The legal system is vast, and most people will find themselves involved with it at some point in their lives. Any involvement with the justice system can be daunting because the various legal processes are often difficult to understand for individuals who are not familiar with them. Whether you are facing a divorce, starting a new business, or filing a personal injury claim, an experienced attorney can provide resources and support as you navigate your legal journey. There are many different ways that a legal claim can be resolved, but two common legal processes for businesses are litigation and arbitration.
What Is Litigation?
Litigation is a legal process that is used to settle business disputes. Some people use the terms “litigation” and “claim” interchangeably, but they are separate things. A claim or lawsuit is the initial filing of a legal complaint, while litigation includes all the steps required to resolve the dispute at hand.
Litigation can be either civil or commercial. Civil litigation involves disputes between individuals, such as personal injury claims or disputes between landlords and tenants. Commercial or corporate litigation refers to cases involving businesses or corporations rather than individuals. These cases could be class action claims or disputes over a breach of contract.
The Litigation Process
Regardless of the type of litigation required for a specific claim, the legal proceedings will follow the same general pattern. There are six major phases to litigation, although not every case includes all six. The phases of litigation are:
- Pleadings. The first step in the litigation process is the filing of the initial claim. Once the claim has been filed, the other party must respond, usually within a set period of time.
- Discovery. After the claim and response have both been filed, the involved parties will begin collecting and sharing the necessary information to support their case. This is also the phase when experts or witnesses are selected, and all motions are filed.
- Pre-Trial. In many litigation cases, the pre-trial period is an opportunity for the two parties to attempt to settle the claim. Representatives for both parties will meet several times to see if a settlement can be reached. If the meetings are not successful, then the case will continue to trial.
- Trial. The trial provides both sides the opportunity to argue their case in court. Evidence will be presented, witnesses and experts will be examined, and arguments will be made. Trials could either be before a jury or just a judge.
- Verdict and Settlement. Once the trial has concluded, the judge or jury will hand down a verdict. This is the decision about who wins the case and how much the settlement will be.
- Appeal. If one party is dissatisfied with the outcome of the case for whatever reason, they have the option to ask for an appeal. This means that the case will be reevaluated to see if the prior verdict was correct.
What Is Arbitration?
With some conflicts, the parties involved do not want to deal with the courts, so they choose arbitration to resolve their dispute. Arbitration is the process of selecting neutral third parties, called arbitrators, to make a decision. Each party will provide information and evidence to the arbitrators. The evidence will be examined, and a decision will be made. This decision is binding for both parties and cannot typically be appealed.
Litigation vs. Arbitration
Litigation and arbitration are both effective methods of resolving business disputes, but each one is necessary in different circumstances. If a business prefers the dispute to be handled privately, they will often choose arbitration. Arbitration is also a more cost-effective and time-effective option. If, however, an entity is unsure of the outcome and wants to be able to appeal if the case is not decided in their favor, they will likely follow through with litigation. An experienced business attorney can help you better understand which process best fits your case.
FAQs
Q: Is Arbitration Better Than Litigation?
A: There is no clear way to determine if arbitration is inherently better than litigation. Arbitration and litigation are two different legal processes that each serve a distinct purpose. In some situations, arbitration is the better option, while other claims will require a full litigation process. If a business wants to find a way to settle a dispute without the involvement of the courts, then they will likely choose to pursue private arbitration rather than litigation. Which method is “better” will depend on the specifics of the claim.
Q: Is Litigation Cheaper Than Arbitration?
A: No, in most cases, litigation ends up being the more costly option. The process of commercial or corporate litigation is often much longer and more involved. The litigators must invest a significant number of hours in investigation and other legal processes, such as filing motions and selecting experts. This can drive up the cost, particularly if a litigation attorney charges an hourly fee. Arbitration tends to be a less expensive option because the process is more limited and does not require as much committed time.
Q: What Are the Differences Between Litigation, Mediation, and Arbitration?
A: Each of these processes is a way to settle legal disputes, but they are all executed differently. Litigation is a much more involved process that requires the involvement of attorneys, the collection of significant amounts of evidence, and presenting the case before the court. Mediation is the process of bringing in a neutral party to help resolve the issue in everyone’s best interest. Arbitration is when all involved parties share their information with one or more arbitrators, who then determine the outcome of the claim.
Q: What Does It Mean When a Case Goes to Arbitration?
A: When a case goes to arbitration it typically means that the business entities involved did not want the courts involved with the case, but rather wanted the issue resolved privately. In the event of arbitration both parties will submit information and evidence to a third party, referred to as an arbitrator(s). When all the necessary information has been shared the arbitrator(s) will consider all the information they have and make a final decision. This is fully binding for both parties and often cannot be appealed.
With over eight decades of experience, the team at The Myers Law Group can help you determine if litigation or arbitration works for you.