Mediation and Arbitration
Mediation and arbitration sound like the same thing to many people, but they are actually quite different. They are both used to resolve civil conflicts, but the similarity stops there.
Mediation is relatively new to civil cases, but over the last three decades has been found to be useful for resolving many kinds of conflicts. Mediation is now used in personal injury, business litigation, insurance and insurance bad faith, divorce, probate, and workers compensation cases because it is so successful at helping parties to settle their differences.
Arbitration has been around longer. An arbitrator acts like a judge and renders a decision based on evidence presented during a hearing. In many cases there is a panel of arbitrators, usually three, with one chosen by each party and the third agreed to by the parties to be a “tie-breaker”. Disputes between unions and employers are often submitted to arbitration. Some insurance contracts, especially uninsured motorist contracts, contain arbitration provisions where the parties can request, but not demand, arbitration rather than submitting their claims to a jury.
Many contracts contain arbitration clauses. One area that has been particularly troubling is nursing home admission agreements, drafted by the nursing home industry, that require complaints about patient care to be submitted to an arbitration panel rather than to the court system. Some states have held that these provisions are unconstitutional or otherwise illegal, because they take away an injured patient’s right to a jury trial against the nursing home.
There is binding arbitration, and non-binding arbitration. If parties submit to binding arbitration, they must accept the decision of the arbitrator or arbitration panel, whether they like it or not. In non-binding arbitration, the arbitrator’s decision is not final. If either party rejects it, they may go to court or other administrative process. Even though the decision isn’t binding, it often gives both parties a neutral way to evaluate their case, and decide if they want to accept the decision or go on to take the risk and expense of further proceedings.
In mediation, parties to a lawsuit or other dispute hire a trained mediator. Usually the mediator is a lawyer who has some expertise in the relevant area of law and legal practice. I have taken mediator’s training, and occasionally am hired to mediate a personal injury case. I have also represented hundreds of clients in mediation, and almost always recommend going to mediation if there is an opportunity to do so. Since courts usually order it in civil cases, there are lots of opportunities.
In preparation for mediation, lawyers for each party write mediation statements to tell the mediator and the other side about their case. They then meet in a neutral place, such as the mediator’s business offices. Most mediators immediately separate the parties into separate rooms. Studies show that when the parties get together and start stating their cases, they usually alienate each other by “beating their chests”, thus reducing the likelihood of settlement. To avoid that, the mediator ushers them into separate conference rooms, provides for their comfort, and keeps them apart from each other.
The mediator will take offers and talking points from one party to the other, going back and forth between them. A good mediator is much more than a “water boy”, however. Most often, both sides believe they are right about their cases. If they don’t settle the case, one will win and the other will lose, or the judge and jury will award something in the middle. That “middle” is where cases usually should settle. The mediator’s job is to help each party see the weaknesses in its case, thereby creating the uncertainty which is the reality of the judicial system. If you KNOW you are going to win, why settle? But if you realize that you MIGHT lose, it begins to make more sense to consider compromising the case in order to avoid the risk of having a third party like a jury decide your case.
The mediator is not a judge, and cannot decide the case. Mediators typically do not try to tell either side what their case is worth. As a lawyer representing injured people, my job in mediation is to structure the negotiations so as to get the very best offer possible from the other side. It takes patience and experience to judge where those limits are, because the other side doesn’t always tell the mediator the truth, and usually there is at least some “wiggle room” even in a “take it or leave it” final offer. Once we have that last offer, it is my clients’ decision whether to accept or turn down the offer. It is their case, not mine, thus it is always their decision. I advise; you decide.
I’m a big fan of the mediation process. If a case can be settled reasonably, it saves both parties the expense, time, and uncertainty of trial. The defendant buys my client’s case; my client sells the case to the defendant or defendants. Since litigation expenses usually come out of my clients’ recovery, saving the costs of trial saves them money and frequently gets them more compensation than they could get from a jury even if they got a higher verdict than the settlement amount.