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Mediation, Arbitration or Litagation?

Friday, June, 29, 2012





Amy Lieberman, Esq.


Workplace disputes are something that all employers face at some point. The

larger the employer, the more frequently personnel concerns arise, conflicts occur, and

claims or grievances are filed. The issues may become so severe that separation from

employment is considered. On some occasions, the employee may be terminated; other

times, the employee is so upset that he or she resigns and asserts a “constructive

discharge”, claiming that the working conditions were so intolerable that no reasonable

person would have stayed employed.


When preliminary attempts at resolving workplace conflict have failed, human

resource professionals are relied upon to decide the next course of action. Termination or

other appropriate discipline may be imposed. Administrative claims or grievances may

be filed; lawsuits may follow.

Before examining the factors to be considered in choosing which path to take to

resolve a workplace claim or conflict, it is helpful to understand the basics of the different

dispute resolution alternatives.



This is the most traditional, and formal, form of dispute resolution. Litigation is

based on the adversarial trial system, where one side is pitted against the other, and only

one side will prevail. Both parties are usually represented by legal counsel. The matter is

presented in state or federal court, where arguments are made, witnesses testify and are

cross-examined, and documentary evidence is presented. Formal rules of evidence and

procedure are followed. Ultimately, the trier of fact – the judge or the jury – renders a

decision, in accordance with specific applicable law. That decision can be appealed, and

then, appealed even further to a still higher court.



Arbitration is a less formal type of dispute resolution. It is similar to litigation in

several respects: it is an adversarial process, generally involving legal counsel, where

one side is pitted against the other, and only one side will prevail. An arbitrator who is

either appointed by the court, or selected by the parties, will hear the case. Arguments

are made, witnesses testify, and documents are presented, but the process is more

informal in that it occurs in a conference room, instead of a courtroom, and the arbitrator

has some discretion with respect to liberalizing the rules of evidence and procedures.

The arbitrator will then render a decision, which may or may not be binding, depending

on what the parties have agreed to in advance of the hearing.



Mediation is a voluntary process which can be initiated by either party to a

dispute, or their counsel. Unlike a judge or an arbitrator, a mediator, who can be

appointed by a court or administrative agency, or privately selected by the parties, does

not listen to a formal presentation of witnesses and evidence and then impose a decision

on the parties. Instead, a mediator is trained in facilitative skills, and assists the parties to

communicate and negotiate, identify common interests and goals, and resolve underlying

issues so that the parties are able to come to an agreement themselves that each side is

comfortable with. Legal counsel may or may not be involved. The mediator does not

provide legal advice, but may provide the parties with information about the law that the

parties may want to consider in reaching a resolution. Finally, a skilled mediator will

offer creative options and alternatives to assist in resolving the dispute that the parties

may not have previously considered.





When evaluating which dispute resolution method will work best in any given

situation, the following factors should be considered:


1. Cost

Litigation is by far the most costly alternative, and for many, can be costprohibitive.

A typical employment dispute can cost tens to hundreds of thousands

of dollars in attorneys’ fees to take through trial. Discovery is fact-intensive and

can involve many witnesses, adding further costs in lost productivity. Some

cases may involve payment of attorneys’ fees to the prevailing employees as well.

For a large employer, where the budget includes cost of defense for employment

claims, this issue may not be as important as it would to a smaller or mediumsized

employer without a budget for such costs. Arbitration is the next most

costly – discovery still occurs, although it may be limited, and the length of the

hearing is likely to be shorter than a court trial. Mediation is the most informal,

and the least costly, of the alternatives.


2. Time constraints/need for quick resolution

In Maricopa County, it takes on the average of a year and a half to two years to

get to trial. The appellate process will, of course, lengthen the time until final

resolution. Arbitrations can usually be scheduled within a 6-month period, and,

if the parties have agreed, the result can be binding and preclude any appeals.

Mediations do not require extensive discovery, nor do they require as detailed a

preparation as an adversarial process, so sessions can usually be scheduled within

a month.


3. Stress level

The emotional state of the employees, managers and key witnesses involved

should be considered, and an assessment made as to the level of stress that the key

players are able or willing to tolerate. The more formal the procedure, the higher

the stress. (Just ask someone whose ever been personally named in a lawsuit.)

There may be a need for counseling during the process.


4. Need for confidentiality

The need for privacy can be critical. If, for example, there is a claim of sexual

harassment, either the victim or the alleged harasser may not want the fact or the

details of a claim to “go public.” The employer may not wish any negative

publicity which could affect public opinion and possibly have economic or

political repercussions. Other employees who learn about a claim may think

about joining as plaintiffs in a class action. Here, mediation may be the best



5. Setting precedent

This is a relative of the “confidentiality” factor, above. The employer may be

relatively confident in its position, and may want, or need, to set a firm precedent,

or to make a public statement about how it reacts to certain situations. In such a

case, litigation may be the most preferable option.


6. Existence of ongoing relationship

Where the claimant is still employed, there may be a desire to preserve or

improve relationships. This factor could also exist in a business context where

parties are likely to be in contact in the future, even if the current association is

ended. If a positive ongoing relationship is important, mediation is the most

preferable option, where the focus can be on enhanced communication and

preserving relationships.


7. Availability of non-monetary options

When the employee has left the organization and has expressed no desire to

return, in many instances the eventual resolution will likely depend on the

payment of a sum of money. In that case, arbitration or litigation may be

appropriate, since judgments or awards are made in monetary terms. Where other

relief may be available, such as transfers, training, mentoring, use of leave, and

long-term disability, mediation allows for “out-of-the-box” solutions.


8. Likelihood of satisfactory resolution

In some extreme situations, the conflict has become so adversarial that the parties

or their counsel are out of control with little or no likelihood of any willingness to

compromise or reach a negotiated solution. In other situations, the parties have an

unrealistic opinion about their likelihood of success and insist on taking it “all the

way.” While an experienced mediator can provide some useful “reality testing”

in private session, parties who are firmly rooted in principle may only be satisfied

when a judge or jury validates their position.





It is possible to rely on all of the above methods of dispute resolution. Many

employers are turning to mediation as the first step, then proceeding to binding

arbitration. In cases where the arbitration is not binding, the parties can then

proceed to court if they are unhappy with the result.

Even cases that begin in litigation can later turn to arbitration or mediation, where

the parties wish to take a step back to try to resolve the matter in a less adversarial

manner, short of reaching “the courthouse steps.” Each case is different, and

human resource professionals should consult their counsel as to which approach

may work best in any given case.




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