ANATOMY OF A LAWSUIT – Part IV
In my prior blog “Anatomy of a Lawsuit-Part III” I referenced Mediation and Arbitration as alternatives to trial.
Mediation is very much like a pretrial, but the mediator, usually an attorney or retired judge with no ties to either party, spends several hours or even days in an effort to assist the parties in reaching a voluntary resolution of their dispute. Unlike a judge in a pretrial, a mediator does not usually express his/her opinions of the merits of case, but rather attempts to guide the parties to come together on what they perceive as a fair resolution of the case. The main difference with a judicial pre-trial is that if the mediator takes a stand on one specific resolution, he/she may cause one of the parties to become defensive, which is not conducive to bringing the parties together. Compromise is the key to and goal of a successful Mediation.
Arbitration has previously been addressed by my Colleague, Howard Kantrovitz, in his blog, “What is Commercial Arbitration?” Although Attorney Kantrovitz in his blog discusses “Commercial Arbitration,” arbitration of a non-commercial, civil dispute follows virtually the same process. The parties must first agree to submit their dispute to arbitration. They will then enter into a contract setting forth the terms of the arbitration including whether it is binding or non-binding. If it is binding, then the parties agree to be bound by the arbitrator’s decision. As part of the Arbitration Agreement, the parties will often agree to also limit their liability or exposure by including in the agreement parameters for any award, normally referenced as a hi/low agreement. This is a statement that restricts the final award regardless of the amount of the award that is issued by the Arbitrator. For example, if the hi/low is set at $30,000/$85,000, if the arbitrator renders an award of $25,000, the Plaintiff will nevertheless recover the pre-established low of $30,000; If the arbitrator’s award is $50,000, then that amount will be paid to the Plaintiff; and finally, if the arbitrator issues an award that exceeds the pre-established “high,” for instance issues an award of $100,000, then the maximum the Plaintiff will be paid is $85,000. This process is a reasonable alternative method of resolving civil disputes, especially those matters where the outcome is questionable. It provides some guaranteed recovery to the Plaintiff regardless of the arbitrator’s decision, and also provides some limitations on the exposure to the defendant.
If the alternative dispute resolution (ADR) options are not pursued, or are not successful, trial is the last resort and the topic of my next Blog.