There have been many times in my personal injury practice when I and my client and the defendant agree to mediate or arbitrate a personal injury case. In this article I will discuss the difference between mediation and arbitration as legal alternatives to filing a lawsuit and how they can help resolve some personal injury claims without having a court trial.
The differences between mediation and arbitration
Both mediation and arbitration bring in a professional and impartial third party to help resolve an issue, but this is pretty much where the similarities end.
Mediation is a voluntary legal method to settle a dispute that is non-binding, unless it is court-ordered. The mediator acts as a go-between between the two parties to try to negotiate a settlement agreement. It is much more informal than arbitration. The mediator can meet with both parties at the same time, or speak to them individually. Mediation can sometimes take a few hours or a few days.
Unlike arbiters, mediators do not make any decision on behalf of the parties. They try to facilitate the resolution of the dispute by supervising the exchange of information and the bargaining process. Many times mediators are the voice of reason, acting to find common ground for the parties and to deal with unrealistic expectations. They help to define each party’s concerns and come up with solutions. They often draft the final settlement, if both parties agree.
If both parties agree to a mediated agreement, they sign the settlement. In most cases, a signed agreement is tantamount to an oral agreement in that it is considered an enforceable contract. If one or both parties do not agree, either one or both of them can decide to pursue their claims in other venues – like going to court.
Arbitration involves an actual hearing that is normally conducted by one or more agreed-upon arbitrators who are usually members of the legal profession (another lawyer, a retired judge, etc.). As in a trial, evidence is presented, arguments made, and witnesses are usually called. When all of that is completed, the arbitrator(s) delivers a decision within a specified period of time.
There are three types of arbitration – binding, advisory and non-binding.
Binding Arbitration: Binding arbitration is very similar to going to court and having a trial. Both parties agree to abide by the final rulings of the arbitrator(s). In my practice, the parties usually involved in binding arbitration are my client and the insurance company representing the person or company who caused the personal injury accident.
Advisory Arbitration: Advisory Arbitration is held to give both sides an idea of what will happen if the case goes to trial, or help them decide whether to agree in the future to a binding arbitration. This can be helpful in seeing the strengths and weaknesses of a case and how and if a future settlement may be reached.
Non-Binding Arbitration: Non-binding arbitration is advisory in nature unless or until it becomes binding. This type of arbitration may become binding with a passage of time if neither party requests further proceedings.
Why mediation and arbitration are useful
Both mediation and arbitration are legal means to reach an agreement that is faster and much cheaper. They are less formal and a court trial and less demanding regarding rules, evidentiary matters and procedures. Another benefit is that the proceedings are not usually part of the public records and the details can be kept confidential.
In my personal injury practice, we may agree to use the methods of mediation or arbitration when negligence is agreed upon by both parties, but a monetary settlement is disputed.
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