FREQUENTLY ASKED QUESTIONS ABOUT MEDIATION AND ARBITRATION

IN GENERAL

1. What is Mediation?

Mediation is a confidential and voluntary attempt to settle a dispute, with the aid of a neutral person. The neutral person is called a mediator. The parties to the dispute participate on a voluntary basis. They are free to leave at any time. The mediation process is confidential in the sense that anything said orally or in documents is not admissible in a court of law. This is meant to encourage the frank, open discussions by the parties of their particular points of view, all with the goal of settlement.

The best outcome of a Mediation is the settlement of the dispute. If there is a settlement, it must be reduced to writing in order to be enforceable.

If there is no settlement, the dispute continues. Sometimes, it may settle in the near future, as a direct result of the Mediation. Most mediators continue to monitor any case that does not settle at the Mediation and do everything they can to assist the parties in reaching settlement.

2. What is Arbitration?

Arbitration is the submission of a dispute to a neutral person who issues an arbitration award. The neutral person is called an arbitrator. Generally, an arbitration award is final, binding and non-appealable. It can be enforced in a court of law, like any other judgment from the court.

Arbitrations are governed by whatever rules that the parties have agreed to use. These may include rules of the American Arbitration Association or the Judicial Arbitration and Mediation Services (JAMS). In the absence of an agreement, they are governed in California by the default provisions found in Code of Civil Procedure 1280 et seq.

3. What is the difference between Mediation and Arbitration?

As noted above, Mediation is the attempt to settle a case. Arbitration is not an attempt to settle a case. Rather it is the process of deciding the case. In Arbitration, another person, the arbitrator, issues a decision which is called an Arbitration Award. In Mediation, the mediator does not issue a decision or award but simply helps the parties resolve their dispute.

Mediation is like a settlement conference. Arbitration is like a trial. In Mediation, the parties control the outcome, as they alone possess the power to reach an agreement. In Arbitration, the arbitrator controls the outcome, as he or she alone possesses the power to issue an award.

4. Does it cost money to go to Mediation or to Arbitration?

Yes. Mediations and Arbitrations are private methods of resolving disputes. The individuals who serve as mediators and arbitrators are private individuals who are in business. They charge for their services, much like a lawyer charges for his or her services. They operate outside of the court system and Mediations and Arbitrations are often called ADR or Alternative Dispute Resolution.

The cost of the mediator and arbitrator is a private obligation of each of the parties. Mediators and arbitrators are free to charge whatever they desire and once the parties and lawyers have agreed to pay that amount of money, it becomes their obligation.

5. What are the advantages of Mediation and Arbitration over the court system?

In general, Mediation and Arbitration are quicker, cheaper and more efficient methods of resolving legal disputes. They allow the parties and their lawyers to determine when the case will be settled or determined instead of being subject to the unpredictable court calendar. They allow the parties to select the individual who will help with settlement or will make the decision, instead of being assigned to a judge who may not be familiar with their type of case.

6. Do I have to have a lawyer to participate in a Mediation or Arbitration?

No, you do not have to have a lawyer. It may not be feasible to hire a lawyer, if the dollar amount in dispute is small. Nonetheless, if at all possible, it is best to use a lawyer, as he or she is familiar with the process and can guide you along.

MEDIATION

7. Can I force another party to mediate a case if the other party does not agree to Mediation?

No, the other party must agree. As a practical matter, even if the other party attends but really does not want to participate, it does the first party little good. At its core, Mediation is the voluntary meeting of the parties to a dispute. It requires their agreement to participate in Mediation, as well as their good will and willingness to compromise.

8. Are some mediators better suited to handle certain types of cases?

It is true that some mediators are better suited to handle the same types of cases that they handled as lawyers. That having been said, the skill of a mediator is not so much knowledge of a particular area of the law as knowledge of the settlement process and the methods of achieving settlement. Therefore, there are many good mediators who are quite successful in settling cases in areas in which they have never practiced law.

The key in choosing a mediator is the experience, training, reputation and skill set that the individual mediator brings to the table. The best mediators are those who listen attentively to both sides of the case and make every attempt to really understand the case, before they offer any opinion as to possible settlement options. These are the kinds of mediators who are most successful in bringing people together and assisting the parties in the settlement of their dispute.

9. What should I do to prepare for Mediation?

Thorough preparation for mediation is critical. This means learning as much about the facts of the dispute as possible. This also means learning about the other side of the dispute. This is usually done through formal discovery, such as interrogatories, site visits and depositions. It can also mean hiring an expert to render an opinion on the merits of one side or the other.

After learning about the case, it is a wise idea to prepare and share a Mediation Brief with the mediator and the other side. This allows all parties to learn your position and to make best use of the time at the Mediation.

