Problems happen, even to the most well-meaning of non-profits. Problems with vendors, contractors, employees, clients, board members, donors… you get the idea. Sometimes an intermediary is necessary to help solve issues. A lawyer or court is not always necessary. Here are two popular alternatives:
Mediation
Mediation is a type of Alternative Dispute Resolution in which a neutral person (called the mediator) helps the people who have a dispute talk to each other. The mediator makes no binding decisions and the individuals themselves ultimately determine whether the process results in a resolution of the dispute. The mediator is only there to help the disputing parties communicate with each other in the hope that they can find a way to work out their disagreements.
Mediation generally has the following traits:
- Confidentiality. Not only is mediation generally a confidential process, but unless the parties agree otherwise, information disclosed in mediation is not admissible in court.
- Nothing to Lose but Time. Nobody is penalized in mediation if the process fails to result in an agreement. Unlike in arbitration, the parties may then choose to make any agreement reached binding.
Arbitration
Arbitration is a type of Alternative Dispute Resolution in which a neutral person (called the arbitrator) listens to all sides of a dispute and then becomes the judge and jury. The decision of an arbitrator is usually final.
The typical traits of arbitration are:
- It’s fast. Arbitration is a process that is generally much quicker than going to court. This is due to the fact that courts are usually congested and it can often take months, if not years, before the parties get to present their case to a judge. An arbitrator can hear the parties’ arguments much quicker and with fewer bureaucratic hoops. And, unlike with mediation, an arbiter will reach a decision.
- It’s binding. Not only is the ultimate decision of an arbitrator final, but testimony given to an arbitrator is usually under oath and can be used against a person or organization later.
- It’s specific. Arbitrators often know more about the issues in dispute than a judge would because they have specialized in certain types of disputes. This could lead to better informed decisions.
Mandatory Arbitration
Many types of contracts contain what are usually called “mandatory arbitration clauses”. These clauses state that if either party to the agreement has a complaint, then that dispute be resolved through arbitration. Mandatory arbitration clauses often also include provisions:
- allowing the party that wrote the contract to choose the arbitrator and the rules that will govern the arbitration process
- gagging either party from talking to the press about the dispute
- making the arbitrator’s decision binding, meaning it is final and cannot be overturned by a court
There is little a person can do about a mandatory arbitration clause – short of refusing to sign a contract. Courts generally refuse to overturn a mandatory arbitration clause, but exceptions are sometimes made if the clause seems to be “unconscionable”. A judge might find a clause unconscionable if:
- it appears that the parties did not have equal bargaining power. For example, a company might not be able to enforce a mandatory arbitration clause against an employee that lacks the ability to advocate for him or herself, perhaps because of insufficient education.
- the clause was written in fine print instead of being prominently displayed in the contract.
- the losing party must pay arbitration costs that exceed what they would have had to pay to file the same claim in court.
Find out more about the advantages and disadvantages of ADR. Need an arbitrator or mediator? Look at options at the American Arbitration Association’s website.
