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Deciding between arbitration and litigation

Depending on the insurance issue you need to defend your company from, it can be difficult to figure out if you and the opposing party should to take your case to court or see an arbitrator. Before you decide, it is important that you weigh the pros and cons of each method and see how much the benefits of one side outweighs the benefits of the other.

Why choose arbitration?

Arbitration is a private option, outside of the courtroom. You will not be part of an open court and the transcripts of the proceedings will not become public. Cases that go public could affect your company’s reputation from the information the opposing side could reveal about you.

Generally, arbitration is less costly than litigation as your prices are for the arbitrator and attorney fees. Court costs are significantly more expensive. In addition to court costs, lawyers take a more active role in litigation.

The proceedings in an arbitration trial are more straightforward and do not require the numerous formal processes seen in a courtroom such as multiple hearings or detailed paperwork. It often goes by much quicker than a court case and only takes a few months whereas you could wait months or years for the court to hear your case.

Your company and the opposing party select the arbitrator to remove any personal bias. The judge and jury in a courtroom are randomized and cannot be chosen by either of the parties.

Why choose litigation?

It may benefit you to have your case heard in court to have multiple people decide between the parties. While the arbitrator tries to determine the verdict in an equitable fashion, it might feel fairer if your case was with multiple people that have different perspectives and input.

Litigation can cost less than arbitration if the case is too complex. Having multiple parties and lawyers in in an arbitration case could prolong the process as one person must process all the arguments and claims. The arbitrator has to attempt to keep the hearing fair without the advantage of distinguished court processes such as subpoenas and dispositions that could help reach a definitive conclusion. If the arbitration fails and has to be followed up with a court case, then it was a significant waste of money and time.

If you feel the verdict is unfair, there is little your company can do in an arbitration to counter it. A binding arbitration in particular means that neither party has the right to an appeal. You also lack the ability to cross-examine witnesses, arbitrators can consider information or pieces of evidence that the judge and jury could reject at a trial, and your attorney has more limits on what they can do.

The final nature of arbitration and the limiting legal maneuvers, in comparison to litigation, is controversial among any law firms.

Which one is best for you?

It all comes down to your preference, but the best way to decide is based on your case’s content. Some issues might be resolved better privately and quickly while others require a bigger audience and everything the legal system can offer. Research how past cases similar to yours have been solved in both departments to see which side leaves you with more benefits.

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