Often the mediator will talk to the lawyers ahead of the case to learn about anything not covered in the Mediation Brief. Again, this allows the best use of time at the Mediation.

The parties and lawyers should be certain to set aside all of the time necessary for the actual Mediation. This usually means a full day. Nothing else should be scheduled during this time. There should be no interruptions for phone calls for other business. Of critical importance is the actual, physical presence of all people with full authority to resolve the case. It is rarely productive to send an agent or someone who only has partial authority. It is unfair to the process and to the other party.

10. Is Mediation successful if it occurs at the beginning of a case, before discovery?

Some cases do settle at the very beginning of the case and before discovery. Usually, the lawyers are very experienced and they can predict with some degree of accuracy what the discovery will show. They are able to guide their clients to a settlement based on their years of experience. An experienced mediator can do the same. The advantage of Mediation at the beginning of a case is the tremendous savings of money for discovery and for attorneys' fees.

Even if a case does not settle at the beginning, sometimes the parties can at least agree on a limited amount of discovery that they will perform in order to return to Mediation for further sessions.

11. What actually happens at the Mediation?

The Mediation usually takes place at the mediator's office or some other neutral site. The parties and their lawyers meet in one room, each sitting on opposite sides of the table. The mediator sits at one end of the table. This is called the general session. There are rare times when a general session is not productive and this step is omitted.

The mediator begins the general session with an explanation of the process and a brief understanding of the case, based upon the mediation briefs. Then the mediator calls on the lawyers for each side to add whatever each thinks is important. Also, the parties are free to say whatever they want. Whatever the lawyers and the parties say at the general session is inadmissible in court, so they are encouraged to speak freely and not to hold back. During this phase, the mediator is trying to learn as much about the case as possible. At all times, it is important to remain civil with the other side no matter the nature of the dispute.

After awhile, the parties go to separate rooms for private sessions with the mediator. The mediator usually spends the remainder of the Mediation visiting each party in private sessions. There is an additional layer of confidentiality in these sessions because nothing said to the mediator in these private sessions is repeated to the other side, without the express approval of the party and his or her lawyer. During these private sessions, the mediator will work with each party to discuss the relative merits of the case. Eventually, a party agrees to an amount of money that is offered to the other party for settlement of the case. Frequently, the numbers mentioned at the beginning of the Mediation are not very close to the number that will finally settle the case, but the process needs to start somewhere. It is frequently said that the starting numbers of the parties are not really offers of settlement but, instead are signals being sent to the other side.

After the exchange of these offers or "signals," the parties usually get more serious, especially if they see the other party working to compromise and if they see that settlement may be possible at some middle number. Eventually, the parties might come to an agreement on an amount of money and terms upon which they can settle the case. At that point, the parties sign a written agreement to this effect. The Mediation is over and all that remains is to carry out the terms of the settlement, e.g., payment within 30 days by cashier's check, delivered to the office of the plaintiff's lawyer.

The lawyers then notify the court and the trial date and all further proceedings are canceled. The case is over. Because settlement is so often the result of Mediation, it is true that Mediation becomes the parties' actual "day in court."

12. Can experts be used at Mediation?

Yes, experts can be used in several ways and can be very helpful at Mediation. First, experts can express an opinion in front of the other side, effectively giving the other side a preview of the case that will be presented later in court or arbitration if it does not settle. This can be very effective, especially in cases that are largely expert-driven.

Second, experts can meet and talk among themselves in front of the parties and their lawyers to see if they can agree on any of the disputed issues.

Third, experts can be used only in private sessions, thereby helping the mediator to understand the case but not giving away information to the other side, prior to trial or arbitration. This is the typical use of experts in Mediation.

Fourth, experts can be used by preparing reports which are used at the mediation, without the physical presence of the expert himself or herself. Although not as powerful as an appearance by the expert at Mediation, the use of the expert's report can be quite useful.

13. Are there different kinds of mediators?

Yes, there are two main types of mediators, i.e., facilitators and evaluators. Facilitators are more "hands-off," spending their time assisting the parties to come to an agreement and working to keep the parties talking. Evaluators are more "hands-on," offering opinions of the value of the case.

Some mediators combine both types and serve both as facilitators and evaluators. They might work more as facilitators at the beginning of the Mediation and work more as evaluators toward the end of the Mediation.

Regardless of the type of mediator, most of the experienced mediators know that settlement is a difficult process and that persistence in achieving the end result is necessary. Therefore, they are willing to spend whatever time and energy is required to that end. Frequently, an apparent impasse is only the beginning of an effective mediator's work at Mediation.

