The Differences Between Litigation And Arbitration

People tend to avoid civil litigation at all costs because it can be expensive, time-consuming, and hard to predict. No one is certain of the outcome until the foreman of the jury hands the paper to the judge, who will read the decision out loud.

Today, many use alternative ways to settle a dispute, such as arbitration, which has become increasingly popular. The biggest attraction to this method is getting an immediate resolution to a business dispute. Often, the decision is binding, with little chance of an appeal ever taking place.

Many employee contracts include a mandatory arbitration clause that stipulates an arbitrator will resolve all work-related disputes. If you’re in the midst of negotiating a contract, many colleagues will stress to include a clause into any agreement. It is important to understand the differences between arbitration and litigation before you may have to choose one of these dispute resolution methods.

What are litigation and arbitration?

Arbitration is a closed format for parties to settle a civil dispute by agreeing to have an independent third party consider the evidence and render a decision that is binding upon both parties. In larger arbitration cases, there may be a group of arbitrators that will hear both sides before making a binding decision. Arbitrations often proceed similar to litigation, with both parties offering witnesses and other evidence.

Litigation is a standard legal process where a judge or jury renders the decision on the parties’ dispute inside a public courtroom. In Texas, the judge is bound to follow the Texas Rules of Evidence in determining what evidence is or is not allowed to be seen by the fact-finder.

The primary differences between litigation and arbitration

One of the biggest differences between arbitration and litigation is that an arbitration hearing is done in a private setting and provides some amount of control to the parties. Only the parties and the independent arbitrator are required to attend each hearing. This format becomes a huge advantage once the arbitrator hands out a decision, as both sides must agree to make the outcome public. In addition, the parties and the arbitrator can generally control how evidence will be handled, allowing for more flexibility than in a courtroom.

All civil litigation proceedings are formal and controlled by statutory and procedural rules inside a courtroom. The evidence submitted and testimony provided are available for public consumption. Sometimes, both sides might try to negotiate a settlement before moving forward with a trial to prevent any negative public relations consequences.

The other main difference is that there is basically no right to appeal an adverse decision after an arbitration. In litigation, the losing party can attempt to appeal the fact-finder’s decision to the controlling court of appeals, which often adds significant time before the litigation is complete.

The cost differences between litigation and arbitration

Arbitration hearings are generally quicker than litigation, as the parties and the arbitrator have more flexibility in scheduling a final hearing. Civil litigation often takes longer before a case is tried because the court has control over its own docket, and civil cases are usually scheduled secondarily to criminal matters.

The cost of an arbitration, however, is generally significantly higher because the parties are generally responsible for paying the arbitrator’s fee. This fee is often several thousand dollars, and many arbitration proceedings require the parties to pay a significant portion of the arbitration fee up front.

Brown & Fortunato can help your business with litigation or arbitration. Our team of Litigation Attorneys has experience in advising and representing a wide variety of organizations. Call us today at (806) 345-6300 or Contact Us by email to learn more about our Practice Areas. You can also visit us in person at 905 S. Fillmore, Suite 400 in Amarillo, Texas.