Mediation

Mediation Versus Arbitration: What Is the Difference and What Do They Both Mean?

When divorcing spouses wish to seek quick, cooperative marriage dissolution, they may choose to pursue alternative dispute resolution methods such as divorce mediation and collaboration. Avoiding litigation can make the entire process less stressful and less overwhelming for everyone involved. It can also be the most cost-effective option as well, as mediation is typically less expensive and less time-consuming than litigation.

Another alternative dispute resolution to end a marriage without litigation is arbitration. Many people mistakenly think divorce mediation and arbitration are interchangeable - and they are not! Divorce mediation, arbitration, and litigation are all very different ways to settle a divorce, with different benefits and drawbacks.

In this video Stolfe Zeigler New Jersey Divorce Group founding partner Abigale Stolfe explains the difference between divorce mediation and arbitration and how to determine which of these two divorce alternatives to traditional divorce litigation might be best for your family.

WATCH: New Jersey Divorce Attorney Abigale Stolfe explains the difference between divorce mediation and divorce arbitration in New Jersey

At Stolfe Zeigler New Jersey Divorce Group, we strive to help our clients find the solution that works best for their unique situation. Our New Jersey divorce and family law attorneys have experience in both mediation and divorce litigation and are ready to help you find the solution that works for your unique situation. With offices in Toms River and Moorestown, our divorce mediation attorneys can help you seek a fair, collaborative resolution so that you can begin to move forward with your life as soon as possible. Contact us today 732-240-9555 to discuss your case.

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Transcript


This is Abigale Stolfe from Stolfe Zeigler New Jersey Divorce Group talking to you today for our Monday Let's Do Lunch! Today we are talking about mediation versus arbitration: What is the difference and what do they both mean?

A lot of people interchange these two words. Mediation and arbitration are not at all interchangeable. Let's start with what do these two words mean so that when you're speaking with a lawyer or looking for a third party assistance you know what you're looking for and who it is that you need to assist you in that process.

Mediation is an agreement to go to a third party to assist in negotiating a resolution to your matter. Mediation could be just the two litigants with a mediator; mediation could be you and your spouse with each of your attorneys and the mediator. So you could have three people there or you could have five people there. Sometimes the mediation could also include any experts or forensic professionals who you might have hired, whether it's custody or financial, so you could have a variety of different players in your mediation. But for the most part your core group is going to be either three of you - which is you your soon-to-be ex and the mediator - or five of you - you, the other side, the two attorneys and the mediator.

When you are at mediation what the mediator's job is is to help you find a common ground, a common goal, a midpoint, an agreement. You may want x, your spouse may want y, but we have to figure out how to bring you two together into the middle and that's what mediation at its core requires. An agreement mediation requires an agreement.

Arbitration is where you hire a private judge. Instead of going to the courthouse and using a judge through the courthouse, you hire someone who doesn't have to be a retired judge. Your judge could be a lawyer, your judge could be a religious expert, your judge could be an accountant, your judge could be a retired judge. There's a lot of different people who act as arbitrators. And what that means is you present your case to this person either by yourself, or again with your lawyer and hired professionals, and that person makes a decision for you.

We're not trying to bring two sides together, we're not trying to bring them to a common ground. Instead, what we're saying is we can't find the common ground but we also don't want to wait the length of time it takes for a judge at the courthouse to make a final finding because it can take a lot of time to get to a trial point with a judge at a courthouse. So instead, what we're saying is we want to hire an arbitrator to hear our case and to give us a decision.

Arbitration v Trial

What's the difference then between an arbitration and a trial? I realize it is kind of out of topic here, but I feel like it's important to talk about in order to really get a true sense of these three different things. So a trial is again you go to a judge in the courthouse and you say, Judge, we can't come to a decision so we need you to decide our case. When you go to a judge at a courthouse, you could get four trial dates over the course of 12 months. I'm in a few trials right now. One we started a year ago and we just finished, and that trial had two witnesses, only the husband and wife, so we were not talking about a lot of witnesses in that trial. I have another case right now: we started trial during the pandemic, I think in October as well, we're looking at ending that trial in April or May and again right now we have the two witnesses - there could be a third.