14. What is a mediator's proposal?

A mediator's proposal is one method of bringing the parties to an agreement when they are at impasse. The mediator gives each party privately his or her opinion of the amount of money, for which the mediator believes the case can and should settle. If both parties agree to the mediator's proposal, the case settles. If only one party agrees, the other party is not told of this agreement, thereby protecting the agreeing party's bargaining position.

A mediator's proposal sometimes allows the parties to settle a case, where they are truly stymied and are unwilling to suggest further compromises. It is not used that often and most mediators much prefer not to use a mediator's proposal but prefer that the parties themselves exchange offers and demands, thereby reaching agreement on the basis of their own suggested numbers. However, in appropriate cases, it can be a very useful tool.

15. What are my chances of settlement at Mediation?

Ordinarily, the chances of settlement at mediation are very good. Most private Mediations do result in settlement and most good mediators enjoy very high rates of settlement. The chances of settlement increase dramatically, if both sides enter the Mediation with open minds and a willingness to compromise. The most important single piece of advice that most people can follow is to simply listen to the other side and to attempt to understand the case from the other side's viewpoint.

Even where there is an impasse, the mediator has several methods available to bring about settlement, especially if the parties are willing to continue the process. Over time, parties with good will and a desire to settle will eventually arrive at agreeable terms of settlement. But the parties need to "invest" their time and energy in the process.

16. Is settlement at Mediation always better than going to court or arbitration?

Yes, studies have shown that in the vast majority of cases, a settlement at mediation is almost always better than going to court and taking one's chances on the result. These studies have compared the last offers of settlement with the actual result in numerous cases and have found that for the most part, both plaintiffs and defendants are better served by settlement.

The simple fact is that nothing is guaranteed in court or in arbitration. No lawyer can give positive assurance of a particular result in court or in arbitration because that lawyer really does not know what will happen. A lawyer can give an educated opinion, for sure. But the beauty of Mediation is that the parties control the outcome of the case and they know the result, as opposed to giving control to someone else, such as a jury, a judge or an arbitrator, and not knowing the result until the very end.

17. What happens if we don't settle at Mediation?

If there is no settlement at Mediation, the parties remain in exactly the same position they were when the Mediation began. The mediator usually stays in contact with the parties or their lawyers, to see if settlement can still be achieved after the Mediation. The opportunity or climate for settlement may have been improved by a Mediation, even if it is unsuccessful, at first.

Also, there are cases when it is important for certain information to be exchanged or certain discovery to take place. Once that occurs, the parties may return to Mediation for further sessions.

18. Does a settlement have to be in writing?

Yes, a settlement has to be in writing in order to be enforceable. For this reason, most mediators insist that the parties sign a written agreement before leaving the Mediation. This may take some time, but it is time well spent. As a practical rule, mediators often suggest that the parties come prepared with a form of settlement agreement, leaving blank the areas of dispute to be discussed. This saves much time and gives the parties some degree of assurance that they have already thought of possible legal issues they want covered in the settlement agreement.

ARBITRATION

19. How does one become an arbitrator?

Arbitrators are usually individuals who have received special training in how to conduct Arbitrations. For example, organizations such as the American Arbitration Association offer specific training to the members of their Panel of Arbitrators. Frequently, but not always, arbitrators have participated in Arbitrations as lawyers and have seen the process from that perspective, prior to becoming arbitrators. Also, some arbitrators are retired judges. Almost all arbitrators today are dedicated individuals who have chosen this pursuit as a career.

20. How do I choose an arbitrator?

The best thing to do is to find out who is currently serving as an arbitrator in a geographical area. This should be followed by gathering as much information as possible, by consulting websites, by researching legal information sources and by talking to others. Also, the parties and their lawyers could agree with each other to talk jointly and directly to the prospective arbitrators, regarding their qualifications, reputation and experience. The parties and lawyers should not talk separately, or ex parte, with a prospective arbitrator, unless the other side agrees. In any case, the arbitrator is bound to disclose any such contact with the other party.

Having chosen an arbitrator, the next thing is to obtain from the arbitrator a disclosure of all known contacts between the arbitrator and the two sides and their lawyers within the last five years, as required by law. California's disclosure requirements are quite extensive. This disclosure might divulge additional information that is worth pursuing.

The goal is to find an objective and fair individual who understands the nature of the dispute and has a reputation for issuing well-reasoned decisions, based on the facts and law.

21. Can I force another party to arbitrate a case if the other party does not agree to arbitrate?

Arbitration is contractual in nature an depends on the agreement of the parties. Further, arbitration requires an agreement in writing in California. Lacking a written agreement, one can rarely force another party to participate in arbitration. This kind of dispute is settled in court by way of a petition to compel arbitration.

