What is arbitration?

Arbitration is becoming more and more commonplace as a method of resolving legal disputes outside of the courtroom. Arbitration clauses are prevalent in many types of agreements people enter into these days, such as employment, insurance, credit cards, finance, and cell phone contracts. These clauses contractually obligate people to work out disputes through arbitration.

However, we recognize many consumers and others who enter into these agreements may not understand the basics or may not even be aware they signed a contract with an arbitration clause. Still, arbitration can be used at any time as a method of alternative dispute resolution if both parties agree. Whether voluntary or mandatory, arbitration is similar to a trial, and thus, a Morgan and Morgan personal injury lawyer on your side can help immensely.

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How Does Arbitration Work?

Arbitration can take on many forms to resolve disputes between two parties. Usually, the complainant will notify the other party concerning the intent to dispute and the reasoning behind it. Just like any other legal proceedings, the other party will usually have time to respond, arbitrators will be selected, and the hearing will take place.

There may be one arbitrator or a panel, and how the arbitrator(s) is selected may be outlined in the agreement. The rules for arbitration can be straightforward or complex. It's essential to review any document that was signed to understand what restrictions will be imposed. The personal injury lawyers at Morgan and Morgan who handle arbitration can provide useful support in these matters.

Arbitration, in many ways, mirrors a courtroom trial. You will see the evidence presented, legal theories argued, examination, and cross-examination of witnesses, for example. However, arbitration varies from a courtroom trial because many elements are simplified or restricted to expedite the process. The arbitrators will evaluate what they are presented with and will deliver a decision within a specified timeframe. Their findings may be binding or non-binding, depending on the contractual agreement.

What Is Mandatory Arbitration?

When a dispute arises between two parties that have a mandatory arbitration clause in an agreement, the parties must submit their disputes to an arbitrator and are bound by the rules of the clause. A local court then enforces the findings. However, some arbitration clauses are far more complex and can dictate where the arbitration will take place, how the arbitrators are selected, who pays attorney's fees, and whether the resolution will be kept confidential. Fortunately, sexual harassment or assault claims are no longer eligible to be resolved through arbitration. Individuals may have their day in court due to the Ending Forced Arbitration of Sexual Assault Harassment Act passed in March 2022.

What Is the Difference Between Binding and Non-Binding Arbitration?

If you sign a contract that has a binding arbitration clause, the decision made by the arbitrator is final except under circumstances of fraud or abuse of power. If your agreement has a non-binding arbitration clause, you can dismiss the arbitrator's findings and pursue a court case. Non-binding arbitration is often used as a bellwether for parties to see how the dispute would end up should a trial become necessary. The goal is to come to some sort of settlement before taking it before a judge and jury. However, when entering a non-binding arbitration proceeding, you must understand the legal ramifications. For example, the language on the agreement may say that if you accept the settlement, it is final.

Who Pays for Arbitrators?

A significant downside to arbitration clauses is that both parties are frequently responsible for paying a filing fee which is typically based upon the total amount of the claim. Many arbitrators are retired lawyers, judges, and even professionals with some expertise in particular fields. Their fees can start at $1000, preventing some claimants from attempting to redress wrongs. However, some courts have concluded that unconscionable contractual provisions that require parties of limited means to pay high fees simply to address the wrongdoings of the other party need to be curtailed. Some states have enacted codes and standards to deal with inequities and even allow court trials to determine if a party has the financial means to pay arbitration costs.

What Are Some Advantages of Using Arbitration to Resolve Disputes?

While mandatory arbitration may be a bitter pill to swallow for some, there are some advantages, such as:

  • There's usually a mutual agreement on the choice of an arbitrator
  • Disputes are resolved quicker than a court trial
  • The cost of arbitration is less expensive than hiring an expert witness for a court trial
  • Arbitration proceedings and findings are usually confidential
  • Low options for appeals, so the dispute is finalized

What Are the Disadvantages of Using Arbitration to Resolve Disputes?

  • Both sides relinquish the option for an appeal
  • If the amount of money in question is on the lower end, but the matter is complicated, it may not justify the cost of arbitration
  • Arbitrators may consider evidence that a court trial would consider inadmissible
  • The discovery process is limited, which makes preparing for counterarguments more challenging
  • Mandatory arbitration forces the hand of claimants
  • Arbitrators may consider "apparent fairness" instead of strictly adhering to the law

Working With a Morgan and Morgan Personal Injury Lawyer

You’ve asked, "What is arbitration?" If you still aren't sure if you need an attorney, you might consider the following guidelines. If your claim is under $10,000, you probably will do okay on your own. If it's more, you may want to consider getting some legal help. Suppose you are in dispute with a company or organization. In that case, it's almost assured they will have a lawyer on their side to represent them during the arbitration. So should you. Our fee is free unless we win, and you can contact us today for a no-cost case evaluation.