6.


Arbitration and mediation

It would be rare, unless included in signed contractual agreements, to use arbitration or mediation prior to filing a lawsuit against the debtor. The U.S. courts have an increasingly huge backlog. More courts are requiring that parties to a lawsuit submit to non-binding mediation or arbitration before the case is allowed to proceed to trial.


Mediation or arbitration is an informal process, in which an arbitrator or mediator meets with the parties’ attorneys and one or two witnesses from each side. The parties each present their documentary evidence and one or two witnesses. The mediator or arbitrator will discuss the strengths and weaknesses of each party’s case, and make a recommendation about a probable outcome at trial. If both parties agree with the recommendation, a settlement agreement is submitted to the court.


The recommendation of the mediator or arbitrator is non-binding, and either party can choose to not accept the recommendation. Nevertheless, there is one important consideration for the party that chooses to not accept the recommendation. If that party receives a lesser result at trial than what the mediator or arbitrator recommended, that party must pay the opposing party’s attorneys’ fees.


(End of chapter 6 - Arbitration and mediation)

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