Any trial lawyer (or client who’s been through one) will tell you that jury trials are risky, expensive and stressful.  Although trial lawyers enjoy the thrill of the battle and the rush that comes with hearing the jury deliver its verdict, taking a case to trial is not always in the client’s best interests.  The trial lawyer has dozens of cases each year; the client, usually just one in a lifetime.  So, rolling the dice with a jury is more risky for the client than the attorney.  Trials often require expert testimony, which is expensive.  Trials are also incredibly stressful events, from the pressure of preparing and testifying all the way through the wait for a verdict.

Because of this risk, expense and stress, Alternative Dispute Resolution (“ADR”), including Mediation and Arbitration, has become a popular venue for resolving disputes.

Mediation

Mediation is a form of ADR which is conducted by a third party, usually a retired judge or very senior and experienced attorney, who tries to bring the parties to a negotiated resolution.  In Mediation, the mediator does not have the power to impose a resolution on the parties.  Instead, the mediator acts as a facilitator who discusses the respective strengths and weaknesses of the case with the parties with the goal of reaching a final resolution.

Traditionally, the parties will submit materials to the mediator in advance of the Mediation session so that the mediator understands what issues are in dispute and the settlement positions of the parties.  The actual Mediation usually starts with a joint session with everyone present so the parties can explain their positions.  Thereafter, the mediator usually puts the parties in separate rooms and travels back and forth between the two to discuss the case and try to negotiate a resolution.

Although Mediation can be costly (the mediator usually commands a significant fee) and there is a possibility that the dispute might not settle because Mediation is non-binding, Mediation has proven to be a very effective means of settling cases.

In my practice, I recently settled a large vehicle accident case through a half day Mediation session.  This saved my client a six-month wait for a jury trial, probably $10,000 in expenses and eliminated the risk of a low jury verdict.

Arbitration

Arbitration is a form of binding ADR in which an arbitrator (again usually retired judge or senior attorney) hears the case and imposes a decision.  Arbitration can occur either because it is required by a contract between the parties or because the parties voluntarily choose to arbitrate rather than proceed to a trial in court.  Some advantages of Arbitration over a trial include convenience for the parties (agreed upon location, date and time of hearing), less formality in the proceedings and finality (usually no appeals are allowed).

The risk of Arbitration as opposed to Mediation is that an arbitrator decides the case rather than tries to negotiate a resolution.  Nevertheless, with Arbitration, the parties can be assured of a swift and, usually, final decision.

In January I resolved an Underinsurance claim through Arbitration.  The hearing took four hours, compared to three days as a jury trial, and the result was extremely fair to my client.  In addition, she really felt like she had the chance to tell her story and had her “day in court.”

High-Low Arbitrations

To reduce the risk of the final decision in an Arbitration, parties often impose “High-Low” parameters.  In a “High-Low” Arbitration, the parties will agree in advance that, regardless of the actual decision of the arbitrator, there will be High and Low parameters within which the award must fall.  If the arbitrator’s award is higher than the agreed upon High number, it will be changed to the High number.  If the arbitrator’s award is lower than the agreed upon Low number, it will be changed to the Low number.  For example, assume that in a Personal Injury case the injured party and insurance company agree that the “High-Low” should be $100,000-$10,000.  In such a case, if the arbitrator’s decision is between those numbers, it stands.  However, if the decision is lower than $10,000, the injured party gets $10,000.  If it’s higher than $100,000, the injured party only gets $100,000.

The advantage of a “High-Low” Arbitration is that it reduces risk.  The disadvantage is that it eliminates the chance of a “home run” victory for either party.

I have a “High-Low” Arbitration scheduled for May.  My client is grateful that she will have her case settled more quickly and in a less nerve-wracking venue compared to a jury trial in the Chester County Courthouse.