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Judge Mark Frankel Explains the Difference Between Mediation and Arbitration 

 As a legal consultant specializing in alternate methods of settling business and commercial disputes, Judge Mark Frankel knows the many benefits of not proceeding to trial. When both entities take advantage of this window of opportunity, even before a lawsuit is filed, they will typically reach an agreeable settlement or resolution.

Arbitration or mediation can save clients large sums of money and a lot of valuable time. The cost of going before a jury and/or judge can range and depend on what state you live in, the expertise of and fees charged by your attorney, along with ancillary costs like a private investigator, forensic testing, and expert witnesses if needed.  In addition, both mediation and arbitration take place in a private setting where there is no opportunity for public scrutiny.  

Mark Frankel performs both as an arbitrator and as a mediator for legal disputes between business entities and/or individuals ranging from licensing to real estate, probate, or trademark infringement to shareholder disagreements or commercial contracts. Knowing the difference between mediation and arbitration can help anyone choose the right legal path to take when faced with a dispute or legal challenge.

Mediation and Arbitration

Alternate Dispute Resolution

Before entering into a legal contract with a business partner, Judge Mark Frankel suggests that each side put in writing in advance how business and financial disputes will attempt to be resolved – either through arbitration or by mediation.

What is arbitration?

When commercial business disagreements are remedied by legal arbitration, a formal legal process will be followed involving the clients and their attorney(s). Frankel explains that arbitration is a step down from the formality of court proceedings. Therefore, the arbitrator you select should be a qualified legal professional.

The arbitrator or arbitration panel has the power to resolve the dispute in a legally binding fashion, and they are basically acting as a judge. They will listen closely to the facts and examine all the evidence before rendering a decision and an award. When you go before an arbitrator, both parties testify under oath.  Once an arbitrator renders an arbitration award, that award can be reduced to a judicially enforceable judgment.  

Benefits of arbitration

Since arbitration is held in the same professional manner as a courtroom event, both parties avoid any public emotional revelations and/or public spectacles. There are many benefits of arbitration. It is a much faster, less complicated, less expensive, and more efficient process when compared to courtroom proceedings.  You should be aware that the process is not only binding but final as well, with very little to no opportunity to appeal an adverse decision.  

The arbitrator acts as an impartial judge and puts an end to the dispute without filing pretrial motions and discovery papers, or other ancillary court proceedings.

Suppose both parties desire a legal end to a business dispute without dealing with a backlogged and often unpredictable court system. In that case, arbitration hearings are convenient and lead to a private and confidential resolution.

What does a mediator do?

Frankel suggests a mediator as a less-structured, more informal solution to legal disputes. The mediator will help both parties define the disputed issues and understand what may be best for the interests of both sides. During mediation, both parties can vent how they feel, tell their side of the story, and engage in solving the problem creatively and together.

While not as formally structured as arbitration, the mediator still acts as an independent, third-party professional whose goal is to move both parties to settle the business dispute in a mutually-agreed fashion.  If desired, the mediator may offer his or her opinion on the strength of a legal position or the viability of a settlement offer in a constructive manner and in aid of a settlement.  

Neither party can be absolutely certain that mediation will solve the business dispute because each can refuse to negotiate or be forced to accept the other side’s proposals or the mediator’s suggestions. This level of control by both parties can be seen as either an advantage or a disadvantage. In the end, both parties still retain control over the ultimate settlement of the dispute when mediation is chosen.

When to choose mediation

If you desire to preserve the business relationship, then mediation can be an advantageous way of settling disputes, says Judge Mark Frankel. The conflict of litigation or arbitration may often destroy business partnerships and leave both parties with unresolved feelings and/or concerns. Mediation tends to preserve business relationships because the proceedings are based on an open discourse and a problem-solving model.

Choose mediation when you want to avoid a direct and serious confrontation with the other party on financial disputes or business concerns. It is not uncommon for business stakeholders to feel uncomfortable confronting a perceived injustice. Mediation can be the proper approach when contracts are unclear, or one party feels they may have been taken advantage of.

Judge Frankel believes each party should consider both mediation and arbitration options before deciding on one or the other. A general rule of thumb to follow is when a matter has escalated to a more severe or complex disagreement and an ongoing business relationship is no longer feasible, then choose arbitration. Mediation is the best path to take when you simply need help sorting out a business issue, and one of your main goals is to preserve the business relationship.

No matter which type of alternate dispute resolution you decide upon, try to focus only on the facts, be clear and concise with your statements, and stay focused on the issue at hand. 

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