Month: May 2014


The Problems with Litigation, Arbitration, and Mediation

By Sam Ventola,

CrossroadsPart I – Litigation

There are three usual methods of resolving disputes – litigation (having the case heard in court), arbitration (having the case decided by a private decision maker), and mediation (agreeing to resolve the dispute with the assistance of a neutral facilitator.

The problem is that none of these methods is ideal. Each of them has drawbacks which prevents it from being an efficient and reliable method to resolve disputes. In the coming days of this blog we will examine each of them, and suggest an alternative to all of them which makes the most sense.

We begin with litigation. Litigation is the “default” method of resolving disputes, meaning that unless the parties agree otherwise somewhere along the way, the issue will be resolved in litigation. Despite that, however litigation comes at a significant cost – and by cost we don’t just mean money.

Make no mistake, the expense of litigation is significant. In fact, litigation expenses are so high that litigation expenses actually end up exceeding the amounts paid or received in litigation cases. A Duke University study for every dollar spent in litigation, forty percent went to paying awards or settlements…. SIXTY PERCENT went to litigation costs!

When we think of litigation costs we think primarily of attorney’s fees, which are huge and getting higher all the time. Remember that when you are paying attorney’s fees , you are not necessarily just making rich lawyers (although many are), you are also paying for overhead , which is substantial. If you see your lawyer has nice offices, plentiful staff, and expensive advertising – bear in mind you are paying for that. Some forms of advertising absorb half or more of your fees.

Also remember this point – when you are paying a lawyer hourly fees, you are counting on that lawyer to act in your interest. It is in the lawyer’s interest, however, to drag the case out as long as possible to let the attorney’s fees total as high as they can. Not all lawyers are dishonest. But when it is in the lawyer’s interest to engage in scorched earth litigation tactics, it makes sense to question whether the lawyer’s advice is actually promoting the lawyer’s interests over yours, even subconsciously. The doctor always believes in his own medicine; it is the same with lawyers.

Attorney’s fees are just the start, though. Litigation costs also include court filing fees, court reporter fees for depositions, expert witness fees, and appeal fees. All of these fees can sometimes equal or exceed the attorney’s fees.

The most significant cost of litigation, however, may not be any of the expenses paid out. The most significant cost may be YOUR TIME. As litigation drags out month after month, you will find that it makes ever increasing demands on your time and attention, destroying your concentration and stress levels in the process.

The assault on your time, wallet and sanity is compounded by the fact that courts have little to no interest in reducing your costs or time commitment. For example, courts will typically set five or more trials all for the same period of time, based on the assumption that most of them will be resolved before the scheduled start. If you find that another case that has been scheduled for the same time is still going and has priority, you will find that your case will suddenly be postponed. Most of the time and expense of preparing for trial will have to be borne again.

For all of these reasons, the litigation process is clearly less than ideal. Can the usual alternatives – arbitration or mediation be considered reliable replacements? Stay tuned in the coming days as we examine each of these alternatives – and in the end suggest a new solution.

 

Sam Ventola has a wide variety of experience in litigation, legal education, and mediation. He has been an attorney on both sides in business litigation, employment disputes, probate litigation, and personal injury cases. In addition to being an attorney, he has been a mediator, hearing officer, labor relations professor, and lecturer on litigation, employment and First Amendment issues. He has also achieved the rating of AV Preeminent® by Martindale Hubbell.