Litigation is an expensive and time-consuming process, but sometimes it a necessary one. Some disputes escalate too quickly, involve issues too complex, or concern such vast amounts of money or resources that resolution through the courts is the only realistic option. That said, most of us won’t be involved with extensive litigation regularly but even relatively simple matters, after lawyers and judges are involved, can balloon into runaway trains of expense and stress. That is why alternative dispute resolution options are becoming more popular both in business and personal transactions. Mediation and arbitration are ways to resolve disputes amicably but also save costs, save time, and save business relationships. Any business owner who uses lawsuits as the primary means to solve grievances will find profits quickly fall and business prospects dry up. A local Cleveland business attorney can tell you how install arbitration and/or mediation procedures into employment, business, and contractor agreements so if problems ever do arise, more options will be available to you to resolve the dispute.
What is Mediation?
Mediation is a confidential and non-binding dispute resolution process often used as an alternative to lengthy and expensive lawsuits.
Per the Uniform Mediation Act Section 2(1), mediation is a process in which a mediator facilitates communication and negotiations between parties to assist them in reaching a voluntary agreement regarding their dispute.
Per O.R.C. § 2710.07, mediation is confidential and whatever transpires at mediations isn’t disclosed publicly. Further, statements made at mediation are not admissible as evidence. See Ohio Evidence Rule 408. Statements during mediation are not admissible evidence because public policy is better served if the parties can speak openly and honestly during mediation. Thousands of man hours and millions of dollars are saved by steering disputes out of the court system and resolving them through mediation.
At the conclusion of a successful mediation, mediation agreements are entered into by parties to further solidify and confirm confidentiality and set out the terms of the amicable resolution. Your business attorney can draft one up when the time comes.
Why to Mediate:
Ultimately, it is cheaper and faster to resolve a dispute with mediation than going to court. Further, mediation preserves personal and professional relationships. Litigation and legal complaints are the nuclear option which effectively destroys trust and relationships. Furthermore, you have greater control over the outcome of mediation, unlike litigation. With litigation, the trier of fact, either a judge or jury, decides the case.
With mediation, you have input over the final resolution of the matter, greater availability of creative solutions (non-monetary), can reduce legal expenses and loss of business opportunities and profits. Additionally, privacy is often a major benefit of mediation, legal decisions are publicly accessible and litigation involves more people naturally. Thus, more people means greater likelihood of embarrassing information getting out.
Further, mediation is designed to overcome barriers to communication such as difficult opposing party and difficult opposing counsel. It is much harder for these parties to be stubborn and unrealistic to a licensed mediator, such mediators won’t put up with any horseplay or unconscionable negotiation tactics and are highly motivated to seek and facilitate a quick resolution.
When is the best time to mediate?
At the outset/before a dispute – it may be more successful to “nip it in the bud” because it takes place before the knives of litigation come out, hurting feelings and entrenching conflicting positions.
After partial discovery – may be beneficial to mediate after some discovery because both parties have incurred attorney fees and discovery expenses and, at this point, both parties have a deeper understanding of the relative strength and weaknesses of both sides. Furthermore, the costs incurred so far puts in it perspective for both parties the cost of protracted fighting.
After full discovery, but before trial – at this point it is basically the last chance to mediate before a lengthy, and correspondingly expensive, courtroom battle occurs. Furthermore, this is the last chance for the parties to resolve the dispute themselves before it is handed over to a trier of fact, and who knows what they’ll do. Remember, OJ went to jail for robbery, not murder.
Who attends a mediation?
A person with authority to make binding decisions, for both parties, often a designated agent or attorney. Additionally, others with knowledge of dispute or who are instrumental for final decision, often this means spouses and/or business partners.
What is Arbitration?
Arbitration is a contractual agreement to submit disputes to a third-party neutral for a binding decision. See O.R.C. § 2711. Arbitration occupies the middle ground between mediation and full-blown lawsuit.
Arbitration is an alternative dispute resolution available when a final and binding resolution is needed as quickly and cheaply as possible. The decision of an arbitrator or an arbitration panel is binding and enforceable at law. Lawsuits may be used to enforce the decision if the losing party does not comply. In such a lawsuit, an arbitration decision can be very persuasive evidence to possess. Further, noncompliance to a binding arbitration decision often makes this party liable for the costs of enforcing the decision, that is they have to pay the attorney fees of the innocent party to sue them.
Arbitration is often more beneficial in the business context where the financial stakes are higher. Many businesses operate within the confines of a delicate web of supply and distribution where even a relatively minor and short-term disruption can cause significant damage to on-going operations. Further, in our current age of social media, public perception is more critical than ever before. Thus, embarrassing or unpopular information regarding how a company does business getting out can do more damage and cost more money than the underlying dispute.
Important to note, however, arbitration cannot used to settle disputes concerning ownership or real estate. See O.R.C. § 2711.01(B)(1). However, a local Cleveland area attorney can easily add arbitration provisions to trusts, and such trusts can be funded with real estate. As such, arbitration is available in a widely variety if contexts if an experienced Ohio attorney is used.
An Ohio business attorney is in the best position to advise on the most effective alternative dispute resolution process for you and your situation. We’ve all heard the stories of business owners or owners and customers suing one another over relatively minor sums of money, then at the end of the long lawsuit, the attorney fees dwarf the amount of money that was originally fought over by the parties. Smart and precise use of alternative dispute resolution procedures can save your business thousands of dollars not only for one business deal gone bad, but many times over during the life of your business.
For information on arbitration, mediation, or any other business law matter, contact the attorneys at Baron Law LLC. The author of this blog, Mike Benjamin, can be reached at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at firstname.lastname@example.org.
About the author: Mike E. Benjamin, Esq.
Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at email@example.com.
The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.