Mediation vs. Arbitration

In a perfect world there would be no business lawsuits because the parties involved would resolve their differences without resorting to court action.  

At Jacobs & Dodds each of our lawyers has been trying cases for over 30 years. Last year partner Paul Jacobs spent over four months in trial. However, before resorting to litigation, every attempt is made to settle our clients' business disputes before a lawsuit is filed. There are several alternative dispute resolution methods that can be effective in resolving business disputes. The two most common are mediation and arbitration. 


Simply put, a mediator seeks to help parties to develop a shared understanding of the conflict and to work toward building a practical and lasting resolution. Mediation usually does not take place in front of a judge (although it can). Mediation typically takes place before a lawsuit is filed, although mediation can occur during the course of litigation.  

Several different styles of mediation exist . Two of the more common forms are evaluative and transformative. 

Evaluative mediation has an advisory component because the mediator evaluates the strengths and weaknesses of each side's legal position. Transformative mediators do not approach mediation in this manner.

Transformative mediation, in contrast, looks at conflict as a crisis in communication between two or more parties and seeks to help resolve the conflict thereby allowing the parties to overcome their differences. The agreement that arises from this type of mediation occurs as a natural outcome of the resolution of conflict. 

Mediation serves to identify the disputed issues and to generate options that help the parties reach a mutually-satisfactory resolution. If a mediation is successful, the settlement reached is agreed to by all of the parties. This contrasts with litigation, which normally settles the dispute in favor of the party with the strongest legal argument. A judge or jury makes the determination, not the parties.


There is some confusion about the difference between mediation and arbitration. While mediation attempts to resolve business disputes, primarily by defining the dispute and then working to find a practical resolution, arbitration involves the appointment of an arbitrator who listens to the facts concerning the business dispute and then applies the applicable law and renders a decision (award) that may be binding or non-binding on the parties.

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