Litigation vs. Arbitration: What is the Difference?

December 15, 2021

Litigation and arbitration are two of the most common types of cases that lawyers file in civil courts. The pandemic has affected both types of court procedures. One-third of respondents…

Litigation and arbitration are two of the most common types of cases that lawyers file in civil courts. The pandemic has affected both types of court procedures. One-third of respondents to a recent poll found said that their cases were backlogged due to closed courts.

Knowing the difference between litigation vs. arbitration is key to understanding the basics of our legal system. Read on to learn more about each legal definition and what types of disputes they resolve.

What Is Litigation?

The defining feature of litigation is the role of the courtroom. Litigation refers to settling a dispute between two parties or among several parties.

Litigation usually begins when one party believes another party has aggrieved them or that one party broke the law. One party known as the plaintiff files suit against the defendant in a court of law through the litigation process.

Both the defense attorneys and litigation attorneys often spend weeks or months preparing for the court date. The defense attorney prepares to justify the actions of the defendant. The plaintiff does so with the intention of enforcing a legal right.

During the court proceeding, the judge acts as the litigator. Both parties present evidence, question witnesses, and argue their case. Then, the judge issues his or her final verdict after both sides have presented their respective cases.

Now that you understand what litigation is, let’s explore one alternative to court battles.

What Is Arbitration?

Arbitration offers an alternative to litigation. The idea is to enter a binding agreement with an arbitrator who hears the views of both parties. Like litigation, arbitration is legally binding.

Unlike litigation, arbitration is done in private. The legal course of action has several benefits.People often pursue arbitration because the negotiations are confidential. This means that the negotiations are not subject to public disclosure.

Arbitrators understand how to bridge differences between both parties. For that reason, arbitration is often less combative than litigation.

Once the arbitrator has heard both sides present their case, he or she issues a final decision. Arbitration is considered a faster and more cost-effective alternative to courtroom litigation. Now that you understand what arbitration is, let’s explore examples of each of the legal terms.

Examples of Litigation

Litigation often involves a party that believes another party wronged them. Contract or proprietory information disputes are some of the more common types of civil litigation.

Contract disputes can involve various issues relating to services or products that do not meet the contract specifications. Proprietory information disputes involve claims that certain information is owned by one company and used by another company without authorization.

Personal injury cases usually involve litigation. The injured party acts as the plaintiff, while the individual who caused the accident or the company involved acts as the defendant.

In cases where a semi-truck causes a serious accident, the insurance company that insures the driver often has a legal team. That legal team then argues in the interest of the trucking company that is being sued.

Work-related litigation encompasses a wide range of cases where a worker or employer may seek legal advice. Business-related lawsuits could involve fraud. One example is when a company argues that an individual or company offered fraudulent services.

Trademark or copyright litigation settles situations where intellectual property rights have been violated.

Examples of Arbitration

Lawyers can use arbitration to settle various commercial or business disputes. When both parties cannot agree to the terms of a settlement, arbitration offers one way to handle the issue without involving judges or public records. The action can also avoid having to go through costly court proceedings.

Contractual cases are often settled through arbitration. Disagreements on the meaning of contracts and claims of breach of contract can benefit from prompt arbitration. Companies frequently do not want to become bogged down in expensive and time-consuming litigation.

Wrongful termination cases are commonly settled through arbitration. Employers may have an interest in keeping the details of a termination private. This may only be possible through arbitration.

Those negotiations often end with an agreed settlement. Companies can require former employees not to discuss the negotiations.

Litigation vs. Arbitration: Which Option Is Right for Me?

When it comes to paying legal fees, time is money. Lawyers often charge $500/hr or more for their services. If both parties are interested in reducing legal fees that could reach tens of thousands of dollars, then arbitration may be the way to go.

Any dispute a company wants to keep from the public is possible for arbitration. In situations where trade secrets or sensitive human resources details are involved, arbitration can keep those details private.

In situations where one party believes that it has a slam dunk case, litigation may be a tempting route. This is especially true when legal fees are not a concern. A clear path to a large settlement may be worth the legal fees.

The final decision to pursue litigation or arbitration should involve considering several factors. The decision to pursue either legal proceeding should be done in close consultation with a trusted law firm.

Explore Your Legal Options

The decision of whether to pursue arbitration or litigation is an important one that requires expert advice. The attorneys of Grellas Shah understand the nuances of litigation vs. arbitration. We bring many years of professional experience to serving as your trusted advisor.

Our attorneys will earn your trust by providing sound legal advice and successful results, whether you require legal services for complex business litigation or startup and venture law. To schedule your consultation,contact our office today.

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