The reason I'm telling you that is because when you go to trial in superior court you are really in a group of hundreds that particular judge is trying to work for. When you hire an arbitrator, you are in a group of your own right. I did an arbitration last year and we had five consecutive days - we blocked an entire week for the litigants as well as the experts to testify. They testified over the course of the week and within 20 days we had a decision, and within 30 days they were divorced.

There's a huge time differential and an attention differential between arbitration and trial, but arbitration is very simply a private trial. These are the terms you want to know:

  • mediation is you want to hire someone to make gus or to bring us together so that we can make our own decision
  • arbitration is we're going to hire a private fact-finder, a private judge, in order to tell us what to do because we can't make our own decision
  • trial is when you go to a courthouse, a state courthouse, and you go before that judge who's going to make a decision for you

The difference between arbitration and trial - the big difference - is cost and time. The cost in dollars, the cost in time: those are your big differences between arbitration and trial.

Types of Mediation

What kind of mediations then are we talking about? You could have mediation for parenting time, you could have mediation for financial, you can choose the topics that you're going to mediate. There might be some hot button topics that just you know and your spouse knows and the lawyers know that we are never going to come to an agreement on this particular issue, but we have 10 others that we can come to an agreement on. So if we have 11 issues let's try to resolve the 10 because maybe that one standing alone will find its resolution, or maybe that one standing alone we have to have an arbitrator call. But let's see what we can resolve because it's not an all-or-nothing process.

Mediation is not if we can't solve all 11 we can't do mediation; you can and you should anytime you can come to an agreement. You are better served because you know your family, you know your need, you know your children's needs, you know the ability of your spouse to financially support you and your children, you know the financial ability to buy your value out of a house or a retirement account or any interest. You guys know best how to settle your case. So to the extent you can find common ground, even if it's not on every issue, you want to do that.

So that's mediation, There are some court-mandated mediations that you're required to do that I think give people a good flavor for the need to be flexible and negotiate.

Parenting Time Mediation

One is Parenting Time Mediation. Whenever children are involved and custody is not agreed upon, the court will send you to parenting time mediation. Even during COVID you will do parenting time mediation. During that parenting time mediation you work with a courthouse staff member. Typically attorneys do not attend, although attorneys can attend, and you work with this person through the courthouse who can help you.

Say you know what you really want - forget all this legal jargon and we've talked about this before. Don't get caught up in legal jargon - you don't know what it means, you don't know how it gets implemented, who wants Tuesday - that's the question the mediator is going to ask. That's mediation, that's what you want to know: Who gets Tuesday? Where are the kids going to be on Tuesday? That's all I care about. How you guys classify it under the legal jargon I don't really care, I don't know where my kids are on Tuesday.

That's really how I want you thinking about mediation. So your first round if you have children is with a parenting time mediator. If that is unsuccessful, then it builds from there. Either then you go back before the judge or maybe you do another round of mediation or maybe you have to hire forensic experts to facilitate that discussion. But first step mediate with the parent time mediator.

Early Settlement Panel

From there you go to your next court mediation which is called an Early Settlement Panel - ESP. Some counties call it an MESP: Matrimonial Early Settlement Path. Either way, they're the same thing. An ESP is where you sit with a mediator who is generally speaking going to be a lawyer who practices family law and has for a very long period of time or a forensic accountant who again is very deeply entrenched in the world of family law. In the courthouse, you'll work with that panelist who does not charge you for their time in that Early Settlement Panel session to work towards a resolution of some or all of your issues. That is really a great opportunity to get some of these easier topics off the table because you're not paying that mediator for that time and typically you get about 45 minutes to an hour of that mediator’s free time so you want to take advantage of that. That is not an hour you want to waste arguing over stuff that is not going to be productive. You know you're not going to settle certain issues, so go to the ones that you can settle with this person who's there to help. If you do not settle your whole case during your ESP early settlement panel then typically the court will order you to the next step which is Economic Mediation.

