Litigation v. Arbitration? What is cheaper?

on February 12, 2014 by James Hunt

SFTH 11When you are involved in a contract dispute or other type of litigation matter, you probably want to get it resolved as quickly and inexpensively as possible. Many advocates believe that alternative dispute resolution (ADR) accomplishes this goal better than litigation. The primary reasoning is that arbitrating a dispute often decreases the legal expenses and the process typically moves quicker. However, this is not always the case.

Arbitration can be quite costly, depending on the circumstances of your dispute. Many arbitration companies charge the parties significant fees just to initiate the arbitration procedure. In addition to paying your own attorney, you will also be paying at least one arbitrator’s hourly fees. In some cases, a panel of 2-3 arbitrators is required. Most experienced arbitrators charge very high hourly rates. While the parties typically split the costs of the arbitration equally, it can still be a very expensive undertaking.

Most arbitrations involve a discovery phase. This is the process where the parties exchange all their evidence related to the case, including exchanging documents, deposing witnesses and sharing other relevant information. Although it is a more streamlined process, it can still be as costly as the discovery phase involved in litigating a case. In fact, it could be more expensive if one of the parties uses delay tactics. At least if this occurs in litigation, you can go to the judge to obtain relief and an order penalizing the party dragging their feet.

Finally, it is important to understand that it is very difficult to appeal the decision of the arbitrator. Thus, if you believe the arbitrator got it wrong, you may be stuck with the decision. Conversely, if you filed a lawsuit in court, you most likely have the ability and opportunity to appeal the judge or jury’s decision for review by a higher court.

If you are trying to decide whether to arbitrate or litigate your legal dispute, it is essential to confer with an experienced attorney to discuss all the various factors involved in your matter. Make sure you have a clear understanding of the expenses, timing and consequences of your decision. To learn more, contact Slater, Tengalia, Fritz & Hunt to schedule an appointment.

Slater, Tenaglia, Fritz & Hunt, P.A. is a full service law firm.  Our practice focuses on commercial litigation and personal injury matters.  For over 35 years, we have been providing superior legal counseling and representation to institutional clients, including Fortune 500 Corporations and individuals throughout New York, New Jersey, Pennsylvania and nationally. We can be contacted by phone: (201) 820-6001 or (212) 692-0200 and we can also be found on the Internet, LinkedIn, Twitter, Google+, Youtube and on Facebook. We also have a network of local counsel throughout the United States. All initial consultations are free.