Mediation vs. Arbitration:
Know the Difference

Submitted by: Deen Rogers, Manager

Litigation can be a long, frustrating and expensive experience. Given the choice, most of us prefer to avoid litigation if at all possible. That's why it is important to be aware of alternatives to litigation for resolving disputes. The two most widely used forms of Alternative Dispute Resolution (ADR) are mediation and arbitration.

Mediation is a confidential process that uses a neutral third party to act as a facilitator to the agreement, but not a decision-maker. The mediation process is informal and does not follow the rigid rules of evidence or procedure used in litigation. The parties to the dispute are in control.  Ultimately, success depends upon the parties' ability to reach an agreement. Simply put: mediation is a non-binding process. It does not restrict the ability to pursue the dispute further unless the parties come to an agreement and choose to be bound by its terms.

Mediation is a widely used form of ADR because it resolves disputes quickly, inexpensively and in a flexible manner. Mediation also has a very high success rate that usually produces general satisfaction among all parties involved.

Arbitration is similar to mediation in many ways, but the neutral third party renders a decision that is generally binding and cannot be appealed. The process is more formal than mediation, although it is still usually less formal than litigation.

Arbitration offers many of the same benefits as mediation. It can resolve disputes quickly, and usually less expensively, than litigation. However, the finality of the binding process is what makes arbitration different from mediation.

Arbitration is generally less flexible and more costly than mediation, and it frequently leaves one of the parties unhappy with the result. There is a tendency in arbitration to split the pot, which can leave the parties involved feeling dissatisfied.

While disputes are generally not pleasant or desired, having a good understanding of the alternative dispute resolution options is important to achieve an efficient result. If you need additional information, certainly your local legal counsel needs to be consulted. Umbaugh has also provided support to our clients in certain dispute resolutions. For additional information, please contact us at footnotes@umbaugh.com.