Economic Mediation

In Economic mediation you're paying the mediator; you're paying them an hourly rate at some proportion between you and your spouse to help you work towards a resolution. So now you see why I said use that hour that you get for free to your benefit - don't waste it on things that you know you can't talk about to settle when you go to your Economic Mediation. There's more time: you might get a four-hour block of time, you might get a five-hour block of time, you might get a whole day. You might go multiple times to your economic mediator. It is not uncommon if you have 12 issues that you have to break it out into multiple sessions. Again, you're going to pay the mediator for all of those sessions but it's money well spent because if you can chip away at those 12 issues, that's always going to be the money well spent. When you go to Economic Mediation the court could simultaneously or subsequently send you to what's called a Blue Ribbon Panel.

Blue Ribbon Panel

A Blue Ribbon Panel is where you sit with a panel of mediators so more than one usually. Those are in the more complex cases so when you're dealing with businesses, high-income earners high asset holders, complications such as trusts - that's when you would go to a Blue Ribbon Panel because then typically you need more time put into the resolution of the case, and again because it's mediation trying to bring two people together. So this is not a panel of people who are telling you what to do; it's a panel of people who are trying to bring you together.

So that's the crux of mediation. The big takeaway on mediation regardless of whether it's ESP Economic Mediation, Blue Ribbon Panel or before you even start the litigation route, you want to hire a mediator from the gate - the key takeaway is mediation is an attempt for the two of you to come to an agreement on the issues at hand. You're making the decision: someone is not making the decision for you. That's mediation.

Arbitration Process

Arbitration, similar to trial, is where someone is making a decision for you. You're relinquishing control of decision-making power. That is a big decision to make. I don't know many people who really want to relinquish control. I hate really pushing control. You really want to know you tried everything in your power to make your own decisions, but if you can't, you can't. Then you go to arbitration which will put a little asterisk there for the trial. Arbitration requires a lot of eyes to be dotted and t's to be crossed in order to make the arbitration binding. There's a statute that governs arbitration. It governs the rules of arbitration, it governs what has to be in your arbitration agreement, what specific clauses have to be in there and what specific rights you have to know you're waiting.

Fawzy v Fawzy

Then we add a second layer when you're dealing with children. There's not only the arbitration statute and some court rules that kind of bolster up the statute or require some additional information, but there's also this case called Fawzy: f-a-w z-y. Anyone who's watching this in order to learn about arbitration you should look that case up right now, well when we're done, and read it because what Fawzy says is that regardless of the forum of arbitration - and I'll talk about the forum in a second - but regardless of the forum, if you're dealing with issues relative to children: not financial, not child support per se but issues relative to their care, custody and control - education health etc - you have to follow some pretty strict requirements in what you have to do in order for that arbitration decision to be upheld by a court.

If you are an arbitrator please take a minute to go and read Fawzy; if you are considering arbitration please take a minute to go and read because you do not want to sign on to a process, engage in the time it takes to do the process, engage in the cost of the process only to find out you didn't follow one little requirement that's going to get rid of everything you just did. That is what will happen. So take a minute and do it right, don't be so quick to rush into it that you inadvertently make it non-binding. That's my big ass trick on arbitrations. There are some very technical rules and requirements when you're going into arbitration so you want to make sure that you do that process correctly.

What Does The Arbitration Process Look Like?

