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Tag Archives: arbitration & mediation

FAQs About Business Litigation

What is involved when litigating a business issue?

This depends on the issue. The business owner would follow the same process for business litigation as he or she would for any civil lawsuit, including usually obtaining an attorney, pretrial matters such as motions, possible settlement negotiations, trial, and possibly appeal.

What are some alternatives to litigation?

Businesses often use Alternative Dispute Resolution (ADR) methods. The ADR process usually utilizes arbitration or mediation. These alternatives are attractive because they are often less expensive and more efficient than traditional litigation.

What is the difference between mediation and arbitration?

Mediation is a cooperative process and uses a neutral third party (a mediator) to facilitate consensus building and discussion, in order to reach a mutually satisfactory resolution. Arbitration also employs a neutral third party (an arbitrator), who listens to both sides and makes a decision, which is usually binding.

Is the result of mediation or arbitration binding?

The judgment in arbitration is usually binding on the parties. Often the parties decide prior to the arbitration proceeding that the findings of the arbitrator will be final and legally binding. This agreement is usually formalized by a contract signed by all parties involved. Much less commonly, parties may agree to nonbinding arbitration, viewed as a negotiation technique. Mediation is not binding and the parties, if dissatisfied with the result, can move on to a courtroom proceeding.

Can results from mediation or arbitration be appealed?

Because the result of mediation is nonbinding, the parties can still bring their issues before a judge, although this is not technically an appeal. In the case of binding arbitration, an appeals process may take place if the parties have agreed, before the arbitration begins, to allow one. Generally, the decision of the arbitrator is final and the appellate process is not available.

What is a class-action lawsuit?

A class action is a judicial proceeding where usually one or two named plaintiffs represent a much larger group of plaintiffs. Often, the issue is one where there has been an injury to a large enough group of people that individual litigation would be inefficient.

Can business entities participate in a class action?

Yes. If a business entity has an injury in common with a greater group of plaintiffs that have formed a class, then the business may qualify as a class member.

What is the legal fee arrangement for a class action?

Lawyers are normally paid on a contingency-fee basis in class actions. This means that the lawyer only collects a legal fee if a positive judgment for the plaintiffs is reached. Due to the high costs of class-action lawsuits, generally contingency-fee arrangements are the best option.

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Alternative Dispute Resolution (ADR)

In some instances, a business may want to avoid a complicated and expensive courtroom battle by using instead an alternative dispute resolution (ADR) method. ADR is a way to resolve legal issues without going to court. The two most frequently used forms of ADR, described below, are arbitration and mediation.

If your business is facing a legal battle, contact us to discuss using ADR as an alternative to a traditional lawsuit.

Arbitration

Arbitration employs a neutral third party (an arbitrator) or an arbitration panel to listen to both sides and makes a decision, which is usually binding. The general purpose of arbitration is to provide a forum to resolve issues without having to go to court. The arbitrator acts in a capacity similar to that of a judge.

When two parties enter into a contract, there will often be an arbitration provision requiring that any legal issues arising from the agreement will be resolved in a binding arbitration proceeding rather than litigated in court. These arbitration agreements commonly appear in a variety of contracts, including sales contracts and employment contracts.

Once the arbitrator makes a decision, the parties ordinarily cannot appeal to a higher judicial body. On some occasions, an appeals process may take place if the parties have agreed upon it in the initial arbitration agreement. However, the lack of an appeals process is generally seen as an attractive aspect of binding arbitration.

Arbitration can be either binding or nonbinding. Binding arbitration means that the result has the same legal effect as a court judgment – it is final and legally binding. Nonbinding arbitration means that the results are merely advisory opinions that might aid in the settlement negotiation process. After nonbinding arbitration, each party could still choose to pursue action in court.

Mediation

Mediation is another alternative to resolving civil disputes outside of traditional litigation. The mediation process is less formal than arbitration proceedings or trials. The process of mediation is attractive to businesses because they can avoid court and are able to discuss issues without the procedural constraints of litigation. Mediation functions through dialogue, facilitated by a neutral mediator. The process begins with opening statements and progresses through discussions and private caucuses. At the end of the proceeding, joint negotiations take place, with the mediator offering his or her opinion on the best way to resolve the issues. The opinion, unlike that of the arbitrator, is not legally binding.

Most mediation sessions last no longer than a day. The cost is limited to any charges for the mediator’s service. Many cities have mediation centers, which typically deal with personal and business disputes and provide low-cost services.

Los Angeles – Southern California Business Litigation Attorneys

Rising court costs and time management make alternatives to court attractive for many companies. Through arbitration and mediation agreements, a business can require that issues arising out of a contractual relationship be resolved by an alternative dispute resolution method.

If you are involved in a dispute regarding a business transaction or any aspect of your business, it is best to consult an experienced business attorney to address your particular situation. The attorneys of Stolpman, Krissman, Elber & Silver, LLP, are an excellent resource for information regarding business litigation and can explain your legal options.  Contact us today for advice from one of our experience California business law attorneys.

FAQs About Business Litigation in California

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