How Lawsuits Work

Trying to Settle Out of Court

Settling out of court is far less expensive than a trial

Settling out of court is far less expensive than a trial. Unless you know for a fact that you have an ironclad case, you stand the risk of spending large amounts of money and getting nothing in return. No satisfaction, no restitution, nothing. The best first step of any potential lawsuit is to try to work out your disagreement outside of court. The courts agree with this wholeheartedly and in some states require some sort of dispute resolution before you can even bring a case to trial. Even if you do have an ironclad case, you need to weigh the costs of litigation with the potential award you might (or might not) get after a trial.

Here are some ways you can try to resolve your dispute without involving lawyers and large sums of money. You have three general paths to take to avoid the court room.


Face-to-face Negotiation

First, you should try a good old-fashioned face-to-face conversation with your adversary. Is he even aware of the problem? Does he acknowledge responsibility? Have you tried to come to an agreement about how to remedy the problem? You may be surprised at how reasonable the person is. If you do come to an agreement, you should probably have it documented and each sign it with witnesses present. And it's best to have an attorney draft it up to make sure you haven't left any loopholes.


If you've tried your own negotiation and gotten nowhere, then you might consider mediation. In mediation, you and your adversary come together with a neutral third party who tries to help you work out an agreement. A mediator does not have any say in how the mediation turns out, he only provides advice about your options and how you could come to a fair agreement. He helps you arrive at a solution. In some courts, you are required to go to mediation before you can bring a lawsuit to court. You don't have to come to an agreement, but you have to go through the process and try. This requirement is an effort to reduce the number of cases that go to court. Some contracts you sign may also require mediation before you can file a lawsuit in the event of a dispute.

If you do arrive at a solution in mediation, you can make it legally binding by writing up a mediation agreement that each party (and usually the mediator) signs. The agreement spells out the decision that was made as well as intentions for future behaviors that both you and your adversary are required to follow. By having a signed agreement, you can make the outcome enforceable in court.

Mediation fees vary a lot. Depending on where you live and who your mediator is, you may pay as little as $50 (or nothing) for mediation, or you may pay $200 to $300 per hour. Mediator training varies a lot, too. Some may be volunteers who have backgrounds in social work or similar fields, some may be specially trained for mediation in specific areas like divorce, and some are lawyers who mediate on the side.


Another form of dispute resolution is arbitration. Arbitration is similar to mediation in that you come together with your adversary and a third party to discuss a solution to your problem. The difference is that the third party, known as the arbiter, makes a legally binding decision on your case. Arbitration is more like litigation in this respect -- you lose control of the decision. The arbiter's decision, called the "award," has to follow the law. If the arbiter doesn't apply the correct laws to the decision, then a judge may overturn it. You are also allowed to have counsel at an arbitration. If you know your adversary is bringing an attorney, you should, too.

So when should you go to arbitration? Since arbitration is based more on the legal issues and less on the personal issues of the case, it is usually recommended for cases that involve money rather, as opposed to a case about a neighbor who keeps blocking your driveway. Cases like that are best settled in mediation, if possible.

Arbitration does cost more than mediation, however it is still less than going to court. Like anything else, it depends somewhat on where you are geographically. Typical half-day arbitration may cost both you and your adversary anywhere from $500 to $1,000 each.

There are different types of mediation and arbitration. For instance, you can have nonbinding arbitration, which means that if either party doesn't like the decision, it isn't binding. You can opt for high-low arbitration, which means you and your adversary establish upper and lower limits for the monetary award. (For instance, an insurance company would suggest a low amount and the individual with the complaint would suggest a higher amount.) The arbiter isn't told about the limits. If his or her decision is lower than the low number, then the low number is used, and if it is higher than the high number, the high number is used. If the decision falls within the limits, then it becomes the actual amount of the award.

Many other variations are possible, as well. For more information, go to The WWW Virtual Library: Private Dispute Resolution.

Looking for an Attorney

If neither mediation or arbitration works for you, then you begin your search for a good attorney. The best bet is to get recommendations from friends, family, business associates, or the local bar association. You should talk with several attorneys before you settle on someone. Look for experience in the area of your dispute and litigation experience, as well as interest in your case. If you need a very aggressive attorney, then watch the attorney in the court room and get a feel for his style. How well you get along with the attorney is also important because communication between the two of you is crucial. If you don't feel comfortable with the person, you may not be able to communicate with him effectively.

Also remember that, in the event that you make a poor choice, you can always change attorneys. You would still have to pay any fees and reimburse for costs, and the initial attorney may have a right to part of any award you eventually earn.