Arbitration is another form of alternative dispute resolution. Like mediation, it brings the parties together before an impartial third party who understands the applicable law and will keep order during discussions. And like mediators, arbitrators are often retired judges or lawyers with experience in the legal area affecting your case, with a fee that will usually be split evenly between the parties. But unlike a mediator, an arbitrator does not actively guide the conversation or give opinions. Arbitrators are more like judges who keep order and rule on questions about the law, and eventually decide which party should prevail. In nonbinding arbitration, the resulting judgment is only a suggestion; in binding arbitration, the decision is usually final.

At a non-binding arbitration, both parties present their cases as they would in mediation. But instead of holding the conference that a mediator would hold, an arbitrator simply decides which side should prevail and how much the plaintiff might be entitled to in damages. The idea is to show the parties how an impartial person sees their case, which encourages them to settle. The arbitrator’s decision is non-binding, so if you do not agree, you are free to continue to trial. However, in some jurisdictions, you may be penalized for this if the court ordered the arbitration, or if you go to trial and do not do as well. Your lawyer should be able to tell you about the rules that apply to your case.

Binding arbitration is just like non-binding arbitration, except that both parties agree beforehand to abide by the arbitrator’s judgment. You and your lawyer can choose binding arbitration, or you may be contractually obligated to use it. Binding arbitration can be advantageous for parties who want to resolve their cases more quickly, and sometimes more cheaply, than they might be able to in court. However, because it is hard to challenge the judgment produced by binding arbitration, it is important to understand before the arbitration that you usually must follow the decision of the arbitrator. In fact, you may be penalized for ignoring or defying that decision. Your lawyer can give you a professional opinion on whether binding arbitration is a good idea in your case.