Thursday, February 4, 2016

Why arbitration is worse than small claims court.

Just because you have a legal dispute with someone doesn't mean you must end up in small claims court. There are lots of alternatives to small claims court, most of which are called alternative dispute resolution or ADR.  Until now, there were very few methods of ADR:

  1. Mediation: This is when a third party shuttles back and forth between you and the other party, trying to make a compromise deal. The good news is that mediation allows you to avoid small claims court.  The bad news is that mediation costs money. And the longer it takes, the more expensive it is, because mediators usually charge by the hour.
  2. Arbitration: Arbitration is more like a private small claims court, where a private arbitrator listens to the two of you and renders a decision, just like a judge.  There are two kinds of arbitration: binding and non-binding. Binding arbitration leaves you at the mercy of the arbitrator, who could be great -- or could be a dumb as a doorknob. You never know what kind of arbitrator you're going to get (I once had an arbitrator actually fall asleep during the session and everyone around the table had to wait an hour until he woke up!). If you choose binding arbitration, it means both of you agree to abide by the arbitrator's decision.  Non-binding means that neither of you are obligated to follow his decision. In other words, everyone has just wasted a lot of time and money.
Arbitration is the choice of big corporations who don't want to spend a lot of time and money in court.  That's why if you look closely at your financial contracts, there's often a clause about forfeiting your right to litigation in favor of arbitration.

Fortunately, there is now another means to settle your dispute for a lot less, a lot faster: Online settlement services.  With an online settlement service, you submit the offer and the other party submits his. No judges, lawyers, mediators or arbitrators get in the way, slowing things down or  screwing things up. No charging high fees. You write up your description of the case, the other party approves it and the online settlement service does the rest of the work, settling and paying out the matter, usually within a week.

Because it's online, the online settlement service is more convenient, too.  Everything is done at your convenience, from any internet device, anywhere in North America. No missing work. No driving and parking. No chasing the other guy all around the country: If you have his name, e-mail address and phone number, you're good to go.

Before you commit to arbitration, find a reputable online settlement service first. Most don't charge a dime until both parties agree to use them, and even then, it's far faster and less expensive than courts, collections, mediators and arbitrators.

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