What Is the Difference Between Mediation and Arbitration?

Legal disputes arise all the time, from two spouses arguing over how to divide their marital assets to business partners fighting over their interests in a company. In some cases, these disputes lead to litigation, but litigation is generally something to be avoided if possible. A prolonged courtroom battle is expensive, time-consuming, emotionally draining, and difficult to predict.

Given all these downsides, many people opt for a different way to resolve their differences outside of a courtroom. Two of the most common alternatives to litigation are mediation and arbitration. There are significant differences between mediation and arbitration, however, and it’s important to know what they are so you know what you’re getting into. Keep reading to learn more from the experienced Gastonia dispute resolution attorneys at Mullen, Holland & Cooper.

What Is the Difference Between Mediation and Arbitration?

Mediation is when two or more parties who are disagreeing meet with a neutral party to resolve their differences. Mediation is a non-binding process, meaning the parties are not required to follow the recommendations from the mediator. The parties who are fighting keep control over the entire mediation process. This includes who the mediator is, who pays for the mediator’s services (the parties usually split the cost), who will attend the mediation sessions, the format of the sessions, how the dispute will be resolved, and whether or not the parties will have their lawyers present.

The goal of mediation is to help the arguing parties clarify their positions and desires, then work toward a voluntary resolution to the conflict. The mediator does not decide what the “correct” resolution to the dispute is. Instead, the mediator’s job is to help generate a productive discussion by serving as a neutral observer. Because mediation sessions do not take place in a courtroom, the parties involved in the dispute are generally less combative and may be more open to resolving their conflict. If the parties involved in the dispute can reach a signed agreement, that agreement is binding.

Arbitration works differently from mediation. Instead of one neutral mediator, there’s often a panel of arbitrators who will listen to each side present their case. The arbitrators have much more control over how the proceedings will go than mediators and will set the terms for the negotiations.

The biggest difference between mediation and arbitration is that the arbitrators’ decisions are usually binding, meaning the parties involved in the dispute must follow the arbitrators’ ruling. There are few options for appealing binding arbitration, so be sure you know what you’re in for. Having said that, arbitration is still preferable to litigation because it’s less expensive and gets the parties out of the courtroom, making it easier to have a productive discussion.

Which Is Better in Which Situations?

There are no hard and fast rules for whether mediation or arbitration is the better option for settling your dispute. As a general rule, mediation is preferable if you think you can find a reasonable compromise with the other party. Because mediation is non-binding, you still have options to resolve your dispute if you’re still at an impasse once the mediation sessions are over.

If you and the other party are hopelessly deadlocked and you can’t see a way to resolve your dispute, arbitration may be the better alternative. Even if the arbitrators’ decision is binding, it’s still a way to keep your dispute out of a courtroom and bring the case to an end. Just be mindful that you’ll most likely have to live with whatever the arbitrators decide.

How a Lawyer Could Help

Whether you opt for mediation or arbitration to resolve your dispute, you’ll want to consult with a lawyer and have them with you during the sessions if possible. In mediation, a lawyer can help you prepare your arguments, gather evidence, and look for possible compromise solutions. If you opt for arbitration, you’ll want a lawyer with you during the meetings to make sure you present the strongest possible case and avoid any mistakes that could jeopardize your position.

In certain circumstances, a lawyer can also help you appeal a ruling after binding arbitration. As dispute resolution attorneys with more than 50 years of legal experience, the team at Mullen, Holland & Cooper is thoroughly prepared to help you through the mediation or arbitration process. Learn more by visiting our contact page.