Why go to court? Featured

7:00pm EDT December 31, 2006

As court dockets swell with caseloads and the cost of litigation climbs steadily higher, parties to a disputed contract increasingly seek an alternative to often lengthy (and, consequently, expensive) trials.

Alternative dispute resolution (ADR), long a feature of California’s legal system, has gained greater prominence during the last 15 years as an effective means of resolving disagreements between aggrieved parties. The benefits to the approach can be significant. These include arriving at a decision far sooner than would occur in a court trial. And, significantly, the ability to present the facts of a case to a subject matter expert — who decides on the merits of a claim — rather than judges or juries whose generalist knowledge could make them unprepared to effectively evaluate the technical features of some lawsuits. Mark Himmelstein, a partner at Newmeyer & Dillion LLP, says that ADRs can offer many advantages to both sides in a dispute.

Smart Business spoke with Himmelstein about how legal issues could be solved without resorting to a trip to the courthouse.

What are some of the key benefits to be gained by using alternative dispute resolution?
One of the most important features of ADR is that it is a cost-effective way to litigate, and, in fact, that is the primary goal of ADR.

Theoretically, you should get to arbitration sooner than you could go to trial because you are not at the mercy of the court’s calendar. You can select an arbitrator who has the time to see you. Also, the discovery process can be streamlined and the hearing itself should be shorter than a jury trial.

Another key feature is that you can select an arbitrator who appeals to both parties, whereas you do not select the judge who will listen to your case. Here, you have the confidence that someone with knowledge of the area in dispute will weigh your argument, that the process will be completed quickly, and that you will receive a just result.

In fact, even if you start litigating in court, many judges today will tell parties in a lawsuit to seek ADR instead of proceeding to trail because they have seen that this method often allows disputes to resolve quickly and in a manner that is satisfactory to both parties.

What is the difference between arbitration and mediation?
A mediation is a non-binding settlement meeting in which the parties informally present their cases to a mediator who does not pronounce judgment; rather, he attempts to assist the parties in arriving at a mutually agreeable resolution. In arbitration, the parties put on evidence formally, witnesses testify, and arbitrators arrive at a binding decision that generally is not appealable.

In many of our firm’s cases, whether we are litigating in court or in arbitration, we counsel our clients to first seek mediation in an attempt to resolve the matter before incurring the expense and the risk of further litigation. And, of course, if the parties agree to a settlement in the mediation, we will make sure that a settlement agreement is immediately signed in front of the mediator, which holds both parties to the terms of the settlement.

Describe an instance when you might want to seek arbitration.
Many contracts contain a clause that requires all disputes to be resolved in arbitration instead of a jury trial. We see this often in purchase and sale agreements, employment agreements and construction contracts. For example, in real estate and construction contracts, disputes concerning breach of a sales contract, defective work or payment issues would be arbitrated. The aggrieved party would initiate an arbitration proceeding instead of filing a complaint in Superior Court.

How does someone go about finding an experienced arbitrator?
Most law firms, including ours, maintain a list of experienced arbitrators and mediators in various fields. Additionally, there are several large independent organizations that offer arbitration services through their list of retired judges, lawyers and subject matter experts.

Importantly, since an effective arbitration agreement must be fair to both sides, most agreements dictate that both parties have to agree on the choice of an arbitrator. The provisions of an arbitration agreement should clearly state that the process will be conducted in a manner that considers each side with equal weight. And, generally speaking, the greater the disparity in the bargaining position of the parties, the more detail must be contained in the agreement.

MARK HIMMELSTEIN is a partner in the Real Estate, Insurance and Litigation Practice in the Orange County office of Newmeyer & Dillion LLP. Reach him at Mark.Himmelstein@ndlf.com or (949) 854-7000.