The arbitration looks a lot like a trial. You find your arbitrator or arbitrators. And how do you do that well: if you are a heavy asset or income-based family you may say, I want a retired judge and an accountant to be my arbitrators because I want to make sure that everyone understands that complicated financial factors. If you are a family who has the majority of your assets held in beneficial trusts, then you might say, Well you know what I want? I want a retired judge. I want an accountant. But I also want an estate attorney who can explain the intricacies of these trusts that we created and how the beneficial designations are labeled. You may say, I don't need a retired judge - I just want a trust attorney and an accountant. So there's a variety of different professionals who can get involved in order to form the best panel for you.

There's also religious panels. Our firm works quite a bit with the Lakewood community, which is an Orthodox Jewish community. For the most part, that community will work in a rabbinical setting. You do not have to work with rabbis within the state, you can go out of state for the rabbis in other states; mainly Muncie, New York - we see a lot there. But again even if you're in New York, if it is a New Jersey case they have to follow the New Jersey requirements. So when you're picking the forum, whether it's these judges, accountants, lawyers or whether it's religious - whether it’s rabbinical or christian - whatever your religious designation is - here everyone across the board is still bound by these requirements under the arbitration statute. So when you're picking your forum make sure that your panel understands their requirements under the law in order to make that arbitration binding. So when you are attending an arbitration, you're going to present the case just like you would during a trial. You're going to present witnesses, you're going to present documents, you're going to mark documents as evidence and at the end of it your panel is going to give you the decision.

They're going to tell you this is what we've decided. Here's the law we relied upon. It's going to be a written decision just like if you had gone to trial. Again, if you're working with an arbitrator, you want to make sure that they understand that requirement.

Why am I going through all this procedural? Because it's really unfortunate when we see people take time and money - and it takes a lot of time and it's not a cheap process - only so that we can look at it and say we can't get a court to confirm this arbitration and work. Because after you go to arbitration and you get an award you then have to go to the courthouse and say, Okay Judge, we went to arbitration and here's the award and we want you to confirm it as a court order.

Well if the other side opposes and says I'm not agreeing because it was all about child custody and they didn't follow the Fawzy standard, the court could throw that whole thing out. If the other side says, Well I'm not agreeing because they missed this one little piece of the arbitration statute that was not in my arbitration contract; if the contract's not valid the resulting award is not valid. So when you are going through the full process it's contract has to be right process has to be followed in order for the court to confirm the award. Because just because an arbitration award comes out does not mean that it is binding until a court says it's binding. So you want to make sure you follow all those processes so it’s binding under the arbitration statute.

If you agree to binding arbitration there's very limited circumstances under which the arbitration award is not binding. If you agree to non-binding arbitration then your purview is a bit bigger in what you can challenge and typically that's all spelled out within your arbitration contract. But you know courts are going to look at this and say, Well you know you signed up for this process, you all agreed to it, you all went, you presented your evidence, the other side relied upon this coming to a conclusion in this setting. So you really have to have some good claims and proofs in order to get a court to not confirm an arbitration of work mediation is not necessarily binding per se, but typically like I said that's you guys coming together. So normally what happens is when you come to an agreement you both sign off on it instantaneously and it's presumed to be the intended agreement because you've made an agreement. No one made it for you - it's your own signature so we don't really talk about binding and non-binding and mediation because there's kind of this presumption if you've signed it, you intend it to be binding on yourself.

Advantages and Disadvantages of Mediation

Mediation is obviously less expensive than trial or arbitration. It is going to be confidential meaning that anytime you attend the mediation, the mediator nor the other side can't disclose anyone's position. The intention is that there's a free flow of communication so that you can come to a middle ground. If people are clammed up because they don't want the court to know, Oh I'm willing to do this, then you can't ever come to a middle ground because there's no free flow of communication. So mediation by its very nature is confidential. Arbitration, because it's binding, we do talk about confidentiality in certain contexts but for the most part when you're dealing with confidentiality you're talking in terms of mediation.

How Do You Choose An Arbitrator

How you choose an arbitrator goes back to that forum question. You choose your arbitrator the court So when you say to a court judge, I want to come out of the court system and I want to go to arbitration the court doesn't say, Okay I'm appointing x as the arbitrator. They can't do that.

