Making Use of Mediation and Arbitration to Resolve Business Disputes

Those of us who practice in the areas of business law and business litigation must often acquaint our clients with the stark reality that litigation of business disputes can be expensive and time consuming.

In the appropriate situation, however, there may be less expensive alternatives. More and more, Massachusetts business lawyers and business litigation lawyers are turning to alternative dispute resolution as a vehicle for the resolution of business disputes. It can be much more cost effective, less time consumptive and, perhaps equally important to the business executive, activities can be scheduled to work around his or her needs. Any business executive who has labored through a lengthy court case knows that certain case related activities in Massachusetts (as well as our neighboring states) are scheduled either for the convenience of the court or in accordance with a somewhat rigid set of standards, which cannot always be changed.

But, what is alternative dispute resolution?

While the term "alternative dispute resolution" widely refers to non-court settings for the resolution of disputes, the two customary forms of alternative dispute resolution are mediations and arbitrations. The two are profoundly different from one another.

Mediation is a voluntarily agreed upon procedure, where the parties, typically having been unable to agree to a settlement of a dispute, will seek the intervention of a mediator. The mediator is trained to assist the parties in reaching a fair agreement. The mediation session often occurs at the mediators' office and the parties initially meet together for opening statements of some sort, and then separate to discuss their respective needs and   evaluate offers and counteroffers. The mediator often engages in "shuttle diplomacy," traveling between the two rooms, in an effort to narrow the gap between the parties and assist them in reaching a resolution. A good mediator will be, by turns, the intermediary, evaluator, advisor, chastiser and salesperson. Mediation is often successful, as both parties are usually attending voluntarily, which in itself evidences a will to bring the matter to resolution.

Arbitration, on the other hand, is similar to a court trial before a judge. The parties may agree to submit a dispute to arbitration, or arbitration may be mandated, for instance, by a contract.   In arbitration, each party puts on their respective case and the arbitrator(s) decide the case after hearing the evidence. The formal rules of evidence which govern most courtroom proceedings are typically more relaxed and the proceedings are most often heard in a conference room without a stenographic record. In arbitration the decision is final and can rarely be appealed.

Mediation and arbitration are voluntary. Both parties must agree to submit to alternative dispute resolution. There are two ways in which this may occur. First, the parties may agree at the commencement of a dispute or while it is pending to have it mediated or arbitrated. Oftentimes, the parties will agree to mediation while a court case is ongoing, in order to try to settle a matter, and terminate the litigation. Sometimes the parties will agree to mediation at the request of the judge, and in some instances, the judge will order mediation.  

The second and more common method in business cases is the contractual provision for alternative dispute resolution. Typically a contract between two parties will provide for arbitration of disputes if they should occur, and may also set out the ground rules for the arbitration. For instance, a provision may read: "Any dispute arising from the subject matter of this contract shall be submitted to arbitration before a single arbitrator in Boston, Massachusetts. The arbitration shall be conducted in accordance with the Commercial Dispute Rules of the American Arbitration Association."

Some contracts, however, are more elaborate and actually call for the parties to attend mediation before arbitration.

Should arbitration be mandated by all business contracts? The attorneys of Parker Scheer do not believe this should be the case. The decision as to whether there should be alternative dispute resolution provisions in a contract is an important one and should not merely be considered boilerplate language. For instance, arbitration limits the amount of discovery in which either party may engage   There are certain contracts which may require lengthy performance periods or may deal with complex or document-intensive matters. The benefits of convenience and savings in those situations may be outweighed by the necessity for in-depth discovery if there is a breach of the underlying agreement.

For this reason (and certainly for a host of others) every business should have a skilled business lawyer providing assistance with the negotiation of important contracts. Also, and importantly, in the event of a dispute, it is crucial to insure that your business litigation lawyer is experienced in alternative dispute resolution as well as in court cases.

We, at Parker | Scheer, pride ourselves on our business/corporate practice and our business litigation practice. We were recently recognized by Massachusetts Super Lawyers as a top business litigation practice in Massachusetts. We will be happy to meet with you to discuss your contract needs as well as guide you, in the unfortunate circumstance that you have a claim against you or need to bring one.

Back to top

Contact Parker|Scheer Business Lawyers

For more information on mediation and arbitration, or if you are seeking a Boston business lawyer for any other needs, please contact Barry Scheer. If you prefer, you can also telephone our offices in Boston seven days a week at toll free 866-414-0400.

Related Articles

Parker | Scheer - Boston's premier business lawyers