Last time, I described a bit about the Wall Street Journal Family Finances article titled “Trading Dispute? Try Mediation.”
The WSJ article gave an overview of the manner in which two alternative dispute resolution (ADR) processes could interface. Although the context there was brokerage account disputes, the same concepts apply to other areas where a contract may commit parties to using arbitration, instead of litigation, to resolve conflicts. As the article made clear, these mandatory arbitration clauses do not, however, prevent parties from mutually deciding that they would prefer to use mediation, instead of arbitration, to resolve their conflict.
So, why would parties choose mediation over mandatory arbitration? The WSJ article makes several points. Sometimes mediation provides a reality check: one party’s hopes and expectations may be wildly unrealistic and mediation can offer an opportunity for decision-making based on more grounded expectations. Mediation can save time: in part by relieving scheduling difficulties if a three-person arbitration panel is required and in part by requiring less time in actual sessions with the third-party neutral(s), the mediator or arbitrators. Spending less time can also mean spending less money, on legal and process fees and on time spent away from other, more productive activities.
Perhaps most important, the parties retain control of their own conflict. They decide whether to accept or reject a settlement and, in that way, control the outcome of their dispute. In arbitration, just as in litigation, the neutral third party — an arbitrator, judge, or jury — will assume control of the case and impose a decision on the parties to the dispute. In mediation, the parties work with a mediator to fashion the best solution possible, from their own perspectives, to fit their own situation.