How is business mediation different from arbitration and what do you need to know if you are in a business-related dispute?

Mediation and arbitration are separate legal venues designed to help parties in a dispute to find resolution to business disputes without going to a full trial before a California Court.  Most disputes that reach mediation or arbitration involve an underlying lawsuit, and California’s Trial Courts require that the parties undergo a settlement conference and prefer the completion of mediation prior to hearing the case in open Court.

Key Takeaways About How is Business Mediation Different From Arbitration:

• Mediation and arbitration are separate legal venues designed to help parties in a dispute to find resolution to business disputes without going to a full trial before a California Court.
• In business mediation, the parties agree upon an experienced mediator who focuses on the dispute at hand and resolving the issues between the parties.
• The parties are not obligated to agree to all or part of the mediator’s recommendations.  If agreement (or part of one) is reached it is memorialized in a settlement agreement.
• Unlike mediation, where the mediator is working in a more collaborative way, arbitration is a much more structured process designed to give a swift, final decision.
• The difference between business mediation and arbitration is the difference between flexibility and structure, the collaborative and the adversarial, the flexibility to pick and choose your outcome versus having an outcome determined for you.

What is Mediation?

It is important to understand the difference between business mediation and arbitration as they are two completely different legal vehicles.  Business mediation is a private and confidential venue which keeps all of your business and financial information out of the public record.  “What happens in mediation, stays in mediation.”

In business mediation, the parties jointly select a neutral, experienced mediator with relevant subject-matter knowledge and a strong understanding of how similar disputes are typically resolved. The mediator’s role is not to decide the case, but to guide the process in a structured and informed manner.

A well-qualified mediator will:

• Contribute substantial experience with resolving similar business disputes
• Understand the governing legal principles and how courts or arbitrators often view these issues
• Maintain neutrality while facilitating productive dialogue
• Identify and isolate the core issues driving the conflict
• Clarify each party’s position to ensure mutual understanding
• Evaluate the practical strengths and weaknesses of each side’s claims
• Provide perspective on likely litigation outcomes and associated risks
• Propose realistic settlement frameworks based on experience

An effective mediator brings more than process management. They provide informed insight, encourage principled negotiation, and help the parties move from entrenched positions toward practical resolution.

The parties are not obligated to agree to all or part of the mediator’s recommendations.  If agreement is reached it is memorialized in a settlement agreement.  This is often the end of the dispute.  However, it is not an “all or nothing” game.  Mediation is often able to resolve a part or a significant portion of a business dispute, leaving only a portion of the original litigation to be resolved.  In many cases remaining disagreement is resolved after mediation and prior to arbitration and/or trial.  An effective mediator will usually stay in touch with the parties to help them reach a successful resolution.

What is Arbitration?

In business arbitration, each of the parties will put forward a few suggested arbitrators and then work to reach agreement on selecting the arbitrator for their case.  Unlike mediation, where the mediator is working in a more collaborative way, arbitration is a much more structured process designed to give a swift, final decision.  The agreed upon “neutral” or arbitrator is more like a judge.  The arbitrator establishes the process the parties will follow and the timeframes to be observed.

In a business arbitration, the process is similar to a trial, but structured to be streamlined, and the parties will have a resolution imposed. While it follows a legal framework, many procedural layers common in court are intentionally reduced.

A typical arbitration may proceed as follows:

• Each party’s attorney submits written briefs outlining legal arguments and key facts
• The arbitrator establishes all procedures and timelines for the case
• Relevant documents and evidence are exchanged and presented
• Witness testimony is provided, either in person or through sworn statements
• The arbitrator evaluates the record and applicable law
• A final written “award” or “finding” is issued

Unlike a courtroom trial, arbitration is not strictly bound by formal rules of civil procedure. Although elements of the trial process may be incorporated, arbitration generally eliminates:

• Excessive motion practice
• Procedural delay tactics
• Extended discovery battles
• Formal courtroom technicalities

In a binding arbitration, the arbitrator’s decision is final and enforceable. The parties agree in advance to accept the outcome. Judicial review is extremely limited and typically available only in rare circumstances involving proven fraud, corruption, or serious misconduct.

Because the award is usually final, preparation and strategic presentation are critical. Arbitration does not offer multiple opportunities to correct mistakes through appeal. Experienced, proven business arbitration counsel ensures that evidence is organized, arguments are focused, and the client’s position is presented with clarity and authority from the outset.

Arbitration can be non-binding if the parties wish.  Non-binding arbitration may simply provide external input on the strengths and weaknesses of your position prior to an actual trial.  This is becoming much rarer as the whole point of arbitration is usually to get a decision and bring the dispute to an end.

So, How is Business Mediation Different From Arbitration in California?

The difference between business mediation and arbitration is the difference between flexibility and structure, the collaborative and the adversarial, the flexibility to pick and choose your outcome versus having an outcome determined for you.

The legal options of mediation and arbitration can prove to be effective tools, however there are advantages and challenges associated with each.  Why is it important to work with the attorneys at the Watkins Firm for your business dispute, mediation or arbitration?

Pro Tip: “…you bring in former superior court, “Judge Jones,” and he’s looking at us, the lawyers, and he knows BS when he sees it. So he’s going to have (strategies for) controlling the lawyers from over-valuing this dispute and from over-posturing, just being aggressive for the sake of impressing their clients.

And he’s going to go back and forth and have the purpose of settlement on his mind, which is what we both want. I’d say 50% of these cases don’t settle at mediation, but after a good mediation a month or two later, it’ll settle because of the mediation. Some mediators actually call us a month later, when we came so close and say, ‘Dan, what can I do? Do you want me to call the other side?’ I’ll say “yeah, good idea. Call the other side.’ And then he’ll call the other side. And they and their clients have calmed down. They’re relaxed and we’ll settle. We have to get to that 95% somehow. So there’s a lot of different ways using the ADR formula with the court has alternative dispute resolution systems, using them to your benefit. Understanding them gives you the best result in 95% of the cases, which is how they resolve.

Arbitration is when you have an agreement in your contract that says disputes are to be resolved by arbitration and it’s usually quicker and cheaper, but you waive the right to a jury trial and the arbitration process itself can be very expensive. But in the long run, waiting to go to trial for two and a half years and waiting for a judge who has an overburdened docket can be just as risky. So arbitrations are great. They cut to the chase and you really don’t have a lot of time for dramatics. You have to have accurate law and facts when you go in and it’s usually decided by your arbitration brief because the (arbitrator) knows when they see a case that has no merit or has great merit.” – Dan Watkins, Founding Partner

Almost 40 Years of Experience in California Business Mediation and Arbitration

The Watkins Firm brings more than 40 years of service, experience and proven success to your side of the equation.  We approach each client’s unique situation with the client’s best interests at heart, searching for the best possible resolution, often in the shortest period of time and at the least expense.  If you want your business dispute resolved we will work to efficiently to reach a settlement which reflects your goals and objectives in a timely, cost-effective manner. 

If there are substantial interests or matters of principle we are prepared to take any case through negotiation, mediation, arbitration and/or trial if necessary in order to accomplish our client’s objectives.   If you are involved in a business dispute we invite you to review our podcast Episode 11 – Resolving Business Disputes as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.

Meet Daniel Watkins:

Daniel W. Watkins is a true people person who sincerely listens. He cares deeply about what others are going through.  Dan enjoys digging into the facts and finding creative solutions to problems.  He contributes his insights candidly and constructively. 

Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.

Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a trusted litigation strategist and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.

He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.

THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR

Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.

In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.