Because litigation can have a significant impact on a business’ ability to operate effectively, we work with clients involved in disputes to assess their options and make decisions consistent with their objectives and budgets. In many cases, early settlement negotiations, whether formal or informal, are the most economical and efficient avenue toward resolution for all parties. There are several different routes for a business to take, and in this blog, we will outline the two most common avenues.
Arbitration and mediation are alternative dispute resolution (ADR) methods used to resolve conflicts outside of the traditional court system.
Arbitration: Arbitration is a process where a neutral third party, known as an arbitrator or a panel of arbitrators, is chosen by the parties involved to make a binding decision on their dispute. The arbitrator listens to both sides, reviews evidence, and issues a decision, known as an arbitration award. This decision is typically legally binding and enforceable in court, like a court judgment.
Key features of arbitration:
- The decision made by the arbitrator is final and generally cannot be appealed, except in limited circumstances.
- The process can be more formal than mediation, involving rules of evidence and legal representation.
- Parties have less control over the outcome since the arbitrator makes the final decision.
- Arbitration is often used when parties want a resolution that is legally binding and when they want to avoid a lengthy court process.
Mediation: Mediation is a process where a neutral third party, known as a mediator, assists the disputing parties in reaching a mutually acceptable agreement. The mediator does not issue a decision, but rather, acts as a facilitator. A mediator works with parties to explore their interests and guides them toward finding common ground.
Key features of mediation:
- Mediation is typically less formal than arbitration or court proceedings, though many Colorado judges mandate mediation in Colorado district court matters.
- The mediator’s role is to facilitate communication and negotiation, rather than make a formal decision.
- Parties retain control over the final agreement as a mediator does not issue a formal award of decision.
- Mediation is often chosen when parties want to maintain a relationship, preserve confidentiality, and have a more flexible resolution process.
The choice between arbitration and mediation depends on the parties’ goals, the level of control they want over the outcome, and the nature of the dispute.
The attorneys at MLMW regularly represent businesses and individuals in business and contract disputes and are available to act as mediators in formal mediations.