Ways to Settle Your Dispute Outside of Court

Filing a lawsuit can be challenging, and it may take time to get a court date to resolve your problem. With the help of a lawyer, you may be able to find an alternative way to settle your dispute, or at least consider some alternatives to resolving the matter in front of a judge. These non-court options are known as Alternative Dispute Resolutions (ADRs).

If you are involved in a criminal case or seeking expungement of criminal charges, you need to appear before a judge or apply for expungement with a district attorney. In these cases, ADRs are not viable options. For civil cases, however, there may be several options available for settling your dispute outside of court.

Arbitration

During arbitration, the people involved in a dispute present their cases to an independent third party. This independent person, known as an arbitrator, is not a judge, though the role is similar. After hearing the arguments, an arbitrator makes a decision to settle the dispute, and that decision is legally binding.

Characteristics

Both parties in the dispute select the arbitrator to guarantee that they are independent and impartial. An arbitrator could be any outside individual who both parties agree can make a fair decision. Some retired judges work as arbitrators, and, in some instances, you may want an attorney or law enforcement professional who is familiar with the area related to your dispute. In some cases, the parties select an arbitration tribunal, which consists of one or more arbitrators.

Arbitration is confidential. The arbitrator and the parties involved work in secrecy to resolve the dispute. No external person can know about the process, the evidence presented, or the decision.

Processes

The process starts with the two parties signing an arbitration agreement and selecting an arbitrator. Once the arbitrator agrees to hear the case, the two parties select a neutral location where the hearing will take place.

The next step is adjudication. During this part of the process, each side presents its case to the arbitrator or arbitration tribunal. Adjudication is very similar to arguing a lawsuit in court. The two sides can have legal representation, and the lawyers can call witnesses, present evidence, and cross-examine the other side’s witnesses.

The arbitrator then makes their decision based on the evidence and arguments during adjudication. This decision, the arbitral award, is final and legally binding. Unless one side can provide arbitrator bias or other unfair procedure, neither party can appeal the decision.

Many arbitration cases involve disputes between employees or labor unions and their employers. However, you could technically use arbitration as an alternative dispute resolution for any disagreement.

Limitations

In court, the judge needs to base their verdict on existing law. An arbitrator needs to provide a written reason for their decision, but they do not necessarily have to base their decision on existing precedents. The decision, therefore, could be random.

Furthermore, arbitration can be costly because there are still attorneys involved in the process, and they need to prepare the case. You also may need to cover the cost of the venue or pay the arbitrator for their services.

Collection Agencies

Collection agencies can help businesses and individuals get money owed to them. For providing this service, collection agencies often get a percentage of the money that they collect. This arrangement can be useful because it means you do not have to pay the debt collector until they get a result. However, it also means that you will not get all of the money that the debtor owes.

A collection agency can be a good ADR option for businesses in some cases. However, you need to work with agencies that have the resources and capabilities to meet your needs.

  • Collection agencies often do not accept collection jobs for smaller debts or personal loans to family and friends. Usually, agencies will take jobs where the amount owed is more than the maximum for small claims court cases. Small claims court maximums are between $3,000 and $5,000, depending on the state.
  • If a new customer does not pay invoices or bills, you may wish to hire a collection agency. With a new customer, you do not have the payment history to assess whether they will pay or not.
  • You can also work with a collection agency if you are dealing with a customer with a poor credit score, or someone who has a history of late payments or nonpayment.
  • If the customer denies that they owe the money despite invoices or written agreements, you may wish to hire a collection agency. An agency can also help if your customer makes unfounded complaints about your business as an excuse for not paying.
  • You need to work with a licensed and bonded collection agency, and you would preferably choose one that has access to tracing tools so that they can track down debtors who are actively avoiding them.
  • The agency may also perform background checks and credit checks on the individual. In some cases, the person may be near bankruptcy or have additional debts. In these cases, the debt collectors may inform you that the person is unable to pay. You would either need to wait for bankruptcy proceedings or look into options for offering forgiveness in some way or another to mitigate your losses.

Demand Letters

A demand letter is usually an additional step that a business or individual can take before going to court. The demand letter gives the recipient a chance to avoid a costly and stressful lawsuit by taking specific actions.

Example of a Demand Letter

An effective demand letter needs to contain specific information.

  • A demand letter begins by laying out the request. For example, you ask that the recipient stop infringing on your intellectual property rights, pay money owed to you, or meet contractual obligations.
  • You also need to summarize a history of the dispute, including any past requests or attempts to get satisfaction from the recipient, i.e. previous bills or invoices, emails, letters, or verbal requests.
  • You then need to clearly lay out the steps that the recipient needs to take to satisfy your demands. You need to be as specific as possible and set a deadline for the other party to meet your demands.
  • The letter should then lay out the legal basis for your demand. You can cite any laws or statutes that the other party may be breaking or reference any agreements or contracts.
  • Finally, you should end the demand letter by laying out the steps that you plan to take should the recipient ignore your demands. Usually, you state that this letter provides them with the chance to avoid the next step in the process, which is going to court.

Mediation

During mediation, a neutral third party helps two groups in a dispute find a resolution. The mediator does not make any judgments about the case. Instead, they guide the negotiations so that both parties get a degree of satisfaction when the dispute gets resolved.

  • During mediation, the mediator guides the process. However, the two parties in the dispute are the ones who make decisions about resolution. One of the biggest advantages of mediation is that outcome does not depend on the decisions of a third party.
  • Mediation can save time and money. You pay for the mediator, and the process could take several negotiation sessions. However, you do not have to pay lawyers to prepare a court case, and court cases may take longer than mediation.
  • Mediation can happen in secret. While court cases are open to the public, the information and details of the dispute settlement remain private during and after mediation.
  • Mediation can potentially lead to a situation where both parties are satisfied with the results. In other dispute resolution options, one party wins and the other loses.
  • However, for mediation to be successful, both parties need to be willing participants. If the dispute makes communication and negotiation difficult, then mediation may not be the best option.

A common example of this is an uncontested divorce. Mediation may be used to handle the division of assets without escalating the process and taking it to court. While it does require both parties to be cooperative and consent to the process, it can save time and money compared to a contested divorce.

Negotiations

Another ADR option involves engaging in negotiations. If the two parties are still on speaking terms, they can negotiate with one another directly. Even if the two sides are not willing to engage with each other directly, they may hire attorneys to act as proxies and handle the negotiation.

The two groups may also choose to negotiate via telephone, email, or even text message. Any medium of communication can work for negotiations as long as both parties agree to use it. As with mediation, negotiation requires that both parties be willing to work together.

Online Settlements

Online mediation is an option for some disputes. During online mediation, the two parties and the mediator use a video conferencing service, to engage in negotiations and try to settle their disputes. Online mediation can be more convenient and less expensive than face-to-face ADR options. At the same time, both parties need to be willing participants.

Mediation by telephone may also be an option. It does not require video conferencing software, but it does provide the opportunity for the mediator to measure the responses of participants.

Other online dispute resolution options include online arbitration and online negotiation. These both use video conferencing tools or telephone conferencing to engage in negotiations or presentation the case to an arbitrator.

Although there are several options for settling legal disputes outside of court, it is not always possible to take advantage of these resources without first consulting a lawyer and getting expert insight into the matter at hand. With the right counsel and the right circumstances, it is possible to avoid trial and reach an outcome that both parties can agree to.

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