Litigation 101

Mediation and arbitration are two categories of “alternative dispute resolution,” also known as “ADR.” They are part of the ADR family because they are both “alternatives” to a court deciding which party is right and which is wrong.

Beyond that, mediation and arbitration share almost none of the same qualities.

Mediation is a voluntary process where the parties, aided by a trained mediator, try to resolve the dispute. The mediator acts as a neutral and does not decide the case. Instead, the mediator works with the parties, and their counsel if represented, to help them reach an agreement under terms that are mutually acceptable. The goal of mediation is to avoid or resolve litigation, on any terms that the parties choose to be part of the negotiated agreement. Many mediators are attorneys by training, but a legal degree or license to practice is not necessary. Mediation is also confidential. Parties who participate in mediation ordinarily sign an agreement at the beginning of the mediation where they confirm that what they say and learn during a mediation cannot be used in the dispute should litigation continue or become necessary. Many courts offer mediation as a free service, but parties frequently will agree to hire a mediator to help them resolve a dispute.

Arbitration is much more similar to a court proceeding than it is to mediation. The role of an arbitrator is to decide the case, not to help the parties negotiate a settlement. An arbitrator listens to witnesses and reviews documents, just like a jury or a judge, and determines the facts and applies the facts to the law. The decision of an arbitrator is called an “award,” and the award, if not complied with by the losing party, can be converted into and enforced as a court judgment. Arbitration awards can be challenged in court, but on very limited grounds, such as clear bias on the part of the arbitrator or an obvious flaw in the process. Unlike a court decision, an arbitrator’s decision cannot be overturned because the arbitrator got it wrong or made a mistake in the law.

Arbitration is similar to mediation in that the parties have to agree to use the process. The agreement to arbitrate is usually made in advance – the parties’ contract has a provision stating that any dispute will be decided by an arbitrator, not in court. On the other hand, parties more frequently decide to try mediation after the dispute has arisen. Arbitration differs from a court proceeding in several important ways: (1) there is no jury; (2) the arbitrator charges for his or her services (courts have filing fees, but they pale in comparison to arbitrators); (3) discovery tends to be significantly more limited in arbitration than in a court proceeding; (4) arbitration proceedings are private (they take place in an office conference room), not in a courtroom open to the public; and (5) appellate rights are much more limited in arbitration than in court. For all these reasons, a court proceeding ordinarily takes longer than an arbitration proceeding and tends to be less expensive even after including the arbitrator’s fee. Arbitration and mediation are both critical components of the American legal system. They both alleviate the burden on a court system that suffers from a lack of resources. That does not necessarily mean you should automatically use these processes in every dispute. The decision requires careful thought and may not be appropriate in every circumstance.

There are several different avenues for disputes to be resolved.  The most traditional avenue is a court of law.  There are state courts and federal courts.  Most cases are filed in state court because federal courts primarily have jurisdiction only over matters involving federal law (federal question jurisdiction) or matters between citizens of different states in which the amount in controversy exceeds $75,000 (diversity of citizenship jurisdiction).  When in state court, the particular court in which a case is filed depends on the nature of the dispute, the amount in controversy and the location in which the parties reside or conduct business.

Many disputes are not decided by a judge in a court of law.  Contracts often provide that the parties resolve any disputes through binding arbitration.  Arbitration, in a nutshell, is a mechanism by which the parties hire a private individual (or a group of individuals) to decide the dispute, and agree to be bound by the decision of that individual.  There are numerous organizations that coordinate and administer arbitrations, including by supplying a list of proposed arbitrators.  More often than not, arbitration occurs because the contract that governs the parties’ relationship mandates that the dispute be adjudicated in such fashion.  However, even in the absence of a contract containing an arbitration clause, parties may voluntarily agree to submit the matter to an arbitrator rather than a judge.  Some of the advantages and disadvantages of arbitration and the judicial system are discussed below.

In addition to the courts and arbitration, many matters are decided, in at least the first instance, by an administrative agency.  There are many types of disputes that a court of law will not address unless and until administrative remedies are exhausted.  Some of the more common examples are zoning and land use matters, medical malpractice claims, or matters in which a professional license is involved.

The answer to this question (like most in litigation) is “it depends.”

Generally speaking, a case decided by a judge in a court of law will take a minimum of one year.  More often than not, the case will last closer to, or more than, two years.  Some cases last five or more years.  The federal courts typically are more efficient than the state courts because their dockets are smaller in number and the judges usually have more than one law clerk to assist them.  Due to massive budget cuts, most trial court judges inMassachusettsdo not have any law clerks or share a clerk with one or more other judges.  The length of a particular case depends on the complexity of the case, the schedules of counsel, the schedule of the judge, the location of witnesses, the aggressiveness of the parties, and whether it can be decided on an issue of law before trial or only after a jury or judge hears testimony from witnesses.

