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ALTERNATIVE DISPUTE RESOLUTION:
THE PREFERRED ALTERNATIVE TO LITIGATION

By: Guy O. Kornblum, Certified Civil Trial Advocate, National Board of Trial Advocacy and Member, Million Dollar Advocates Forum

There is a great deal of confusion among lay persons as to the difference between arbitration, mediation, conciliation and settlement conferences. These are all forms of alternative dispute resolution. They are alternatives to out right litigation. Court systems are now designed to make sure that parties are advised about these alternatives and how they can expedite the resolution of a dispute and avoid the risks and expense (not to mention the emotional drain) of outright and full-blown litigation.

First, the distinctions: Arbitration is actually a hearing before a single arbitrator, or panel of three arbitrators, who makes a formal decision in the case after hearing the evidence. In an arbitration, there is a more streamlined process and often relaxed rules of evidence and procedure that make it easier for the parties to present their case. An arbitration can be binding or non-binding. A binding arbitration is final and can be treated as if the "award" (an award is the formal name for the arbitrator’s decision and can be a defense "award" – i.e. the defendant wins, or can award money to the plaintiff or claimant). A non-binding arbitration is simply not binding on the parties. A party dissatisfied with the award in a non-binding arbitration can request a "trial de novo," which means putting the case back into the court system as if the arbitration had not taken place. At the trial, the jury is not advised of the result in the non-binding arbitration.

In the three arbitrator arbitration, each party selects an arbitrator and the two then select a "neutral" arbitrator who usually presides over the arbitration. In most cases, all matters are handled by the arbitrator(s), including motions before the arbitration and pre-arbitration disputes.

In either form of arbitration, the "award" can be converted into a formal judgment by the court. Once that happens, then proceedings to enforce the judgment and collect any amounts owed can be commenced.

In some cases arbitration results from a pre-dispute agreement of the parties. Construction and real estate contracts, including contracts for a broker to represent you in the sale of a property, usually contain a clause by which the parties "waive" their right to a trial in the courthouse, and agree to arbitrate any dispute. There are some statutorily mandated arbitrations. If you have an uninsured or underinsured motorist claim under your auto policy (an uninsured or underinsured motorist hits you and you make claim against your own auto policy), a statute requires that claim to be arbitrated. Some HMO’s have arbitration provisions. Fees disputes with attorneys may be arbitrated through local bar associations.

There are rules, however, that affect whether an agreement to arbitrate is valid. As a general rule, that agreement is valid only if the parties are fully aware that they are giving up their rights, and an arbitration procedure that is fair and not one-sided. However, arbitration can be a less expensive and faster process of resolving disputes, with fewer procedural hurdles. So, it works in the right kinds of cases.

Mediation is basically a "supervised negotiation" in a private setting with a trained and experienced mediator who has the skills of getting parties to talk and exchange views in an attempt to resolve their differences. Mediators work in all aspects of litigation: complex civil cases, personal injury, professional negligence, complex insurance disputes and family law matters, particularly divorces and custody matters.

In a mediation the parties meet with a neutral person, usually a lawyer or retired judge, in a private setting and work through the mediator to try to resolve their disputes. It is purely voluntary and is not binding. A settlement is reached only if the parties agree. A mediation can last from a few hours to several days (not necessarily in succession). The mediator is chosen by agreement only; a party cannot be forced to accept a mediator of a dispute.
Often the parties exchange "briefs" on their position before the mediation. Sometimes these are confidential and given only to the mediator. I prefer the exchange, however, because it allows each side to advise the other of that party’s perception of the issues and the position that party is taking.

My experience with the mediation process works well, but there are several conditions that must be met: First, the parties must be prepared to mediate. That is they must know their case well and have discussed their position with their lawyer and set some realistic goals for settlement discussion. Second, the must go to the mediation with a "good faith" desire to resolve the case. A mediation can educate the adversary of certain issues or evidence, but it generally does not work well if the parties are confrontational and are simply there to try to sell the other side on a "cheap" settlement (from the defendant) or some unrealistic price (from the plaintiff). Third, a mediator must be chosen who is the right person for the case – someone whose approach to mediation fits the type of case and the parties who are involved. If the case is volatile, then someone with a more low key style using more diplomacy than persuasion may be the right choice. On the other hand, if the parties are at odds, it may take someone with stature (such as a retired judge of some preeminence) to bring the parties together. And lastly, the mediator must be "willing to work" – the mediator must be ready to roll up the sleeves and stay the course until all settlement alternatives are explored. The basic rule is the "keep the parties talking."
So long as the parties are willing to communicate, there is a chance for a negotiated resolution.

A mediation is confidential. By law, what takes place during a mediation cannot be used in the lawsuit as evidence. For example, during trial what takes place during a mediation is not "evidence." The trier of fact does not hear about anything that is discussed during the mediation, nor is the subject of the parties’ respective positions a proper subject of testimony.

One of the very attractive aspects of mediation is that the mediator concentrates on one task – resolution of the dispute. This is in contrast to a "settlement conference" presided over by a judge or court magistrate or commissioner who often does not have the time to devote to more protracted negotiations.

There is also a process of "conciliation," which is more rarely used. It comes in various forms, but essentially a conciliator is used to hear the parties describe their case and then recommend a resolution which the parties can accept or reject. This type of approach is infrequent in my experience. It is non-binding but frankly, the time in conciliation might be better spent in mediation.

These alternatives are in addition to the court process which normally requires that the parties attend a mandatory settlement conference with a judge or court officer (commissioner or magistrate) which is set a few days or weeks before trial. More and more, however, courts are encouraging parties to enter into early negotiations to see if a case can be resolved before the parties expend their time and money engaging in "discovery" (depositions and written exchange information). In federal courts here in Northern California, which includes the Bay Area, there are Local Rules for Alternative Dispute Resolution which is designed to "improve the quality of justice by improving the parties’ clarity of understanding of their case, their access to evidence, and their satisfaction with the process and result. It provides for a "broad range of court-sponsored ADR processes to provide quicker, less expensive and potentially more satisfying alternatives to continuing litigation without impairing the quality of justice or the right to trial."

The approach courts now take to an early resolution of disputes is helping to reduce the load on the court and the time and expense parties must devote to their disputes. Your lawyer should be prepared to introduce you to these alternatives and make recommendations regarding which might be suitable for your case.

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