ADR processes as an alternative to litigation in New York

On Behalf of | Dec 16, 2021 | Insurance Coverage Defense |

If you own a large company, it may be inevitable for legal problems to eventually arise. For example, if you own a manufacturing company you could face lawsuits from consumers claiming that your company produced defective products. This is a serious situation, and you may be very concerned about how litigation will affect your company financially. To mitigate the financial harm you could face if you lost at trial, you may want to consider other forms of alternative dispute resolution including mediation, arbitration and neutral evaluation.

What is mediation?

Mediation is an alternative way to resolve a dispute without resorting to litigation. A neutral third-party mediator will facilitate discussions between the two parties in an attempt to reach a mutual agreement out of court. Unlike a judge, a mediator is not a decision-maker. Mediators help the parties communicate with one another. Discussions had in mediation are confidential. Mediation can also be less costly than litigation, and it can often result in a quicker resolution that will allow you to go back to the task of running your business.

What is arbitration?

Arbitration is more formal than mediation but less formal than litigation. Arbitration is overseen by a neutral third-party arbitrator. Each party will make arguments to the arbitrator in favor of their position. They can also submit evidence, although the rules of evidence are generally not as strict as they are in litigation. The arbitrator will consider all arguments and evidence submitted and will issue a decision. If the arbitration is binding, generally the arbitrator’s position is final and there is no appeal. If the arbitration is nonbinding, the parties can move forward with litigation if they do not agree with the arbitrator’s ruling.

What is neutral evaluation?

Neutral evaluation is different than both mediation and arbitration. A neutral evaluator who is an expert in the topic at issue will hear short arguments from both parties. The neutral evaluator will weigh the strengths and weaknesses of each party’s position and will present both parties with what the neutral mediator believes the outcome of litigation will be. This can help parties who are negotiating a resolution out-of-court. The neutral evaluator can even provide guidance and settlement assistance if the parties agree to allow the neutral evaluator to do so.

Alternative dispute resolution may save time and money

Mediation, arbitration and neutral evaluation are all alternatives to business litigation that in the end may save parties money and time while still allowing them to reach a mutual agreement. Most of the time if alternative dispute resolution processes fail, litigation is still an option. Still, it is good to know that you can save your company money by trying to settle your legal disputes out of court.

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