Arbitration vs. Litigation: Which is Right for My Company?

For thousands of years, conflicts have been resolved through litigation. Recently, more forms of Alternative Dispute Resolution have popped up, including arbitration and mediation. With all of the options available, it can be difficult to know what to set as standard for your company. To begin with, let’s explain the most popular conflict resolution methods:

Litigation is a traditional court setting where a Judge hears both sides of a conflict. The Judge will ultimately make a legally binding ruling that ends the litigation. Both sides will be represented by attorneys who argue their position to the Judge. Litigation can include a Jury, where a group of randomly selected citizens hear both sides of the conflict, but that is not mandatory. A court case is generally public and extensive.

Arbitration is a private recreation of the litigation system. An independent third party, known as the arbitrator, will hear both sides of the conflict. The arbitrator, who is normally a retired Judge, will make a legally binding ruling to resolve the issue. While not necessary, arbitration frequently involves attorneys representing both sides. Arbitration is typically conducted much more quickly than traditional litigation.

Mediation is where a neutral third party, known as a mediator, facilitates conversations between the two parties in conflict. The goal is for the two parties to decide on a personal resolution that satisfies both of them. The mediator does not make any decisions or moral judgements. Mediation is commonly used in family law and interpersonal conflicts, but less often on a corporate level.

Most contracts with major companies currently require arbitration as the form of dispute resolution. The advantages it has over litigation are particularly desirable to businesses: it is cheaper, faster, and more flexible. Most importantly, it is private, so the fact that someone has an issue with a company will not be a matter of public record. The price of arbitration has risen as it has gained popularity, however, and some have questioned if the lack of transparency and questionable objectivity are ultimately advantageous for businesses.

While arbitration has emerged as a modern standard, one element still varies: whether or not it is binding. Sometimes clients are allowed to appeal the ruling with a second arbitration case or a full litigation case if they are unhappy with the original arbitration result. Some contracts include clauses specifically ordering that someone can not file any sort of litigation against them. Whichever decision you make for your business, it is important to state it clearly in your contracts.

When it comes to dispute resolution, the ideal method for your business is ultimately up to you. For any help with your commercial and business litigation, or your domestic or international arbitration, contact Waserstein & Nunez today! We are proud to offer creative solutions and flexible fee structures.

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Waserstein & Nunez, PLLC

Waserstein & Nunez, PLLC is a boutique law firm with extensive and varied experience of a large law firm. They are geared towards deal-making and solutions but always preparing and ready for trial or Plan B.

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