Devoted to Corporate Attorneys, Corporate Lawyers, and Corporate Counsel

The following  is not meant to be legal advice.

The negatives of arbitration is that there is no recourse if the arbitrator decides incorrectly.  The arbitrator may not know the law in the subject, and relies on the parties to educate him/her.  The parties can appeal the arbitration decision only if there is gross negligence.  This is difficult to prove so usually the parties are stuck with the decision since the arbitration is usually binding.

Though nonbinding arbitration gives an opportunity to assess the other side when preparing for trial, such as seeing how the witnesses perform, nonbinding arbitration does not occur often in employment cases.  This is because there is CA CCP 99.8 or Federal Rule 68.  The judgment acts against the plaintiff when he/she goes to court if the plaintiff does not take the defendant’s offer.  If the plaintiff is not able to get a court award higher than the arbitration award, the plaintiff does not get attorneys’ fees.  Early on in a case, the attorney fees may be low, but as a case goes through trial, the attorneys’ fees get high.  The plaintiff does not want the judgment number out there because it ruins its opportunity to get attorneys’ fees.

Compared to mediation, the mediator does not need to understand the law, but should be able to articulate each side’s position to the other party. 

Alternative dispute resolution mechanisms are governed by local rules.  This is in addition to state or federal laws.  The local rules tell the parties when and where to go through alternative dispute resolution mechanisms.