From The Sue the Bastards section of How You Can Avoid Legal Land Mines by Joseph S. Lyles (2003).

Mediation and arbitration are two ways of resolving legal cases that are alternatives to jury trials. They are known as Alternative Dispute Resolution (ADR), and they are becoming increasingly popular. Some jurisdictions are requiring that cases be mediated before they are tried, and some contracts require that disputes be resolved by arbitration because the authors of the contracts prefer arbitration to jury trials.

Mediation is a structured settlement conference usually conducted at an attorney’s office. All sides to a dispute are present, often with their attorneys. A neutral, unbiased person (usually an attorney) is present to act as the mediator, and the choice of that person to act as the mediator is either agreed to by the parties or made by a court. The mediator must have had experience or training, or both, that provides the skills for getting opposing sides to reach a compromise. However, the mediator does not decide the case. If it is not settled, the case eventually proceeds to trial.

Mediation is scheduled at a time and place agreeable to all parties involved. Procedurally it is informal, unlike a trial in a courtroom. The conversation between the parties during mediation is usually confidential and cannot be used in court.

Arbitration, on the other hand, involves the use of one or more people called arbitrators to reach a decisions in the case. There are two basic kinds of arbitration: binding and non-binding. In binding arbitration, the arbitrator’s decision is the final decisions and there is no trial of the case. Usually the case is then ended with the parties following the decision of the arbitrator, although it is possible for a party to appeal the arbitrator’s decisions to a court.

In non-binding arbitration, the decision of the arbitrator is simply advisory. The parties may choose to disregard the decision. The main purpose of non-binding arbitration is to provide the parties with strong guidance from a neutral, unbiased third party. It gives them the opportunity to see how a judge or jury would likely rule on their case. Once they have the arbitration decision they are likely to settle the case.

There is a growing trend for parties to written contracts to agree to have any disputes arising from those contracts decided by arbitration. The courts uphold these clauses, even when one party did not read the arbitration clause in the contract. The general policy of our courts is that alternative dispute resolution (ADR) should be encouraged. The court system is seen as overburdened and, thus, too inefficient to deal with all the cases being filed. Therefore, if a judge can take a case off his list of cases to try (called a jury roster) by finding that it should be submitted to arbitration, then that is what he will probably do.

I have found in my legal practice that ADR is usually superior to a jury trial as means of resolving disputes, because in ADR the costs are usually lower; the scheduling is much more convenient; and the proceedings are much less stressful. More importantly, the results are often more reasonable than the results of jury trials.

The outcome of a jury trial is always unpredictable. No one knows what a jury is going to do in any one case. Of course, if people did know how juries were going to rule on their cases, the winners would have no reason to agree to compromise beforehand. Mediation allows you to avoid the uncertainty of a jury trial.

Mediation offers the additional advantage of allowing the parties to fashion a unique solution to their problem. Oftentimes the parties in a mediation can fashion a compromise agreement that involves specific remedies that are not available to a jury. Thus, a settlement can be crafted to meet the unique needs of the parties. In fact, in a dispute between former business partners, there may be other possessions or rights one can give to the other side besides money. Equipment, customer lists, products, endorsements, real estate or future receivables might be given to one party by another party as part of the settlement. But, in a civil jury trial, the jury can only award monetary damages.

Moreover, I find mediation a helpful way to get a case settled because it forces all those concerned to get together and focus on the case, and nothing but the case. By meeting in a neutral location, the parties involved get away from distractions and the influences of the “home field”. And by focusing on only one case, they are able to arrive at an understanding of how it should be settled. Also, having the mediator there to discuss the case helps put it in perspective. Each party is better able to understand the weaknesses of its case.

I’m sure there are a few cases that should be decided by a jury; however, for the vast majority of cases I have handled, I would have preferred settlement through mediation or a decision through arbitration.

Although our system of justice is built upon the premise that a jury is the best decision-maker, the reality is that some juries base their decisions on irrelevant details, prejudices, and misunderstandings. Thus, most attorneys want juries to decide their cases only if all possibilities for settlement have failed.

With jurors you have limited information about who they are, but with arbitrators you generally are well acquainted with their history and credentials. And with mediation, you don’t have to worry because the mediator will not make the decisions, you will.

A case that would take at least a day to try before a jury can be presented to an arbitrator in two hours or less. Although mediations generally take longer than arbitrations, they are faster and usually much less stressful than jury trials.

In addition, arbitrations and mediations are less stressful because they allow disputing parties to retain a tremendous amount of control over their cases; while in a jury trial the parties turn over control of much of the case to a judge. Of course judges try to be fair, but they are sometimes concerned only with processing cases according to their own timetable. In those cases, the scheduling needs of the disputing parties are given little, if any, consideration.

The Lesson: Be sure to discuss ADR with your attorney early in your case. If you are given the choice of submitting your case to ADR, opt for it instead of a jury trial, unless your attorney explains that a trial would be a better choice.