Alternatives to Trial
A Guide to Alternative Dispute Resolution
Settling your dispute out of court could help you avoid high costs and long delays. Alternative Dispute Resolution may be more desirable than going to court.
The American legal system is widely regarded as model for impartial dispute resolution. But, while the conventional trial remains the workhorse of the American judicial system, the system is oversubscribed, both at the federal and the state levels. Thus, getting a civil case to trial can take time, sometimes measured in years. Getting through the process can also cost a lot of money without any guarantee of success. The outcome of the case rests in the hands of people who may know nothing about the business or industry involved in the dispute; because of this, many people are not satisfied with the ability to gauge the likelihood of success.
These two shortcomings-the time it takes to closure and knowledgeable decision makers-are what alternative dispute resolution ("ADR") methods are aimed at. While there are minor variations, we will discuss the two most important ADR processes in this pamphlet: arbitration and mediation. Contrary to popular misconception, these terms are not synonymous:
- Arbitration is an informal yet adversarial proceeding similar to, but simpler than, a conventional trial, where an arbitrator takes evidence and makes a decision binding on both parties.
- Mediation is the attempt of a mediator to fashion resolution of the dispute through agreement between the parties; the mediator is not a judge, but more of a facilitator.
Arbitration is sometimes described as "private trial," where the process is paid for by the parties, rather than by the taxpayers, and the resulting award is usually confidential, unlike the public verdicts of trials paid for by taxes and possible costs to a party.
Arbitration Is Agreed To
Arbitration is a process agreed upon by the parties; if they haven't agreed to it, the arbitrator has no jurisdiction over them and has no authority to rule on their dispute. On the other hand, "regular" courthouse litigation commences when one party files a complaint against the other at the court, regardless of the latter's willingness to decide the dispute in this way.
Arbitration Is Less Formal
Arbitration is a lot more informal. The hearing is usually conducted in an ordinary meeting room, rather than a fancy courtroom. Sometimes there will be only one arbitrator, sometimes a panel of three. Witnesses are sworn as in a conventional courthouse trial, and the parties or their attorneys take turns presenting their evidence, as in a regular trial. The rules of evidence and civil procedure that strictly govern traditional courthouse litigation are relaxed and serve as only guidelines for the arbitrator.
Arbitrators Are Not Always Lawyers
In fact, one of the advantages of arbitration is that the parties can seek an arbitrator who is versed in the nature of the dispute. Thus, it is not uncommon for a contractor or an architect to serve as an arbitrator in a construction dispute; likewise, an accountant may be chosen to hear a dispute concerning a tax dispute or a financing dispute.
Arbitration Is Final
The award of the arbitrator is final; there can be no appeal, except in a few, rare circumstances. The parties agree to this finality when they agree to arbitrate their dispute. (However, mandatory court-annexed arbitration, held as part of courthouse litigation procedural rules, for the smaller civil cases in the courts, allows for an appeal.)
Arbitrators Are Paid
Like the public court system, where judges are paid by taxes, arbitrators are paid by the parties and usually charge by the hour. Their rates are normally set out in their biographies but, if not, you should not hesitate to ask about costs.
How Long Does It Take?
The length of an arbitration hearing depends entirely on the complexity of the dispute. Simple landlord-tenant arbitrations might take less than half a day. Hearings in complicated commercial or construction arbitrations may run for weeks. Usually, the time from commencement of arbitration to entry of a final award is much shorter than the time from filing a Complaint in courthouse litigation to a final determination.
All counties have a mandatory arbitration process. The threshold amount for mandatory arbitration varies from county to county, as determined by that county. These mandatory arbitrations are conducted by practicing lawyers who volunteer their time; there is no charge to the parties. In these cases, the arbitrator's award may be appealed by any party to the Superior Court, but there are significant penalties if the appealing party loses the appeal; these penalties are intended to discourage the appeal of mandatory arbitration awards.
The public often confuses mediation with arbitration, and it is common for people to believe they are the same thing. They are not.
Arbitration=Third Party Decision
In arbitration, the parties cast their fates to the decision of a third party--the arbitrator. The parties no longer have control over the outcome of the dispute, and each can only hope that the case he/she presents to the arbitrator is persuasive enough to win.
Mediation= Resolution by Agreement Between the Parties
In mediation, the parties maintain control over the outcome of their dispute because they control the decision making. The mediator is not a judge; the mediator is a facilitator whose job is to build consensus by helping the parties fashion solutions they both can live with instead of having a third party-either an arbitrator in the private system or a judge in the public system-deciding the outcome for them.
Mediation is not regulated by any state laws or by any mandatory industry standards (although there is one Arizona statute that provides for confidentiality related to mediation.) Thus, any person can hang up a sign and become a mediator, and it is this fact that can result in mediations that leave the parties dissatisfied. It is important, if you decide that mediation might be worth a try, that you check as to the experience of the mediators you are considering or choose a mediator from a professional ADR organization whose mediators are both trained and experienced, and whose biographies are given to you as part of the selection process. Such organizations often have an ethical code for their members.
Mediators Needn't Be Lawyers
Mediation, while seeming to be a legal process, does not require lawyers to conduct it. In fact, many mediators are professionals in various industries whose personalities and "people skills" have proven valuable in bringing together people with divergent views. Skills such as understanding the psychologies of anger, fear and revenge; the ability to listen objectively; knowledge of a particular business or industry; creativity in developing solutions; and the ability to act as a calming influence in inflamed settings are key ingredients to a successful mediator.
Mediators Are Also Paid
Like arbitrators, mediators are paid, usually by the hour. Their hourly rates are usually set forth in their biographies.
How Long Does It Take?
As you can imagine, how long a mediation takes-and whether it is even successful-depends on the good faith willingness of the parties and the extent to which they really want the mediation to work; that is, to really want to resolve the dispute. If one party is not of that mind, the mediation will certainly take longer and its chances of success are diminished.
Many of the Justice Courts in Arizona require the mediation of small claim lawsuits before the suit is ever allowed to be heard by the judge. In the Superior Court, divorce cases also must go through mediation before the judge will hear the case. The mediators in these cases are volunteers and, thus, the parties are not charged. Most judges in civil cases in the Superior Court will press the parties to go through mediation before a trial date will be set. There is a process in civil cases whereby a Superior Court judge can be tasked to convene a "settlement conference," which conference is similar to a mediation.
Where Do I Go for More Info?
There are many ADR organizations that provide mediation and arbitration services and that actually manage the entire process for the parties. They charge fees for these services, but often this cost is well worth it, especially if you are not accustomed to arranging phone conferences, setting hearing dates, and exchanging documents with the other party before the hearing.
For help in finding an ADR organization, ask an attorney you know about ADR and how to go about arranging for it. Keep in mind that some arbitrators and mediators also choose to operate independently of ADR organizations or may do cases obtained from both sources. For independent ADR professionals, word of mouth may be the way you hear about them, so check around locally; the internet can also be helpful.