Med-Arb
{4 minutes to read} There was a time when arbitration was hailed as the sliced bread of the dispute resolution world. Arbitration would be faster and cheaper than litigation, and more tailored to the needs of the parties. You could have experts in the field decide matters. Plus, it was private. As time went on, it lost some of its luster. Arbitration could be somewhat faster, but only somewhat. If there was a panel of three arbitrators, the fees could mount up, and scheduling could be difficult. The needs of the parties? Well, certainly if your side prevailed. But one of the cheaper, faster-selling points of arbitration was that decisions were final and binding. The losing side could not appeal.
Mediation seems to be moving up in the sliced bread pantheon. IMHO, mediation really is faster and cheaper than arbitration and can be tailored to meet parties’ needs more than arbitration or litigation. But not all mediations are successful. At that point, the parties can always proceed with the litigation, or they can agree to finish up with an arbitration. Sometimes parties agree to a hybrid Med-Arb process whereby they agree to first mediate and then continue on to arbitration if the mediation is not successful.
Med-Arb has been around a long time and can be a useful adjunct to mediation. Even “unsuccessful” mediations usually serve a purpose. They can narrow issues and significantly narrow discovery, which creates enormous savings of time and money. If a matter has to proceed to arbitration, what’s left may be efficiently addressed. In addition, a mediation may be partially successful, so even though a matter is not finally resolved, what’s left to be resolved is less than if the entire matter had simply gone through the litigation or arbitration process. If the parties agree to use the mediator as the arbitrator, this can speed up the process even further since there may be little left for the parties to do before the mediator-arbitrator can render a decision. The mediator-arbitrator already knows the facts and the parties’ positions, and may even know what might work best for everyone.
However, using the mediator as the arbitrator in a med-arb can present some problems. A mediator will often have had confidential discussions with parties during the mediation process. He or she may know things a party would not have divulged to a neutral fact-finder. Some people therefore think it is unethical for an individual who has served as a mediator to also then serve as an arbitrator in the same matter. A mediator may come to like one side more than another and therefore be less than fully neutral (though this can happen in the courtroom as well).
Med-Arb seems to work well in different areas. It is often used in construction cases where the parties want to try to resolve disputes quickly and if they can’t resolve all issues in mediation, find that tying up unresolved issues through arbitration can bring a useful finality. There have been discussions about using Med-Arb in divorce matters. Presumably one would not want a mediator/arbitrator making custody decisions. But deciding valuation issues – how much is a house or family business worth, what contributions were made, what is or is not marital property might lend themselves to this format.
What has your experience been with Med-Arb? Where has it worked? Or not?
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Gary Shaffer Shaffer MediationGary@ShafferMediation.com |