Parties to legal disputes often reflexively consider suing one another in litigation. As an alternative, parties can use alternative dispute resolution (“ADR”), including arbitration and mediation. My May 2012 and December 2013 columns discuss mediation, which is a form of facilitated negotiation.

Litigation is a process governed by complicated procedure. A petitioner (or plaintiff) commences a lawsuit by filing a petition in court. The respondent (or defendant) can respond by moving to dismiss the lawsuit or answering the allegations. Parties file motions that ask the court to make rulings.

There is a period of investigation known as “discovery” during which the parties disclose information. After several procedural phases, if the court has not dismissed or decided the case, or if the parties have not settled, there is a trial. Parties can appeal the verdict. Because courts tend to be congested, litigation could potentially last several years and is usually expensive.

As mentioned above, litigation is not the sole process for resolving legal disputes. When parties negotiate contracts, they can include an arbitration clause or sign a separate arbitration agreement. It can identify an organization whose rules will govern the arbitration. Also, the parties may agree to some procedural limitations. As a matter of public policy, courts favor and enforce arbitration provisions. This alleviates some of the congestion in the courts.

Arbitration is less formal and less expensive than litigation. Because the procedural rules are simpler than those used in litigation, arbitration proceedings are quicker. Thus, arbitration may only last several months. Fewer hearings and quicker proceedings result in lower bills and costs.

In arbitration, depending on the rules and amount at stake, one arbitrator or a panel of three arbitrators presides over and decides cases. In litigation, a judge presides, and a judge or jury decides.

Arbitrators can be attorneys or subject matter specialists who have industry experience. I arbitrate commercial matters. My name is included on a list of eligible arbitrators, and parties can select me (and other neutrals) to preside over their case.

Arbitration is private, whereas litigation is a matter of public record. Shortly after the panel of arbitrators is confirmed, the organization arranges a preliminary conference call. The arbitration chairperson leads the call, and parties agree to a variety of deadlines for phases of the case including an in-person hearing that is analogous to a trial.

After the call, the parties’ attorneys handle the case. They rarely contact the organization or arbitrators unless they file papers or if there is a dispute that they cannot resolve between themselves. At any point before or during the hearing, the parties can voluntarily choose to submit the case to mediation to try and negotiate a settlement. It is estimated that 90-95% of matters settle. The in-person hearings usually occur in a conference room of the sponsoring organization.

Arbitration hearings tend to be less formal than court hearings. The rules of evidence are relaxed, and arbitrators can hear witnesses out of order. It is not necessary to have a stenographer. The official record of the case is not publicized.

In litigation, after a court hearing or trial, it may take a judge several months to issue a ruling in the form of a written opinion. Arbitrators may issue a ruling within 30 days, and usually they do not have to formally explain the rationale for their decision.

In litigation, appeals are common. In arbitration, it is practically impossible to win an appeal except in several extraordinary situations. Thus, arbitration awards tend to be final.

 To improve chances of success, parties should retain attorneys familiar with ADR.