Arbitration has to be a contractual agreement between you and this third party, fourth party, fifth party, depending on how big your panel is. Arbitration is a private contract and the court does not order an arbitrator. Typically the arbitrator is chosen by you and your spouse or the two attorneys for you and your spouse, just depending on which phase of the process you're in. If you are dealing in a religious context, typically it's between you and your spouse with the input of certain religious instructors or leaders or assistants in the area.

Cost Differential

We talked about in mediation you are going to pay a private mediator once you get out of that court system mediation, but it's still going to be less expensive than arbitration because arbitration is a trial. To present evidence you have to prevent witnesses. Mediation is not so formal, you're not presenting evidence. You might say to me either, Well here's a document that you need to look at and the mediator will take it and look at it and take it to the other side and talk to them about it. That's a lot easier than, I'd like to introduce as p1 into evidence this document, and then you're going to go over this whole document. It's a lot less formal which of course saves time, which at first saves money, and that's how that plays out.

Vacating An Arbitration

Is it final? We just talked about the arbitration statute and rules and assuming you've checked all the boxes and you get an arbitration award can you go to the court and have it confirmed? There is series of cases that talk about the very narrow exception to having an award confirmed and what I would suggest to you is those you know that could be a four-hour discussion by itself.

If you have a question over whether or not your arbitration award can be confirmed for that give us a call because like I said, there's so many branches to that tree that there's just no way to go through that all in the Facebook Live. But if you have that question, you give us a call because we can help you with that certain kind of overview of how an award cannot be confirmed or can, or can be set aside or vacated if it was procured by corruption, fraud or undue means. If there was partiality by the arbitrator, if the arbitrator refused to postpone a hearing, without good cause if the arbitrator exceeded their powers. Now remember I told you about this arbitration contract which is how you very very very first started arbitration and that really defines what the power of the arbitrator is? So if they've gone outside the scope of that contract, the award that they provided that's outside of the scope can be vacated. It doesn't necessarily mean the whole award gets vacated. It could just be the fragment of the award there was no agreement to arbitrate.

So there's this kind of gray area that a lot of people fall in. They hire a mediator and they want to work with a mediator and they do work with a mediator and then they decide we remember the 12 issues but we settled 10 so we're down to two and let's just have the arbitrator call that. Well the mediator's not an arbitrator. The mediator cannot just switch hats and now become the arbitrator who calls these two issues. So if you are working with a mediator and you need issues called or decided or arbitrated you've got to make sure you have a really detailed conversation with your mediator, with your attorney and with the other side over switching of the hats going from a mediator to an arbitrator. If it can be done, should it be done? That's again that's a very detailed discussion for a very fact-specific consequence.

Notice of Intent

Another way it could be vacated is if the arbitration was conducted without proper notice of its intent. You can't go to an arbitration thinking you're going for a simple introduction. It could be a topic I thought we were coming here today to talk about revising the retirement accounts and now we're talking about the custody of the kids. There has to be notice; you have to know why you're going to arbitration, you have to prepare to go to arbitration.

These are just some of the overview reasons why it would get vacated. Again, vacating an arbitration award is a very fact specific discussion. It's a very detailed conversation. It is not something that is just assumed to happen, nor should you presume that if you don't like the award it's going to get vacated. That is not true. We do not vacate awards because one side didn't like them. I sat on enough of these motions to vacate an arbitration award both preferring to vacate it and opposing it to know very very clearly that the fact that you don't like the award is not enough - that's not going to do it.

So if you sign on to a process of arbitration, please understand what you're signing on to. It is critically important that you follow the very specific mandates of the statute and the court rules as to what you must do. It is very important that your arbitrator knows how to write the award and how to present the award, as well as combining the hearing.

If you need our help give us a call at Stolfe Zeigler New Jersey Divorce group, 732-240-9555.

Thank you so much for listening today, I appreciate it and you.

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