The image of standing before a judge or jury to settle a civil dispute is so commonplace, we often overlook other alternatives our legal system provides. While litigation refers to what you would traditionally think of when going through the motions of a lawsuit – filing a complaint, attending hearings, going through jury selection, attending trial, waiting on a verdict, appeals – there is a less formal, more flexible approach to conflict resolution called arbitration. Arbitration is when a plaintiff and defendant present their case to a neutral third party, the arbitrator, in a closed environment, who reviews evidence and hears testimony before making an official ruling. While this may sound similar to a trial by judge, there are some significant differences which we will cover later.

The optimal choice between litigation or arbitration all depends on the circumstances. We will go over the purpose and structure of each process to give you a better idea of the one that will suit you best.

What is Litigation?

As previously mentioned, litigation is when legal disputes are resolved through the court. During these procedures, both parties present their cases before a judge or jury. This framework is the standard of the U.S. justice system to rectify all civil and criminal conflicts. For many parties, however, this “standard” is a last resort, as the many steps involved from beginning to end can be burdensome for all.

The typical litigation process can be broken into these stages:

  • Filing the lawsuit. The plaintiff in a civil suit is the party who feels they have been wronged. Once they gather their evidence and conduct their analysis, they file a formal complaint to the court, outlining the legal basis for their claim. The defendant of the lawsuit is served with a copy of the complaint along with a summons to appear in court.

  • Discovery. In this phase, both parties exchange any relevant documents or evidence. Parties may also conduct depositions, where witnesses are sworn in and questioned under oath.

  • Trial. If the parties fail to settle their dispute out of court, the case will go to trial. During the trial, both attorneys present their arguments with evidence and attempt to persuade the judge or jury to rule in their client’s favor. The judge or jury will then present their final verdict.

  • Post-trial. After the trial has concluded, the losing side can file an appeal to challenge the court’s ruling. This is not a second chance at a trial, but the raising of specific concerns regarding how the trial was conducted. If the appeal fails to overturn the verdict, the winning party can take steps to acquire what they were awarded by the court, such as monetary damages.

What is Arbitration?

Unlike litigation, arbitration is done behind closed doors, and happens when the plaintiff and defendant agree that a neutral third party will decide the fate of their predicament. This third party is called an arbitrator. Arbitrators typically have significant experience in civil law, or are experts in a field closely tied to the case they are arbitrating.

Qualified arbitrators are commonly provided by these organizations:

  • American Arbitration Association (AAA)

  • Judicial Arbitration and Mediation Services (JAMS)

  • American Health Law Association (AHLA)

This process allows for more flexibility, such as fewer scheduling constraints and the ability for parties to mutually agree on the arbitrator handling their case. The basic structure, however, is the same; each side presents evidence to support their claims in an effort to win a favorable ruling from the arbitrator, similar to how they would in front of a judge or jury.

The typical steps involved are as follows:

  • Agreement to arbitrate: Parties agree to solve their disagreement through arbitration, either by contract or a separate agreement.

  • Selecting arbitrators: Parties pick one or more arbitrators, who are chosen for their expertise and impartiality.

  • Preliminary hearings: Arbitrators hold initial meetings to set rules and timelines.

  • Sharing evidence: Parties exchange relevant documents ahead of the arbitration hearing.

  • Arbitration hearing: Each side presents their case using evidence and witness testimony. Arbitrators can ask questions for clarification.

  • Arbitration award: Arbitrators make a final, legally binding decision, called an award, based on evidence and arguments. It includes the findings, conclusions, and any remedies of the hearing.

  • Enforcement: The award can be enforced in court and has limited grounds for appeal.

When two parties choose arbitration, they are often trying to avoid going through the court altogether. Sometimes, the decision for their dispute to go through arbitration is decided long before a conflict arises. Some contracts have arbitration clauses that stipulates a case cannot be litigated in a court of law, unless both parties agree to waive that provision at a later date.

Advantages and Disadvantages of Litigation

Evidence presented in court needs to pass rigid legal standards to determine if it is relevant and admissible. Each exhibit that attorneys submit is carefully evaluated by officers of the court to determine if it passes these quality checks. This is beneficial for parties who are concerned with evidence being presented against them on questionable grounds. While some evidence may not pass the standards of the courts, they may fall within the guidelines set by a specific arbitrator, who are largely left to make evidence admissibility decisions based on their own judgement.

In litigation, parties have the right to appeal the court’s ruling if they believe significant procedural errors were made during trial. Having this option provides an additional layer of review and the opportunity to correct any perceived injustices.

It is important to consider cases that go through litigation are largely open to the public. Curious observers sitting in the courtroom, court filings distributed through public records requests, and press coverage surrounding high profile cases are all possible scenarios that can disrupt your wish to keep certain events confidential. The closed-door setting of arbitrations is appealing for people who prioritize keeping their legal proceedings private.

Advantages and Disadvantages of Arbitration

As we have mentioned, arbitration is often considered the more flexible alternative to litigation, with less rules and procedures to follow. For one, parties have more control over the schedule and venue of the hearings, rather than being limited to the court’s parameters. There is also the freedom of being able to mutually agree upon arbitrators, and the setting of procedural rules that are worthwhile for both sides to follow.

Arbitration can also be better for resolving complex issues that very few people have the skills and experience to fully understand. This is why, for cases that involve specific industry-related dilemmas, arbitrators are often chosen for their specialized expertise in that industry. This is something you cannot expect to obtain from a career judge or random juror.

The right to appeal the outcome of a litigated case is a great benefit to those who want an additional layer of security when the fairness of a legal proceeding has been thrown off balance. This appeal process, however, is a rare occurrence after someone has chosen to go the arbitration route. If arbitration clauses in contracts allow for appeals, or are silent on the issue, then there may be a path to appeal available. Oftentimes, however, appeals are outright prohibited in arbitration clauses to avoid additional burdens. In addition, the Federal Arbitration Act severely restricts your ability to appeal arbitration decisions in a court of law. Put simply, the act states that if a contract is deemed legally valid, its arbitration clause that restricts appeals is upheld.

Partner with NAEGELI

Deciding whether to choose litigation or arbitration to resolve legal disputes primarily comes down to the level of control you want, the complexity of the issue, and how public or private you want the proceedings to be.

These can be tricky waters to navigate, but whichever path you take, NAEGELI Deposition & Trial can provide a wide range of legal services to assist with your next arbitration, deposition, hearing, or trial. With our esteemed court reporting, legal transcription, videography, interpreting, and trial presentation services, we have the most experienced and highly trained professionals found anywhere in the industry, and tailor our services to fit the needs of your case.

For additional questions, give us a call or contact our in-house support staff here on our website.

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By Marsha Naegeli