Alternative Dispute Resolution

Back in the “old days,” when two parties had a dispute they could not resolve, one party would inevitably end the futile negotiations with the phrase, “See you in court.” Unfortunately, however, the traditional litigation process is very expensive and very slow. The trier of fact, especially if it is a jury, often has no background in, or experience with, the subject matter of the dispute. The decision by the trier of fact is not final until the parties have exhausted their right to appeal, often many years down the line from when they initially filed the action.

Arbitration

Within the past 100 years, arbitration has become an acceptable, and often preferable, alternative to litigation. Parties frequently include provisions in their contracts requiring arbitration of disputes, and courts are loathe to disregard these provisions because of the legislative policy favoring the enforcement of agreements to arbitrate. The rules applicable to the arbitration proceedings relate directly to the subject matter of the contract, such as the construction industry rules for a construction contract or commercial industry rules for a commercial contract.

There are several advantages of arbitration, which include:

• Having a dispute resolved by an individual, or panel of individuals, who have knowledge regarding the subject matter of a dispute. For example, in the case of a construction dispute, appropriate arbitrators may include construction attorneys, design professionals or construction managers, as these persons understand the process of construction, the language unique to construction and the responsibilities of the respective parties in the construction process.
• Lower transaction costs, as there is little or no discovery permitted (other than the exchange of exhibits) for disputes below $1 million.
• A much speedier resolution to a dispute, as small disputes are often resolved in weeks or months and the largest disputes are often resolved within a year or two at the most. Also, the length of the arbitration proceeding , itself, is typically shorter than the length of a trial.

The principal disadvantages of arbitration include higher administrative fees and the fact that there is no effective appeal from the arbitrator’s decision. Also, to the extent that the arbitrator allows increased discovery, there may be increased transaction costs to the parties.

Nevertheless, the advantages of arbitration frequently outweigh the disadvantages, and the parties often are more satisfied with this process than litigation.

Mediation

Within the past ten years, mediation has emerged as another method of alternative dispute resolution. Mediation may be called out by the parties’ contract as a condition precedent to binding dispute resolution or simply consensual.

Similar to arbitration, there are several significant advantages to the mediation process:

• It typically lasts only one day.
• It often allows parties to maintain relationships, instead of having them destroyed by a hotly contested arbitration or litigation.
• It is private.
• There is no discovery.
• Filing fees are minimal.

The attorneys at Goldberg & Banks frequently advocate on behalf of clients at both mediations and arbitrations and Howard Goldberg, a principal of the law firm, is an active arbitrator and mediator with the American Arbitration Association.

If you are interested in a consultation with regard to a private mediation or arbitration, or are interested in engaging the services of Mr. Goldberg as an arbitrator or mediator of a dispute, please call 443.641.9422.