Which Dispute Resolution option should I choose?

Review how to determine your dispute resolution preference between Arbitration vs. Court Proceeding

Many of the legal documents you’ll create using Plainly Legal™ will include sections to address how you’ll handle the (hopefully) unlikely event that a dispute arises.

Here we'll explain the differences between the two types of dispute resolution.

Arbitration vs. Court

You’ll need to decide whether disputes will be resolved through arbitration or a court proceeding. You probably know what a court proceeding is; that’s where you have a judge (and maybe a jury) decide disputes. Those judges are paid by the government, and the courts are generally open to anyone, although there are some fees and costs that parties have to pay.

Arbitration is a form of private dispute resolution. In arbitration, the parties hire a private person (often a former judge) to decide disputes. While an arbitration has a court-like feel, it is generally more streamlined. The person you select to decide the arbitration has more authority to set rules and decide what evidence to consider. In the United States, parties to a contract have the absolute right to choose that arbitration will be the sole venue for disputes related to that agreement. 

Choosing between Arbitration and Court Proceedings is a business decision you have to make. While particular circumstances will vary, here are some of the general pros and cons of each.

Arbitration’s Advantages:

• Quicker Resolution - Arbitration proceedings will generally move much faster than a court proceeding, so you can put disputes in the past more quickly.

• Less Complicated - The person deciding your arbitration can choose more simplified rules of procedure and evidence, to make things simpler. 

• Privacy - There is no public record of someone filing an arbitration proceeding or of the result.

• Less Expensive (usually) - Although you’ll have to pay the person to serve as the arbitrator, it will generally cost less because the quicker resolution and less complicated nature will mean you’ll spend less on attorneys. 

• Finality - The decision of an arbitrator is very hard to challenge. Outside of exceptional circumstances, the arbitrator’s decision is the final say. 
• Class Action Waiver - For any group program, one of the major benefits of an arbitration clause is that you can require participants to agree that they will bring any claim through an individual arbitration. That means participants can’t team up in a group to bring a single action against you (something that could make a claim financially feasible for them). 

Court Proceeding’s Advantages:

• No Upfront Costs - While a court proceeding might end up costing more over the long run, it avoids the need for you to hire and pay an arbitrator right up front. 

• Jury Decision - While it will depend on the amount in dispute, you will often have the right to have a jury decide a dispute in a court proceeding. This can sometimes be an advantage because it means multiple people are involved in the decision.
• Review of Bad Decisions - Unlike arbitration, a bad decision in a court proceeding can be reviewed on appeal. This review can make decisions a bit more predictable over the longterm.  

While we can’t offer advice on what you should choose, here at Plainly Legal™, we have opted for an arbitration clause for all of our agreements.