Masonry Magazine November 2002 Page. 44
Legal Advice
Dispute Resolution Methods
By Warren Lutz, Esq.
Washington, D.C.
An article appearing in the October 2002 issue of Masonry examined various claims that may arise in construction disputes. This month I'd like to provide a sequel and discuss the principal methods of resolving such disputes: litigation, arbitration, mediation and negotiation.
Each method enjoys benefits over the others, yet none is ideal for every situation. The best method to resolve any dispute is usually a function of cost, time, complexity of claim, and the willingness of the disputing parties to reach a negotiated settlement.
Litigation
By far, litigation is the most expensive and time-consuming resolution method, involving the retention of a lawyer, the filing of a lawsuit, and the preparation for and conduct of trial and possible appeal. Litigation can benefit the disputing parties by enabling them to obtain considerable information from the opposite side through a broad array of "discovery tools": depositions, document requests, interrogatories and inspection of property among others. Litigants may also subpoena non-parties and ask the court to order persons and firms to disclose information. Further, following the trial a prevailing claimant can use several judicially enforceable measures to collect a judgment through seizure of the losing party's property or wages.
All of these litigation benefits, however, come at a high price. Lawyers, discovery procedures and trials are expensive; delays are frequent; and litigation places significant financial and time burdens on all parties. Many litigants who believe initially that they have a "slam dunk" case are later dismayed to find that they have spent virtually as much or more to litigate their winning case as the amount of damages they recover at trial.
In short, litigation is best for obtaining information to prosecute a complex case and is perhaps the best resolution method for enforcing a court's final judgment, but it is also the most expensive and burdensome method.
Arbitration
An increasing number of claimants are turning to arbitration as a less expensive means of resolving their disputes. Many contracts now include mandatory arbitration provisions, requiring the contracting parties to resort to arbitration should a future dispute arise.
Arbitration typically involves a claimant filing a claim with an arbitration service (e.g. American Arbitration Association), followed by a limited exchange of information by the disputing parties who appear before a neutral decision-making arbitrator, one who may or may not be a lawyer.
Ideally, the arbitrator may be someone knowledgeable about the area of the dispute. During the arbitration the parties present evidence and argument in favor of their respective positions. Thereafter, the arbitrator issues a final, binding, and generally enforceable decision.
Arbitration procedures are typically far more flexible and less onerous than those governing court proceedings, and the extent of discovery, information exchange and trial length is usually far less than in litigation. As a result, the parties are able to receive an arbitrator's decision sooner and less expensively than had they sued in court.
It is now common that a lawsuit in state or federal court may take well over a year to reach trial, and longer again if an appeal is pursued. By contrast, much arbitration can be completed within 90-to-180 days of the commencement of the claim, generally with no appeal permitted. Significantly, most courts will assist the disputing parties enforce an arbitrator's final decision. Thus, arbitration awards, like court decisions, are enforceable.
There are drawbacks, however. While the cost of arbitrating is less than litigating, the costs can still be considerable. What is saved through fewer pre-hearing procedures is offset by the cost of the arbitrator's fee. Whereas litigants do not pay the court for a trial, parties in arbitration generally must pay an hourly or fixed fee for the arbitrator's time to review case materials, preside at an arbitration hearing, and issue a decision.
Further, critics complain that some arbitrators simply "split the baby," a situation in which a compromise decision is rendered despite the merits of the case strongly favoring one side. Many others believe, however, that conscientious arbitrators make timely, efficient decisions based on the facts and applicable law of a case.