At some point during most of my cases I’ll have a conversation with my client and we’ll discuss the difference between mediations and arbitrations.
Mediations are voluntary processes, and they’re settlement discussions where both sides have agreed that it’s an appropriate time during the case to ask a neutral third party to sit down with both sides and see if a settlement can be reached. However, mediators have no power through the courts (or through the parties) to dictate a settlement. They can’t tell one side what to pay, or the other side what to accept. All they can do is sit down with the parties, both together and then privately, talk about the issues in the case, and see if they can bring both sides into a settlement range where they can have an agreed upon settlement.
There are normally no witnesses called, there’s no testimony taken from the parties or anybody else, it’s just an informal discussion of issues in the case. It’s confidential. By state law, what gets discussed, and the information that gets exchanged between the parties at a mediation remains confidential and can’t be used in any part of the case thereafter. It encourages people to be open and honest, which is normally helpful in trying to reach a settlement. Sometimes you can have more than one mediation if the first one doesn’t work.
Arbitrations on the other hand, are binding. The arbitrator is empowered to be the judge and the jury, and he or she will reach a decision regarding the case that will be binding on the parties, who will have waived their right to appeal and waived their right to a jury trial.
Arbitrations normally are conducted similar to a trial. There will be witnesses called and examined by the attorneys, there’ll be evidence submitted, there can be evidentiary rulings by the aribtrator, and ultimately the aribtrator issues a binding decision with a written explanation.
Now, there are many reasons for an arbitration. Sometimes it’s contractual. For example, if you are Kaiser insured, something happens to you at a Kaiser hospital and there’s a suit that’s filed, that suit doesn’t go into court, it goes into arbitration and it’s normally heard either by a three judge panel or a single arbitrator panel.
Sometimes the parties in a court case can decide to go outside the court system and hire a single arbitrator to act as judge and jury. There are a number of reasons for this. Number one, in this day and age of economic difficulties in the court system, it’s quicker to use an arbitrator if both sides agree. You can streamline the process, call fewer witnesses, rely more heavily on written documents such as depositions, and both sides can save money that way. Thirdly, you can control the outcome to a certain extent. Oftentimes with binding arbitrations the parties have agreed that there will only be a certain amount that can be awarded. In other words, there’s a cap on what the award can be or there’s a floor below which the award can’t go. Now, the arbitrator isn’t informed, but the result is adjusted based on these kinds of agreements.
Also, if there are issues that have already been agreed upon by the parties, they can limit the issues in the arbitration. Mostly it’s just to save time and money, but it’s a very effective process in this day and age where it’s difficult to get a court room, a judge, and a jury.