Mediation and arbitration: What’s the difference?

As a trial lawyer, I relish standing in front of juries and judges. For me, the thrill of a trial far surpasses many of the other highs that life has to offer. The client, however, often feels like he’s sitting through a root canal while sitting in court. The emotional toll that a full-blown trial has on people has led to other forms of dispute resolution that have emerged and evolved through the years. The most common forms that are often discussed are arbitration and mediation. While they sound similar, they are vastly different.

Arbitration

Arbitration is a process whereby parties try their case before a third-party neutral who serves as an arbitrator. An arbitrator is not a judge, and arbitration is not part of our court system. Rather, arbitration is a professional service; the arbitrator is an attorney (sometimes, a retired judge) who often has some form of specialized background in the subject matter that is being tried. The process of trying the case is less formal than in a courtroom. The rules of evidence are often more relaxed. But the important feature of arbitration is that a binding decision is made by the arbitrator. The parties end up with the same result — a judgment, a ruling and finality, but without it taking place inside a courtroom.

There are a number of criticisms of arbitration. The first is that there is no realistic form of judicial review. In other words, there is usually no appeal from a decision by an arbitrator. It is a binding decision that goes no further, and the parties are left with that decision, no matter how unhappy someone may be about the result. Another criticism is that arbitration happens in private, confidential settings, and therefore many believe that there is no accountability for the arbitrator. By contrast, judges are subject to appointment by our elected officials. Trials happen in full public view. A courtroom is open to the public. Noteworthy trials are regularly covered in the media. Not so with an arbitration. Most arbitrations are deemed confidential with no public scrutiny. Arbitrators are free to make decisions that affect people’s lives without having any review or comment on their decision.

Mediation

Another popular alternative to trial is mediation. Mediation is a voluntary process whereby the parties attempt to resolve and compromise their dispute. The goal of mediation is for the parties to reach a settlement. Like arbitration, this process brings the case to an end. However, unlike arbitration, the third-party neutral is not making any rulings or decisions concerning the case. Instead, the third-party, called the mediator, is facilitating a discussion so that the parties can move toward an agreed-upon solution. Over the last 30 years, mediation has proven to be wildly successful. Studies have shown that mediation generally has a success rate of resolving approximately eight percent nationwide of all civil cases that are mediated. This runs the gamut of civil disputes from injury cases to divorce, business disputes, intellectual property disputes, etc.

The popularity of mediation has to do with parties being able to control the outcome. It is a voluntary process; no one forces anyone to settle this case. But, in a courtroom or in an arbitration, the parties are handing the problem over to a third person who ultimately makes a decision. In mediation, the parties can fashion their own solution. Mediation can also bring about a result that is not a zero-sum game. This is unlike a trial in which there is one winner and one loser. I have seen mediations where one side offered an apology or agreed to take some action in the future. Other mediations simply involve money—how much someone is willing to pay to make the case go away.

Mediation is often a for-hire service. The parties pay to have a professional mediator who tries to resolve the case. As with anything, people want to get something for their money. Therefore, people who agree to mediate often have a predisposition towards wanting to resolve their case outside of court.

And, if all else fails, there is always the old-fashioned way of resolving disputes: the courtroom.