Alternative Dispute Resolution: What is it?
Arbitration, Mediation, and Settlement Conferences. What are they and what do they mean to our clients?
Arbitration is an Alternative Dispute Resolution (ADR) vehicle that is being used more frequently to resolve legal disputes. In Civil Cases, it is Mandatory for cases involving $50,000 or less in Pima County. The court controls the case, but an arbitrator (lawyer) appointed by the court hears the case and renders a decision. Any party not satisfied with the decision may “appeal’ the award and ask for a jury trial in Superior Court. As the majority of auto policies are written for $50,000 in coverage or less, many cases go to arbitration first. The vast majority of arbitration decisions are not appealed.
Mediation is another ADR vehicle used to resolve a dispute. It is informal, and not binding. Mediations are now mandatory in every Medical Negligence case. The parties agree on a neutral party to mediate the dispute. Using “shuttle diplomacy”, the mediator shuttles from room to room advancing positions for either side, and trying to find common ground. Most mediators are now highly trained, and practice full time as mediators, and no longer practice law. Mediations are often successful but sometimes are not. Once completed and a settlement is reached, the parties sign an agreement to settle and are bound by that agreement. Generally, the parties share the cost of the mediation.
Settlement Conferences are really Mediations on a lesser scale. Years ago, the insurance companies would host “Settlement Days” where claimants and their attorneys would be invited to short conferences to discuss value with a third party and an adjustor, and attempt to come to a value. The insurance company would bear the cost of the “settlement master.” The goal was to settle claims, and reduce inventory. These grew into the more formal Mediation format. Settlement Conferences are rarely used any longer. We still use the term as the term conveys what is actually going to occur, and has a literal meaning. Currently the insurance companies are no longer hosting “Settlement Days” in the format used in the past.
Mediation is a useful tool and is often successful in resolving a dispute. It can save both parties a lot of time and money.
Arbitration is used not only for court cases but in contract disputes. Read your agreement with your credit card company, your broker, or just about any other contractual arrangement. They usually call for arbitration, not lawsuits. A current trend is for nursing homes to ask new patients to sign Arbitration Agreements before being admitted as a patient. These agreements are not required, and the patient has no obligation to sign them, but as admission to a nursing home is generally a stressful and confusing event, most patients do sign them. Once signed, they are enforceable, and any claim against the nursing home has to be arbitrated, not litigated. The pitfall is the nursing home names the arbitration company, and chooses the arbitrator. Because of filing fees and arbitrator compensation, many times the arbitration is more expensive than a trial. Beware of signing arbitration agreements as usually they are not in your best interests.
Arbitration is usually used to resolve Uninsured and Underinsured Motorist disputes. (UM or UIM). They are part of the policy and are enforceable. They are written in favor of the company, not the policy holder. They usually require three arbitrators which is expensive and difficult when it comes to scheduling. Most of the time they are not appealable, but we are seeing appeal provisions sneaking into many policies as the years go by.
The lawyers at the Rockafellow Law Firm understand and work with Arbitration and Mediation on a daily basis. We welcome your call to discuss this if more clarity is required.