As part of Nixon Peabody's recent virtual CLE Week, our M&A and Corporate Transactions Group and the Litigation Group came together to offer their perspectives when faced with the age-old question of "Do I mediate, litigate, or arbitrate?" Here are key themes from our presentation, along with what to watch out for when faced with these decisions.
- One size does not fit all — mediation and arbitration suit certain industries and certain disputes better than others. For example, disputes concerning an ongoing business relationship are best resolved in mediation, which is less adversarial than litigation.
- Confidentiality— mediation and arbitration offer a private, usually confidential process for resolving disputes.
- Efficiency — arbitration is often faster and cheaper than litigation, but it all depends on what the parties agree to.
- "An ounce of prevention is worth a pound of cure" — alternative dispute resolution (ADR) is what you make it. Businesses that anticipate potential litigation with partners or customers are wise to design an ADR clause that suits their purposes and provides them with added protections, such as a class action waiver, choice of venue and law clause, or limitations on discovery and forms of relief.
- Collateral documents may require mediation or arbitration, even when you do not include an ADR clause in the primary contract.
- Enforce your ADR rights early in a dispute or you may lose them. You cannot make a feint toward a lawsuit and then think mediation and arbitration will still be available.
- If someone files a lawsuit in violation of an ADR clause, you may have (depending on the state) a limited amount of time to move to stay litigation and enforce mediation or arbitration.