Chocolate chip cookies – good. Oreos – good. Chocolate chip cookies stuffed with Oreos – very good? Depends. Sometimes, combining two effective- or delicious – things is incredibly powerful. Or it’s a mess. Mediation and arbitration are two separate and effective methods for resolving disputes. Today, many businesses are taking advantage of a streamlined process that combines the two. It starts out as a Mediation and if things can not be resolved the Mediator switches hats and become an Arbitrator. What are the pros and cons of pursuing this option? Is med-arb a palatable combination for you?
- Resolution. Standard mediation does not guarantee a resolution; it is possible that parties will still have to settle specific issues with litigation or arbitration. Med-arb offers the assurance of a timely and binding decision, whether it is reached mutually or through arbitration.
- Efficiency. Med-arb has a much smaller timeframe, which means it tends to cost less than separate mediation and arbitration processes. Many are finding that it is more cost-and time-effective.
- Momentum. Rather than moving from a mediator to a separate arbitrator, med-arb offers momentum. You continue working and can leverage the progress you have made rather than starting over, re-stating your cases, etc.
- Change of tone. Knowing that the mediator could be the one making the ultimate decision can dramatically change the tone of mediation. It can make both parties more agreeable and respectful of each other and help avoid extraneous outbursts and extreme positions
- Narrows the scope. Parties narrow the scope of the problem(s) during mediation; if they are “stuck” on one specific issue, they do not have to start over. They can have the arbitrator decide on this one issue. It saves time, money, and energy.
- Change of tone. The change in tone can very well be negative. It can stifle emotion, natural reactions, and conversation that arise in a typical mediation session. This, in turn, can keep trust and good faith from being built between the parties.
- Reluctance to disclose. Another issue that arises is that parties may be reluctant to “show their hands” or disclose information in mediation that may affect them later in arbitration. Again, this can stifle the process and collaborative work that arises from standalone mediation. Even if this information is not technically admissible, and even though the mediator/arbitrator is supposed to be neutral, this fear can keep important information from being disclosed.
- Confidentiality. If the mediator meets with each party separately, as in a caucus, the information discussed is confidential. When the arbitration phase arrives, the neutral is not supposed to use this information, but will this knowledge impact his decision? It well could.
Speed and efficacy are often cited as the most common reasons that businesses pursue med-arb. But here’s another: they are usually successful in reaching a resolution before arbitration. Med-arb as a combined process provides a safety net of sorts, and fortunately, the net is not always needed.