Mediation, Arbitration, or Going to Court: Which is Best?

Knowing your options when it comes to settling your case in or out of the court system

If you have found yourself injured because of someone’s negligence, you have a few options in the personal injury case process when it comes to pursuing compensation.

On the one hand, going to court is always an option; however, many choose to settle their compensation amount outside of the court system by using a mediator or an arbitrator. What many do not understand, however, is the difference between these options and which one is best for their particular personal injury case.

Here, we’ll take an in-depth look at these three options for settlement and how you can make a decision for your own case.

General steps to the claims process

After you’ve been injured, you’re faced with the uncertainty of recovery, the piling medical bills, and intense pain and suffering. Compensation can help you toward recovery, but it isn’t a sure fire thing.

Receiving compensation means reaching an insurance settlement with the guilty party’s insurance provider, and this can be easier said than done. Firstly, enough information about your case and evidence of your injuries needs to be gathered in order to know exactly how much compensation you are due.

Once you’ve reached this number, it’s time to submit a demand letter to the responsible party’s insurance company. This should include how the accident happened, the extent of your damages, and how much you are owed in compensation.

The insurance company will likely negotiate with you, and it’s important that you stand your ground until a fair settlement is reached. If you cannot reach a fair settlement in the negotiating process, then you must decide whether to proceed with mediation, arbitration, or going to court. Each has its own set of pros and cons and can help you reach a settlement that fairly assesses your damages.

Mediation

Reaching a stalemate in an insurance negotiation means that you may need to solicit the help of mediation.

This way of reaching an agreement involves an impartial third party (the mediator) that helps both sides reach a reasonable agreement.

Both parties sit down with the mediator and discuss their respective sides of the case; each party also gets to speak to the mediator privately. The mediator then uses the gathered information to persuade the parties to meet in the middle for an amount that the mediator feels is fair considering what’s been presented.

Lawyers can decide also to seek the help of a mediator, or a court could make the use compulsory. Either way, it is not required that a settlement be agreed upon even when a mediator is used; mediators cannot make legally binding contracts.

Mediation is typically quicker and more cost efficient than going to court I a personal injury case.

If a settlement isn’t reached through mediation, there are still other ways to come to an agreement.

Arbitration

Arbitration is similar to mediation in many ways. It is still a means to reaching a settlement outside of the courts; however, the decision made by arbitration is usually binding and must be abided by.

An arbitrator or a panel of arbitrators acts similarly to a judge.

They will review the evidence presented by both parties and come to a decision for how they feel compensation should be awarded.

However, arbitrators have much less restrictions than judges when it comes to making a decision and viewing evidence. For this reason, arbitration is a cheaper and less formal option to a courtroom, but is typically more formal than mediation.

Depending on the details of a particular case, arbitration could be a voluntary decision or made mandatory. Many companies put arbitration clauses in their contracts forcing disputes to be settled in this way rather than going to court. However, arbitration can be voluntary if both parties agree to seek help negotiating terms.

Just as with a mediator, arbitrators will listen to both sides’ arguments. These arguments will include evidence from your case and can even include witnesses.

Unlike a mediator, however, an arbitrator will come to an official decision on how they feel compensation funds should be awarded. That decision can be either binding or nonbinding. If it is binding, you and the other party must abide by the arbitrators’ decision, just as you would with a judge.

It’s possible to repeal an arbitrator’s decision, but unlikely.

If the decision is nonbinding, you have the option to reject the arbitrators’ decision and seek settlement through another means of negotiation, just as you have the right to when using a mediator.

Going to court for your personal injury lawsuit

Mediators and arbitrators do not always lead to settlement. If this is true for you, choosing to go to court may be the best option for your case.

Depending on how much compensation you are seeking, you can proceed to either small claims court or to civil court for damages larger than your state’s limit.

A judge will hear the evidence of both parties, evaluate the claims, and reach a decision that he or she believes is fair under the law. A judge’s ruling is legally binding meaning that the plaintiff and defendant will have to adhere to the decision, even if they aren’t happy with it.

Court decisions are based on presented evidence, so this means that gathering that evidence can take some time and monetary resources. (See How long will my injury claim take?)

For these reasons, the majority of cases are settled outside of court through mediation or arbitration.

Deciding on how to proceed with your personal injury case

Ultimately, how you decide to come to a settlement agreement for your personal injury case is up to you and your legal help.

For most, the risk of losing in court is too high to proceed in that way, and most cases are settled outside of court whether by the help of a mediator or arbitrator or through simple negotiation with the defendant.

If you are having trouble deciding, it’s best to consider your relationship with the defendant, how much you feel you are owed in compensation, and whether or not you are willing to put up costs. Choosing more casual means of reaching settlement, like mediation or arbitration, can save relationships and cost less than court settlements.

However, if the defendant’s insurance company is nowhere close to making a fair offer, or if other settlement methods have failed to make headway, going to court can offer you a final means to reaching a compensation settlement and end a frustrating negotiation process.

It’s important to consult your personal injury lawyer when deciding on how to proceed in negotiation or reaching a settlement.