If you run a business in or around Concord long enough, sooner or later a disagreement will land on your desk. A contract issue with a vendor, a conflict with a former employee, a dispute between business partners. When that happens, many people assume the path forward is a lawsuit. However, alternative dispute resolution (“ADR”) mechanisms continue to increase in popularity, and they present opportunities that could help the parties save time, money, and a fair amount of stress. This article will explain the basics of mediation and arbitration, which are the two most common forms of ADR, and how they compare to traditional in-court litigation.
Mediation: A Guided Conversation
Mediation is less formal than litigation or arbitration. A neutral third party, the mediator, serves as a conduit to help the parties talk through their disagreement and try to reach a voluntary settlement. The mediator does not decide who is right, and does not issue a ruling. The mediator’s job is to facilitate communication, help each side understand the other’s position, and look for common ground.
Because mediation is generally voluntary (but see the below point about when it is required under New Hampshire court rules) and non-binding unless the parties reach and sign an agreement, either side can walk away at any point. It tends to be faster and less expensive than the alternatives, and it can preserve relationships better than adversarial processes, which matters if you intend to keep doing business with the other party.
Arbitration: A Private Decision-Maker
Arbitration looks more like a trial, but it happens outside the courthouse. The parties present evidence and arguments to a neutral arbitrator (or a panel), who then issues a decision. Unlike a mediator, an arbitrator has the authority to resolve the dispute. And depending on the agreement between the parties, that decision can be binding, meaning it is enforceable much like a court judgment, and it is typically very difficult to appeal.
Arbitration is often chosen because the parties agreed to it in advance, typically through a clause in a contract. It tends to be faster and more private than litigation. Having said that, arbitration can still be costly, and giving up your right to traditional appellate review in court is a real trade-off worth understanding before you sign a contract with an arbitration provision.
Litigation: The Court System
Litigation is what most people picture when they think of a legal dispute: a case filed in court, overseen by a judge, potentially decided by a jury, with formal rules of evidence and procedure. It offers more robust protections and rights of appeal compared to ADR, but it is also generally the slowest and most expensive of the three options. Moreover, unlike mediation or arbitration, the proceedings are typically public record except in limited circumstances.
Worth Knowing: New Hampshire Requires ADR In Various Circumstances
One important point to note is that the above three pathways—mediation, arbitration, and litigation—are not necessarily exclusive of one another. If your case is filed in New Hampshire Superior Court, the court rules generally do not allow the parties to skip straight to trial. Superior Court Rule 32 requires most civil litigants to participate in an ADR process before the case proceeds to trial, unless the court excuses it. Additionally, for cases filed in New Hampshire small claims court, mediation is required when the amount in dispute is between $5,000 – $10,000.
The Bottom Line
There is no single “best” option, as the right choice depends on the size of the dispute, your relationship with the other party, and how much privacy and control you want over the outcome. But whichever path you take, understanding the differences before a disagreement erupts puts you in a far stronger position to navigate it well.