Setting Up 5 Arbitration Terms Right Can Encourage a Settlement Outside of Court

Setting Up 5 Arbitration Terms Right Can Encourage a Settlement Outside of Court
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One of the big problems with personal injury cases is that they can take a long time to settle. Why? Even if a party knows it is responsible for an injury, why would it not just settle and avoid trial? There are a variety of reasons but particularly with businesses delay works to the advantage of the business model regardless of injury types (vehicle, dog bite, slip and fall etc.). Insurance companies, for example, deal with personal injuries a lot and have a vested interest in delay. Witnesses’ memories go old, statutes of limitations can run out (the deadline when a lawsuit for an injury has to be filed), evidence can get lost, a delay can pressure a plaintiff to take a smaller settlement and more. No injuries or damages get paid until there actually is an agreement or judgment. The longer a company delays the cost, the easier of a situation it may find down the road with changing conditions. For the injured party, however, delays only make the injury suffered worse as medical bills pile up, loss of work time takes effect on a paycheck, and damaged property can’t be replaced quickly. Where a trial is likely to take years, an out of court option could be a better way to go: arbitration.

Here are 5 steps that can instead make a settlement happen faster via arbitration.

  1. The benefit of arbitration for both parties is that the protracted, long process of a traditional civil trial is shortened considerably. However, both parties involved, the plaintiff and defendant, need to be in agreement that the arbitration will go forward. One party can’t force an arbitration on the other without a voluntary agreement to waive one’s right to trial. There are two types of arbitration, binding and non-binding. The first is more powerful and the second only works if both the parties agree to the results (which can be less common and less used).
  2. Assuming an arbitration is agreed to, who the arbitrating judge will be and who pays the fees matter a lot. Someone has to select the arbitrator and pay for the hearing to happen. This is a key factor in achieving a settlement favorable for a party because the arbitrator is literally the decision-maker in a binding arbitration. While both parties will ultimately want a say in the matter if the arbitration is being agreed to at the courthouse steps, the arbitrator can be chosen ahead of time via a contractual relationship if a party is smart enough to insert the term for arbitration and details and obtain a contract approval for the future. Many companies use this option with consumers to avoid trial if a service dispute comes up after the fact. If an arbitrator has to be agreed upon mutually, the best approach then is to use a third party arbitration services like JAMS for example, who provides retired judges as arbitrators as an objective decider.
  3. The next big decision is what type of evidence format will be allowed. The big reason regular trials take so long is due to the need to listen through various witness statements and cross-examinations. Parties can agree to limited evidence, such as documentation on paper, to truncate the process and get to the heart of the matter versus injection people’s opinions. This approach can be advantageous when the matter is very straightfoward in documents and witness statements are nothing more than hearsay or opinion-making. Again, however, the parties need to agree on the approach, so it can take some negotiating to work out the evidence limitations that will apply. It’s still worth the time and trouble when a dispute can be spelled out very clearly with a focused review.
  4. Further, family and friends who could be a problem in a trial with too much opinion can be eliminated from being witnesses in an arbitration. The trial process is an ugly battle of trying to discredit the other side in front of a jury. Many a deposition has occurred with people torn to bits verbally as parties seek to damage the other’s appearance in court, oftentimes having nothing much to do with the heart of the case. With arbitration, parties can streamline the process and hearing to just what is the issue of the case, saving everyone a whole lot of grief and protecting a party from an uncontrollable witness’ outbursts.
  5. Finally, by making sure an arbitration is binding, there is no ability for the other party to then run off and go back to court. Instead, by agreement, the parties have legally committed to the decision of an arbitration judge. The regular trial court won’t break this commitment easily. As a result, if an arbitration is going to go down a pretty obvious path, many arbitration judges make it clear to the parties when a settlement may be the better approach prior to a decision being made that is final. That too can be a big incentive to pressure a settlement quickly before the arbiter does the deciding for everyone.
All the above can help a case get to settlement better and faster but keeping the parties aiming towards resolution and removing the need to fight and argue. Instead, the arbitration process encourages and pushes resolution, especially when the clear factors of a case will lead an arbiter official to a very easy decision otherwise.

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