On the other hand, if the other party has agreed in writing to arbitrate a case but simply refuses to participate, an arbitrator can proceed with the arbitration and issue an award, much the same as a default hearing in court.

22. Are some arbitrators betters suited to handled certain types of Arbitration?

Yes, some arbitrators are particularly well-versed in one area of the law or another. For example, an arbitrator specializing in business cases might not be well-suited to handle a divorce. An arbitrator specializing in personal injury cases might not be well-suited to handle a business dispute.

It is always important to find out in advance what kind of cases a particular arbitrator is best suited to handle. That information should be readily available on the arbitrator's website or by talking to others.

23. What should I do to prepare for Arbitration?

It is very important to be thoroughly prepared for Arbitration. This means being as prepared as one would be if going to trial. Among other things, this would include investigation of the facts and interviewing witnesses. If permitted, it would also be helpful to depose witnesses. Also, a party may want to retain experts to give opinions on the value of one's case or the value of the opposing party's case.

Also, it is important to prepare all exhibits that a party intends to use at the Arbitration and organize them in a binder or other type of folder, copies to the other side and to the arbitrator. The preparation of an arbitration brief is very important.

24. What actually happens at the Arbitration hearing?

The Arbitration usually takes place in a lawyer's office or at the neutral arbitrator's office. The parties all meet in one room. The arbitrator sits at one end of the table and the parties sit on opposite sides of the same table. Witnesses are called, sworn and give testimony. Sometimes a court reporter will be present to take down everything that is said at the Arbitration.

At the Arbitration, the normal rules of evidence are relaxed. For example, the hearsay rule is not normally enforced, although the arbitrator still wants to know that the evidence is trustworthy. Also, the rules on direct and cross-examination are relaxed, allowing for the most efficient presentation of testimony at the Arbitration. Witnesses are frequently called out of order, in order to accommodate schedules. The Arbitration may go longer one day and shorter another day, depending on who is available to testify.

The Arbitration is conducted in a more informal setting than a trial and the parties may take whatever breaks during the day and at lunch that they deem appropriate. This allows the lawyers to continue some of their normal business affairs at their offices.

25. Is it true that arbitrators usually "split the baby" and only award half of whatever is asked?

No, studies have shown that arbitrators do not "split the baby." This may well have been the outcome of arbitrations in times past, but today, most arbitrators approach each case individually and render an honest and sincere award based on the facts and law, without regard to whether one party gets all, some or none of the relief requested.

26. Are there different types of Arbitrations?

Yes, there are several types of Arbitrations. The normal type is where the arbitrator listens to the evidence and issues an award, addressing all issues submitted for decision. The arbitrator is free to award any type of relief or remedy that the parties have agreed to and that is allowed by law. Typically, the arbitrator awards or denies the award of money from one side to the other. But other kinds of relief may be requested and can be awarded, such as an accounting or order to do something, if allowed by the agreement of the parties.

There is also "baseball arbitration," where the arbitrator is bound to award only one of two amounts of money. It is not used commonly in business disputes.

There is "high-low arbitration," where the arbitrator cannot award more than a set amount and less than a set amount. These set amounts are usually determined by the parties ahead of time and may not even be shared with the arbitrator. But this method of Arbitration does give the parties some assurance that the outcome will not be higher or lower than a certain range.

There is partial arbitration, where the arbitrator only decides certain issues, leaving the remaining issues unresolved and subject to possible settlement by the parties themselves. This is frequently used in cases where there is a thorny legal issue that needs to be decided. Once decided, the parties are then more able to settle the case on their own, sometime using Mediation.

27. When will the arbitrator issue the award?

Usually, the award is issued within 30 days of the date when the case if submitted. During that time, the arbitrator reviews the evidence, including notes of testimony from witnesses and any documents that have been offered and admitted in evidence.

The award is issued in writing and should address each and every issue that the parties have submitted to the arbitrator for decision.

Sometimes, the parties agree that certain issues, such as attorneys' fee and/or costs, shall be decided after the award is issued. In that case, an additional award will be issued.

28. What can I do if I don't agree with the arbitration award?

The first thing to do is to notify the arbitrator of your disagreement. Sometimes, there has been a misunderstanding or mistake that can be easily fixed. Other times, the disagreement is simply that, i.e., a disagreement. In simple terms, the arbitrator sees the case differently than you do. In most cases, there is one party that is more satisfied with the result than the other. It is the nature of the process. But simply being unhappy with the result is not a basis for changing an award.

Once an award becomes final, it is very difficult to change an award. However, there is a court process to correct or vacate an Arbitration award. This process requires the use of a lawyer.


FOR MORE INFORMATION OR ANSWERS TO OTHER QUESTIONS, please contact Ken Malovos by phone or e-mail.