Saturday, June 9, 2012

The League of -ations

I think it is about time I explain the purpose of this blog and the meaning behind "The Fashion Neutral." Generally there are four different types of dispute resolution processes in America: Litigation, Arbitration, Mediation, and Negotiation. My negotiations professor at the Straus Institute calls it "The League of -ations." I will be explaining in a nutshell what each is. Future posts will focus more on one and how it can be beneficial to fashion law.

Americans are not strangers to litigation. We see it from the popularity of Judge Judy and the "Caution, Hot!" warning written on coffee cups at Starbucks. America is (in)famous for being a highly litigious nation. However, people who have been involved in lawsuits have realized how expensive and time consuming it can be. Courts are backlogged with cases that can last for years and it is no secret that attorney's fees are overwhelmingly high. I will cover in-depth later the pros and cons of litigation, but for the purposes of this post these negative aspects of litigation have lead to the recognition and growing popularity of alternative forms of dispute resolution.

The dispute resolution spectrum looks something like:

Negotiation ---- Mediation ------||||------- Arbitration ---- Litigation

Arbitration is a step down from litigation. Both are similar in that they are adjudicative, meaning that a neutral third party hears the case and makes a judgment for the parties. In arbitration, the judge is called the arbitrator and the judgment is called an award. The award, like a court ruling, is binding and enforceable by law. What makes arbitration different from litigation is that arbitration is a voluntary, privatized litigation. This means that the parties can dictate the process of arbitration as long as they are in agreement. To keep a potential dispute out of the court system, parties to a contract can add an arbitration clause  that states that dispute arising from the contract will have to be arbitrated. More on this later.

Different from arbitration and litigation where a neutral third party makes a decision, the parties themselves have the power to solve the problem in mediation and negotiation. Like arbitration, mediation and negotiation is voluntary -- the parties will have to agree to participate. Mediation involves a neutral third party that helps facilitate a conversation and ultimately an agreement between the parties. What is told to the mediator in confidence stays in confidence unless the party gives the mediator permission to tell the other party. The mediator is the go-between who interprets and offers different perspectives. Should any or both of the parties decide that the mediation is not working, they can end it.

Negotiation involves the parties without a neutral third party. The parties work to reach an agreement using tactics and investigation. Generally, negotiating parties can either be competitive (win-lose) or collaborative (win-win). Parties attempt negotiating, if that fails, they have the option to move across the spectrum where litigation is the last resort. The processes become more expensive and time consuming as you move further across the spectrum.

So, guess why I chose to call this blog "The Fashion Neutral"? Ta-da!!

My next post will be on five reasons why arbitration trumps litigation.

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