July 30, 2015
While litigation sounds technical, it boils down to resolving a dispute. That’s it. Simple in theory, but as these disputes become more intricate, so does the process. Child custody issues, property ownership rights or disputes over large sums of money add both an emotional layer and make the nuances a little trickier. In order to create boundaries and outline processes, we have applied rules around how we approach resolving disputes.
In legalese it comes down to litigation.
The term litigation is often associated with the court system, but in reality it applies to a wide scope of legal matters. Seller misrepresentations in real estate, breaches of contract, contested divorcees and eviction proceedings are all examples of disputes that may end up in litigation.
The good news is that there are three different options to resolve a dispute, including one that don’t involve a trial.
This is a solid first step prior to the costly litigation or arbitration alternatives.
Mediation is where the two disagreeing parties present their case to a third party known as a mediator. The mediator is usually an attorney with experience in that area of law in dispute or a retired judge. The mediator is then tasked with the job of helping them come to an agreement.
If the two parties are successful and reach a agreement, the details are put into a settlement agreement. Once signed, that’s game over. The issue is completely resolved. In California experienced legal counsel will include a Civil Code Section 1542 Waiver to ensure the parties will be forever barred from litigating the disputed issues and any unknown or unforeseen issues.
I’m not one for long, costly proceedings if they aren’t needed. That’s why I always build in a mediation clause into contracts that I draft for clients. Often times, I find cases I was sure would involve a drawn out court trial wrapped up by sitting down with a mediator. To counter that, cases I expected to end in a settlement at mediation, moved up the litigation ladder. Either way, it’s a smart place to start resolving your issues.
An important nuance of building mediation into a contract is to link the requirement of mediation to the payment of attorney fees and costs. If a party fails to mediate the dispute, and they prevail at trial or arbitration, they will be denied the ability to recover their attorney fees and costs. This is a powerful hammer to motivate people to attempt mediation before the more costly options of arbitration or trial before a judge or jury.
Mediation isn’t the perfect cure. For starters, the mediator doesn’t have a lot of power in this situation. They can’t make either party do anything; they are merely there to facilitate the conversation and present the risks and possible problems in their case. That being said, this is a viable option that often sidesteps expensive court battles.
If you and the opposing party don’t come to a resolution in mediation, there is no contractual obligation or anything binding that can be done. From here, unresolved disputes escalate to arbitration or trial.
From mediation, one of the next steps can be arbitration. While still not in the courtroom, it has several similarities.
First, the decision here is binding. The decision from the arbitrator is final, to the extent that they file an action in superior court to make the ruling a judgment. As for the proceedings, there will be oral testimonies parties, third party witnesses and expert witnesses. Depending on the agreement discovery may or may not be allowed.
Typically the arbitrator selection is outlined in a contract. This can be a single arbitrator, or a panel. My preference is where each party chooses an arbitrator, then the two arbitrators pick a third one.
You’ll find, particularly when working with larger corporations or franchisors, that they tend to favor arbitration. This is twofold. One, the details never become public. Everything remains out of the eye of the public, including the documents and discovery. If to the parties go to court, the court files are open to the public for review. Two, this process doesn’t have the backlog of the courts. Most times, you see a faster decision. Very few people enjoy dragging out the process if they don’t have to.
The one downfall of this binding decision is that you don’t have any appeal rights. For example, if the arbitrator didn’t follow the letter of the law and allowed findings that shouldn’t be presented for consideration. You’re stuck. That decision is final.
The other challenge is limitations, particularly around discovery. The rules can also be a little looser here. With a less designed legal process sometimes you can spend more time and money on issues that are procedurally codified by statutes. .
Ah, the last one. Full on litigation in court.
Here you have two options. You can either pursue a bench trial or a jury trial. However, a few case types default automatically to a bench trial. Typically, these are equity matters in which the Law requires the judge to decide the matter.
There are a variety of factors that determine your litigation preference. They typically revolve around measuring your odds of success in one over the other. For instance, say you are assigned a judge your attorney has worked with before. If they believe you will get a fair trial with that judge, then a bench trial looks very appealing. You may also have a client that may not appeal to a jury, and so you elect to have a bench trial.
The same logic applies to a jury trial. If you believe a jury will be sympathetic to your cause, that might be the better route. Everyone has biases, and juries tend to be harder to predict.
The courtroom has very specific procedures and rules. From the code of civil procedure to strict guidelines about discovery, this is the most regulated way to resolve a dispute.
The backlog epidemic in the courts is a real thing. Disputes can drag out for years navigating the legal system. Then, you add the option for appeals. This can be a long process.
As mentioned, when you go to court all details become public record. If a speedy settlement behind closed doors is your goal, this isn’t your option.
It’s a reality of life that we will all run into disputes. Whether they end up escalating to the courtroom, well let’s hope you never make it that far. Having a good contract is one of the first preventative measures.
If you are in a situation where you are pursuing litigation or want to create a contract to prevent it, let me help.