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Creative ways to settle disputes without court involvement

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Posted: Monday, June 10, 2013 11:21 am

When I meet with clients who have a dispute with another individual or company, oftentimes my clients tell me to file a lawsuit believing that this is the only way for them to get what they are after: typically money and vindication that their position is correct. I always counsel my clients that litigation can be expensive and that there may be — though not always — a less expensive way to achieve their objective in a far quicker manner. Some of the less expensive ways of achieving the desired objective include mediation and arbitration.

A mediation is nothing more than a non-binding settlement meeting between the two parties (and often their attorneys) and a knowledgeable attorney who has agreed to serve as a neutral mediator to help the parties resolve the dispute and prepare a binding agreement memorializing the resolution. There really is no downside to a mediation since the neutral mediator cannot force either party to agree to any settlement term that they don’t like. The mediator’s role is to give each side his non-biased view of the arguments being offered by each side. You certainly do not need to accept the mediator’s view on the strengths or weaknesses of your legal position, but you should give some consideration to the mediator’s opinion since typically the mediator is knowledgeable in the subject area in dispute and most of the time is an attorney who has either brought similar claims or defended similar claims that have proceeded to trial. I often serve as a mediator in disputes involving other lawyer’s clients. When I do this I am almost always successful in reaching a settlement, but have had several instances where the parties participated in good faith but could not agree on settlement terms. It is important to remember that anything said at a mediation typically cannot be used in any later court proceeding since one of the conditions to participating in a mediation is that all conversations at the mediation will be confidential and cannot be used in any later proceeding.

Another alternative is to participate in an arbitration. The main difference between an arbitration and a mediation is that the neutral arbitrator will act essentially as a judge and will issue a binding decision. The arbitrator will typically allow testimony from the parties and other witnesses before making his binding decision. One advantage arbitration has over filing a lawsuit is that usually the arbitrator’s decision is binding, which means it cannot be appealed. That is not the case when you file a lawsuit since a decision made by a trial court judge can be appealed, which adds significant additional costs. Another advantage of an arbitration is that you can typically get a speedy arbitration date as opposed to filing a lawsuit, which may take a year or longer to get a trial date. Finally, the parties generally need to agree on who the arbitrator or mediator will be. This allows the parties to try to select an arbitrator or mediator who is knowledgeable regarding the industry or claims in dispute. This does not happen when you file a lawsuit and have your case decided by a jury of 8-12 individuals.

There are many instances where a mediation or arbitration are not the best course of action. However, it is always worth taking the time to explore whether mediation, arbitration or some other alternative dispute resolution mechanism may make sense in your situation.

• Brian Foster is a 20-year Ahwatukee resident and senior partner at Snell & Wilmer L.L.P. in Phoenix. Reach him at (602) 382-6242 or bfoster@swlaw.com.

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