Lawsuits are both expensive and time consuming. It might be said that the only real winners in a civil suit are the lawyers. They get paid by the hour, and often in cases of negligence, they receive a substantial portion of the award or settlement – sometimes as much as 30 percent. For co-op and condominium boards, the time and money involved with defending a lawsuit – even in some cases where there is insurance coverage (cases defended under a Directors & Officers policy will pay for legal defense, but not for judgments) – may simply be too much. However, there are options, including alternative dispute resolution, or ADR for short.
Types of ADR
Mary Barrett, an attorney with Stark & Stark in Lawrenceville, New Jersey, says: “ADR is exactly what the name says; an alternative to litigation. It’s an opportunity to resolve a dispute before you get so far that you must litigate the matter.”
Methods of alternative dispute resolution fall into two categories: arbitration and mediation. While they may sound synonymous, they’re two very different things. Ellen Shapiro, a principal at law firm Goodman, Shapiro & Lombardi, which has offices in Massachusetts and Rhode Island, defines the two concepts as follows: “Mediation is a method of resolving disputes without the necessity of filing a lawsuit seeking judicial intervention. It’s outside the traditional legal system of the courts. The first component in mediation is that both sides have to want to do it. It will only work if both sides are amenable. If someone wants their day in court, it won’t work. If both parties are interested in trying to come to a resolution without trial, it will.”
“In an arbitration, however,” says Barrett, “you have a neutral party that makes a decision: who is right, who is wrong, and to what degree and what the final resolution will be. It can be binding or non-binding – so you’d best know which you’re involved with!”
Shapiro defines the difference between arbitration and mediation as: “While both are voluntary, mediation tries to facilitate the parties arriving at an agreement jointly. In arbitration, as in a trial, the parties present evidence—it can be almost a mini-trial, but an arbitrator reaches a decision, and that decision is final. There isn’t any appeal. The parties have not participated in the final decision. They have only supplied evidence to the arbitrator.”