Updated April 2013
Users:
Anyone who has discretion as to what process will be used for a given dispute: attorneys, business executives, and government officials, but also consumers, divorcing parties, and sometimes citizen groups.
Description:
Negotiation, mediation, arbitration, litigation: it isn't obvious which is most appropriate for a given situation. But negotiation is the starting point: almost always, negotiation must be attempted, and very often, parties return to negotiation in the midst of another process, when one or the other sees a new opportunity or need to talk. The essential strength of negotiation is its flexibility and the fact that it puts control firmly in the hands of the parties.
Mediation is the next most common process because it also leaves control in the hands of the parties, can be relatively quick and economical, and is flexible. Its primary drawbacks are that it adds a step of its own, with associated costs in the form of the parties', the attorneys', and the mediator's time, but does not guarantee finality. Mediation, in many settings, works much more than half the time, but always leaves open the possibility that another process will have to be invoked, because any settlement requires both parties' consent.
Arbitration, under a typical arbitration agreement, does provide finality, together with a degree of choice over the arrangements and over who will decide the matter. Its primary drawbacks are that, like mediation, it requires payment of the neutral and a separate process, and that because an arbitrator must make a decision within the terms of reference he or she is given, the opportunities for creativity and joint gains which negotiation and mediation offer are missing here.
Finally, litigation (typically) costs the most, takes the longest, allows the least control to the parties themselves, and is the most likely procedure to result in a decision that is based more on technical rules than on the "true merits" of the case. Yet it is the only process in which a public forum assesses and perhaps vindicates rights that have been asserted, and the only one which provides for an appeal for a party dissatisfied with an original decision.
Application:
Clients, as well as attorneys and other professional representatives, need to understand at least a little about the range of possibilities for handling any given dispute. Without that understanding, they are in a poor position to assess the advice they are given or to assert what they actually need out of a process.
Links to Related Articles:
Alternative Dispute Resolution (ADR)
When to Arbitrate
When to Mediate
