Counting the Costs: A Comparison of Mediation vs. Litigation Expenses
Counting the Costs: A Comparison of Mediation vs. Litigation Expenses
Mediation and litigation are commonly used as alternative dispute-resolution processes. Both processes are extremely helpful when resolving a dispute between two parties. Mediation is a voluntary process conducted in a mediator’s presence. The mediator promotes effective communication among the parties and helps them figure out a solution for their problem.
The process is carried out in litigation before a judge in a courtroom. The judge is presented with evidence and statements from each participant and decides to resolve the dispute. Both of these methods are very useful for conflict resolution. However, each of them has its own set of advantages and disadvantages.
Knowing the cost difference between the two methods is important as it helps parties understand which method would be more suitable for their problem. In the case of mediation, the process involves hiring a mediator that helps parties reach a decision. Thus, the process is less expensive as compared to litigation.
Litigation, on the other hand, is an expensive process. You must hire a lawyer for your case, collect evidence, go through court, and complete all legal proceedings. All this is for a solution to your problem that can otherwise be resolved with much less expense. Considering all this, deciding which methodology to use for your dispute resolution depends mainly on the nature of your case. Not all cases are resolved with mediation. Some may be required to undergo litigation.
This article aims to help our readers understand the concept of mediation and litigation and the cost differences between them so that you can choose the right process to resolve your dispute smoothly.
Mediation: A Cost-Effective Alternative
Lower Initial Costs
Mediation helps lower the costs of dispute resolution by:
Elimination of court filing fees: Mediation helps to eliminate court filing fees. The process allows them to resolve their matters outside of court. Thus, eliminating the need to file a lawsuit altogether and reducing the costs.
Reduced Attorney Retainer Fees: Attorneys’ fees are much higher than a mediator’s. Thus, mediation helps reduce attorneys’ fees by resolving dispute outside of court.
Minimal Administrative Expenses: The process of mediation lowers the minimal administrative expenses by reducing the legal fees, rationalizing the process, and making it more efficient and easier for the parties to resolve their disputes outside of court.
Time Savings and Reduced Billing Hours
Mediation helps to save time and reduce billing hours by:
1. Shorter Resolution Timelines: Mediation is much quicker and faster than a courtroom case. The mediator helps the parties involved come to decisions with mutual understanding in less time, thus reducing the timeline of coming up with a solution
2. Fewer Procedural Delays: Mediation is voluntary and informal. It does not have any rules and regulations like the process of litigation. Thus, there are fewer procedural delays. Participants reach a solution quicker than a courtroom process.
3. Less Time Spent in Courtrooms: Because the mediation process is an out-of-court settlement procedure, participants do not have to go to court to resolve their disputes. The mediator helps to resolve the dispute with effective communication and understanding.
Lower Discovery Expenses
Mediation has lower expenses, eliminating the litigation process’s discovery expenses. Mediation does not require litigation, which automatically eliminates the higher costs. The litigation process has a lot of expensive discovery procedures that lead to increased expenses. With mediation, you don’t have to worry about any such expenses.
Shared Costs Among Parties
Mediation is a low-cost method of dispute resolution that requires the parties to resolve disputes outside of court. This cuts down on many expenses that would have been applied if the parties chose to go with litigation. The process requires the hiring of a qualified mediator who helps resolve the problem. The amount that is spent in mediation is divided among the parties involved. This lowers the cost burden as well. However, in litigation, each party has to pay for the whole process separately.
Litigation: A Financial Burden
Litigation is a method in which conflicts are resolved in the courtroom. It involves a series of legal rules, regulations, and systems in which the parties involved, aka the litigants, are supposed to present their problem in front of a judge, thus, leaving the outcome to them.
Process of Litigation
The process of litigation is quite lengthy. Let us take a look at them:
- Pleading: The first step of litigation requires the litigants to file a complaint. In this case, one of the parties is the complaint filer, and the other party is the one that is being sued.
- Discovery: All the relevant documentation, evidence, and statements are submitted in the court, and each party takes time to collect information regarding the opponent party with the help of their respective lawyers
- Pretrial motions: In this step, each party may petition to remove a specific rule or evidence from the case that may or may not favor the parties
- Trial: When the case proceeds, each party must appear before the judge, present their arguments, defend themselves, and make legal arguments. Once the judge listens to all of it, they move on to making a decision.
- Judgment: The judge presents the decision to the parties once the trial ends. The decision is legally binding. This means none of the parties can disagree with the outcome the judge presents. If any party has an issue with the outcome, they may appeal in the high court. Otherwise, they would have no option to agree to the solution provided by the judge. Do note that this takes a lot of time.
High Initial Costs
Compared to mediation, litigation is a costly method of dispute resolution. Below are the costs involved in the process:
- Attorneys fees: Attorneys fees are one of the primary costs of litigation. The fees depend mainly on how experienced the attorney is.
- Court fees: Next comes the court and case filing fees. Depending on the nature of the case, the price can increase or decrease substantially.
- Discovery costs: Parties to a lawsuit are typically required to exchange information before trial through discovery. This process can include depositions, written interrogatories, requests for documents, and other methods of obtaining information. The costs associated with discovery can be significant.
- Witness fee: Many cases require the parties to hire an expert witness to testify in court for their case. This increases the cost as well.
- Travel expenses: The parties have to spend considerable money on travel costs. Depending on the location of the court, parties may have to travel whenever the judge calls upon them.
The cost of litigation is high. Thus, it is known to be a financial burden on the participants. It is advised that parties should hire attorneys that work strategically to lower the costs comparatively to lower the costs.
Litigation is a process. The process takes a lot of time, from filing a case to hiring a lawyer to endless court hearings until a decision is made. The outcome from a judge might take months or even years to be processed. This keeps the parties hanging and waiting for the solution. Other than being lengthy, the process tends to get frustrating as well.
Choosing the Right Path
As discussed above, choosing which process to go forward with to resolve a dispute depends on the nature of the case. Suppose the case does not require legal binding and can be solved without law enforcement and hiring a litigation lawyer. In that case, it’s best to go with the mediation process and decide upon a solution with the help of a mediator. However, if the process requires legal binding, especially for industry disputes, it is best to proceed with the litigation process. It may be costly, but it binds the parties and enforces the outcome on them.
In the debate of mediation vs. litigation, mediation will always be a great choice for parties who want a quick, easy, and low-cost solution to their problem. While mediation and litigation are both excellent for conflict resolution, litigation is costly and may take longer. Mediation gives control of the outcome to the participants. However, in the process of litigation, a judge gives the solution. Whatever process you go forward with, make sure you have your ideas clear about both processes so that you make the right decision.