mediation or arbitration, but it’s still possible to take a party to court without their consent. In addition, through pre-trial discovery, you can compel the opposing party to give up evidence that they might otherwise keep hidden. People who choose to go to court also get the benefit of picking their litigation attorney, someone they trust and who really understands them and their case. In the event of a judgment they don’t like, people who chose litigation over a binding arbitration procedure have the opportunity to appeal the decision. Clearly, the best option for you will vary case by case, which is why it’s so valuable to have a reliable business lawyer to advise you when the time comes to pick a method for resolving your business dispute.