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
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.
Mandatory Arbitration
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.
Mediation
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.
No Regulation
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.
Mandatory Mediation
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.