Negotiation, Mediation and Arbitration

 

Negotiation and Mediation

 

Mediation is often a great idea often to solve most disputes.  Unfortunately, for most collections cases we handle, it's not as effective.  The reason is that the strengths of mediation don't really apply to invoice cases.  Mediation works because it gets the parties together and a neutral third party will point out the strengths and the weaknesses of each side's case in order to get them to compromise.  For invoice cases, the Plaintiff usually has nothing but strengths in their case and few or even no weaknesses.  The only purpose served by mediating is to convince the plaintiff to take a shave on the claim in order for a check to be written immediately.  This is supposedly in lieu of incurring more attorney's fees fighting.  However, since the claim earns interest as it ages and the attorney's fees incurred are normally recoverable from the other side, there really is very little incentive to negotiate a lesser settlement than the full value of the invoice claim.

 

Now, if the case has turned into a full blown breach of contract dispute, there may, in fact, be weaknesses in the Plaintiff's case.  Then, mediation and the obtaining of a certain result in lieu of gambling on a trial result is often the preferred business choice.  JH&A lawyers have years of experience presenting cases to mediators and negotiating the best, most certain outcomes for the client.

 

Arbitration

 

Many confuse arbitration with mediation.  Arbitration is not a negotiated settlement.  Arbitration is a trial, but with a paid judge not using a government judicial system.

 

JH&A generally recommends avoiding arbitration, if possible.  JH&A (as well as many others in the legal profession) has found through the years that arbitration does not actually provide the benefits marketed.  Arbitration is in fact not generally cheaper than regular courtroom litigation.  The filing fees are more expensive than government courts.  The lawyers have to do the same work as in the courtroom.  So, their fees are generally the same.  The arbitrator has to be paid by the parties.  Arbitration does not generally generate a quicker result.  A well run invoice case can be run in a courtroom in 120-150 days.  The same is true for arbitration.  A breach of contract case can be pushed through in nine months to a year.  The same for arbitration.  Arbitration is supposed to be appeal free and reach a final decision faster.  Being appeal-free in and of itself is not necessarily an advantage if you end up with an arbitrator who, thinking they have the final word, does as they wish rather than follow the law.  Even then, if they go outside their authority to act as granted under the arbitration agreement or the AAA rules, the award can be appealed to a court, vacated and sent back to arbitration to be completely re-done.

 

Nonetheless, clients often find themselves stuck in a mandatory arbitration clause and they must participate.  JH&A lawyers handle these situations regularly and represent the client just as though it was a courtroom breach of contract case.  As this is normally an escalation from sworn account case, JH&A will perform another case evaluation and risk assessment similar to the Pre-Suit Evaluation to assist the client in making the best business decision how to proceed.

 

Again, JH&A does not recommend arbitration and recommends not including any such language in the contracts the clients sign because, more often than not, it mandates that arbitration is the only option to litigate. (You can't go to court.)  If the client needs to sign an arbitration clause, consult JH&A first.  Our lawyers know how to draft the terms defining power and authority of the arbitrator to best meet your business needs.

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