Arbitration typically, but not always, is shorter in length than an action in court.  An arbitration schedule is established by the lawyers and the arbitrator.  Therefore, the parties have more control over the length of the proceeding than in court.  Depending on the complexity of the case, however, arbitrations similarly can last for several years.

Nearly all disputes, regardless of the forum in which they are pending, settle before a decision is reached.  Settlement can occur at any time in the process.  A host of factors influence whether and when a case settles, from economic (i.e. legal fees, amount in controversy, solvency of the parties) to substantive (likelihood of success) to operational (public relations, business transactions, change in management) to emotional (i.e., the individuals involved want to move on with life or business).   At bottom, most cases settle, but it is extremely difficult to predict when a case will settle and how much work will need to be done in the interim.

It should be noted that activity in most cases is periodic.  There are several phases in each matter (see below), with perhaps considerable periods of inactivity in between each phase.  So a case may last several years from beginning to end, but much of that period may consist of simply waiting for something to happen or someone to act.

Settlement is an agreement between two people to resolve a controversy.  More often than not, the settlement is a resolution that avoids the dispute being decided by a judge or arbitrator.

A common way of describing a settlement is that “both sides go away equally unhappy.”  In other words, each party has a potential risk if the dispute continues, and each decides that the terms of the settlement outweigh the risk of an adverse outcome in the dispute.   A settlement agreement is a type of contract.  The terms are subject to negotiation and drafting.

Most of the time, no.  In other countries (including England) the prevailing party recovers fees from the losing party.  The “American rule,” however, is each party pays its own fees unless a contract provides to the contrary or a statute shifts fees to one of the parties.  Many contracts provide that legal fees will be awarded to the prevailing party or allow only one party to recover the costs of collection.  If you have a dispute under a contract, you should look carefully at the contract to determine if such a provision exists.  The existence or absence of such a provision can significantly influence legal strategy, including the decision whether to bring an action in the first place.  Business owners or managers also should review existing contracts and consult counsel about whether to change the contract to include, eliminate, or alter such a provision.  Many statutes provide for recovery of fees by the prevailing party.  The legislature in certain circumstances has decided for public policy reasons to shift the burden to the losing party.

Mediation is a process by which the parties engage (usually for a fee) an independent third party to facilitate a settlement.  Mediation is often confused with arbitration.  Arbitration is an alternative process to a court deciding who is right and who is wrong.  The decision of an arbitrator is usually binding on the parties and cannot be undone absent certain limited circumstances.  The goal of mediation is to reach a settlement.  It is voluntary and there are strict rules prohibiting anything provided or said in the mediation from being submitted as evidence if the case does not settle.

In some circumstances, a contract will require the parties to participate in mediation before filing in court or making a demand in arbitration.   You should review the contact, if any, to see if the contract contains such a provision.

In short, discovery is the process by which the parties exchange information relevant to the case.  There are many different types of discovery, but the most common types are requests for documents, interrogatories (written questions propounded to the other side, to be answered under oath), and depositions (more on this below).  Discovery requests can be made on the opponent, as well as on individuals or companies that are not parties to the case.  The purpose of discovery is to allow both parties to find out the information that pertains to the dispute.  In theory, there should be no surprises if and when there is a trial, and parties usually are not allowed to use documents they did not share with the other side.  Discovery can be very time consuming and expensive, particularly if the opponent is aggressive and/or uncooperative.  Parties often dispute the proper scope of discovery.  Generally speaking, the permissible scope of discovery is quite broad and you should assume that you will have to turn over everything that you think is relevant to the dispute, and more.   If disagreements arise, courts expect (and require) lawyers to work together to resolve them before they get involved.

A deposition is a process whereby a party is permitted to obtain sworn testimony of an individual whom the party thinks has information relevant to the case.  A deposition takes place in a conference room in a lawyer’s office, and lasts anywhere from 30 minutes to several days, depending on the witness’ importance to the case.  The witness’ testimony is transcribed by a court reporter into a transcript, which the witness can review and correct.  Deposition transcripts are often used during pre-trial motions or at trial to establish certain facts, and also are used to impeach a witness’ credibility at trial.

Call us!  Subpoenas and summonses are court orders that require you to do something within a particular period of time, for example appear in court, appear for a deposition, produce documents or answer a complaint.  There are consequences to ignoring these orders, including being held in contempt of court.  Oftentimes you will be able to adjust the timing of the required response, but it is easier to get an accommodation if you respond right away.  If you ignore it or wait until the last minute to address it, your request for an accommodation may fall on deaf ears.