The Difference between Mediation, Arbitration, & Litigation
Posted On December 13, 2016 by Murphy Law Group in Mediation
Dan Murphy of Murphy Law Group explains the differences between mediation, arbitration, and litigation—how each one handles legal complaints, how you might enter into arbitration, and how judgements are reached in each.
John: Hi, I’m John Maher. I’m here today with Dan Murphy of the Murphy Law Group in North Andover and Boston Massachusetts. Today we’re talking about the differences between mediation, arbitration, and litigation. Welcome Dan.
Dan: Thanks for me having me, John.
John: Sure. Dan how are mediation, arbitration, and litigation different?
Dan: Mediation and arbitration are both forms of alternative dispute resolution mechanisms. Both of them are alternatives to what you might know as a simple court case in terms of a case that that takes the form of a complaint being filed in one of the public courthouses–whether it would be on the state level, at the district court level, superior court level, or in the federal courthouse.
John: Okay. Let’s talk then about mediation and arbitration. How are do those differ?
Dan: They differ significantly. Arbitration is in a lot of respects nothing other than hiring a private judge or panel of judges to make decisions in a case. Arbitration is not an attempt by the parties to seek common ground to resolve a case. It is really bringing your case before either a panel or a single arbiter, similar to the way in which you would bring it before a judge or a jury and hiring those people to make a determination.
Oftentimes, arbitrations are agreed to as a mechanism to resolve a case prior to parties having the dispute. In other words, if the dispute is a commercial dispute and the parties were contractually bound prior to the dispute arising and the contract has a mandatory arbitration clause that would be the manner by which the parties would resolve the case as opposed to litigation.
It does not mean that the parties could not also utilize mediation to resolve the case. It would be simply that they contractually agreed that the case would be resolved from a finder of fact perspective by arbitrators versus a judge or jury.
John: Why would two parties want to go through an arbitration rather than do a litigation and have that being in a court of law that determines this? Is this less costly?
Dan: The thinking is efficiency. But the reality is that is not always the case. Sometimes arbitrations take on a life of their own just the way litigations do. But the thinking is efficiency. The thinking is, well, you’re subjecting the parties to arbitration and you’re subjecting your parties to a third-party making a decision. There is a little more control over the process in arbitration versus litigation.
In litigation there are civil rules of litigation that allow you of periods of time during which to conduct a discovery–whether it’d be written discovery followed by a formal deposition practice. And they can be extremely lengthy in time. But that just as an example, in arbitration the arbitrator may well decide that each of the parties has 60 days to exchange a written discovery, the tracking order in a typical litigation case in court might be nine months to get that done.
The arbitrators could decide, as an example, that each side is limited to taking three depositions. In standard litigation in court under the rules of civil procedure there is no limitation on the amount of depositions that one party could take.
John: You mentioned that there can be like an arbitration clause in a contract that would result–if there’s a dispute that you go to arbitration. Can you have a mediation clause and an arbitration clause in the same contract? Then when would you do one versus the other?
Dan: You absolutely can. Typically if you have a mediation clause in a contract, it would precede the triggering of an arbitration. The parties would be committed to attempting to resolve the case in the mediation context prior to moving to the next step which is arbitration. Even once you have entered the step of arbitration you can always move back into mediation again, if the parties believe that it would be helpful to have a third-party attempt to bring each of the parties together, to find common ground.
John: Is there ever a point then at which you can go from an arbitration to litigation? Or just the fact that you’re deciding to use arbitration as a method of resolving the dispute mean that it ends there.
Dan: Typically once you’ve committed to arbitration, you’re committed to arbitration; it’s outside of litigation. There are always exceptions to the rule: if some type of a conflict came up with an arbitrator along the road or if something were added to the dispute that might for some reason to take it out of arbitration.
But typically once you’ve committed to arbitration you’re committed to arbitration. Once you’re committed to litigation in the courts you are committed to litigation in the courts. But in both instances that does not mean that you could not fall back to mediation at any given time.
John: When do you think that using litigation might be a more appropriate method of resolving a dispute?
Dan: Well, litigation is the standard way to resolve a dispute. It takes the parties agreeing, whether it would be before entering into a contract or before filing a lawsuit that arbitration would be an alternative method that they would look to. But the standard method would be litigation.
Sometimes there’s a dialogue between the parties before a litigation starts. Other times there is no dialogue between the parties before a litigation starts. Litigation is the standard approach with arbitration being an alternative approach–one that you may be bound to because you’ve done so contractually before the dispute ever arises or one that the parties agreed to procedurally as a way in which to approach the dispute.
John: Okay. Any final thoughts on mediation, arbitration, and litigation and how they work to resolve disputes between parties.
Dan: Well, mediation is always appropriate. As I said the idea of a mediation is to bring smart people together on each side of a case with a third party who can evaluate the case properly, and can talk to each side about the strengths and weaknesses of the case to make each side recognize that if they go forward and lose control over the case, some other party being a jury or a judge or an arbitrator is going to make a decision.
They’ve got no control over the outcome of that decision and that they’re much better off trying to find a way to be satisfied with a resolution of the case in the context to the mediation than they are completely losing control and giving it to a third party whether it be an arbiter or judge or jury.
John: Alright that’s great information Dan. Thanks again for speaking with me today.
Dan: Thank you John.
John: For more information about the Murphy Law Group, visit the firm’s website at mlgllc.com or call 978-686-3200.