Costs of a Trial: Arbitration vs Litigation

Man and woman trying to settle their dispute

Alternative dispute resolution has two forms.  These are arbitration and mediation.  Mediation refers to a neutral party who reviews the case but does not decide on it.  Rather, the mediator helps discuss for resolution of the dispute.  Conversely, arbitration refers to a third party which decides on the case.  An arbitrator must be unbiased.  Arbitration is usually less expensive than the court fees in cases of litigation.

For this reason, most unions with labor cases which offer arbitration are resolved in companies like Here are some costs incurred if case pushes through in court with litigation.

Decision costs

Aside from the lawyer’s fees, there are also decision costs from the judge and jury. The court requires legal documents such as depositions, interrogatories, and others. Expert witnesses in highly specific fields such as accounting, infrastructure, or medicine may also be tapped into, requiring additional costs. Sometimes, specialized legal cases may require additional experts to research extensive details.

Lost opportunity costs

More often than not, when a company has a legal glitch, some company operations mandatory are put on hold. This is especially true in issues related to licensing. Because of this, income-generating business matters are postponed as well. Arbitration may speed up the process of dispute resolution. If this happens, the business may resume more quickly.

Relationship costs

Business owners are commonly friends before they become partners. Legal disputes between such parties put a strain on the relationship. Sometimes, such strain may eventually destroy the partnership if the resolution borne of litigation is less than amicable. In some cases where the arbitrator is skilled, both sides of the parties may come to favorable solutions, a compromise between parties.

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Going to litigation is like constructing a house. The expenses are substantial. Hiring a house contractor is somewhat similar to appointing an arbitrator. When the contractor, an expert in his or her field is hired to construct a house, the building may have a more polished output. This lessens the need to redo construction failures. Similarly, when employing an arbitrator, dispute resolution becomes more than favorable.