A Note From The Legal Helpdesk: Alternative Dispute Resolution- "A Useful Tool"
by Ham Wilson, General Counsel
January 30, 2018
Former Chief Justice Warren Burger stated that our legal system has become “much too costly, too destructive, too inefficient, and too expensive for a truly civilized society.” Alternative Dispute Resolution, better known as mediation, has become a popular and useful means of settling disputes between opposing parties without involving the courts. This article explores mediation – both in general terms and specifically for a REALTOR®.
In general terms, mediation is an agreement between parties to discuss a dispute in the presence of a neutral third-party (the mediator) in an attempt to resolve the dispute by agreement. The Alabama Center for Dispute Resolution has a valuable website (www.alabamaadr.org) that provides rules, mediation/arbitration rosters, and other helpful information.
Over the past 10 years, the use of the mediation process to resolve disputes has expanded rapidly. Mediation has become a prerequisite to initiating arbitration in many contractual agreements containing an arbitration provision. Frequently, trial courts order parties to mediate their case rather than adjudicate, and more often than not the parties themselves agree to mediation. In fact, mediation of cases at the trial court level have approximately an 80% success rate, showing the value and appeal of mediation.
Mediation can take place before or after a lawsuit is filed, and the first step is to select a mediator. Selection of a mediator is done by agreement of the parties; but, if a lawsuit has been filed and the parties cannot agree on a mediator, the court may appoint a mediator. Typically, the mediator is an attorney who specializes in mediations, but this is not required for mediation occurring before a case has been filed. In essence, the role of a mediator is to facilitate a settlement agreement between the parties. However, a mediator is not a judge but, like a judge, does not represent either side. An experienced mediator can assist the disputing parties by sharing information about similar cases and outcomes with the parties, and he or she can give an unbiased evaluation of the case to both sides.
Benefits of Mediation
Including cost and time savings, some of the advantages to mediating disputes are as follows:
- Increased control by the disputing parties over the outcome of the dispute instead of allowing a judge, jury, or arbitrator to decide the case;
- Control of the outcome stays with those who are knowledgeable of the facts and issues involved in the dispute;
- Much quicker resolutions;
- Less expensive;
- Less formality;
- A voluntary process that can be terminated at any time and;
- Confidentiality of the proceedings (If a mediation is not successful, anything that is said or discussed during the mediation cannot used by one party against the other if the dispute/case proceeds to a trial.)
Mediation for REALTORS®
Mediation can be a successful alternative to settling and resolving disputes between REALTORS® and between REALTORS® and their clients. Mediation is not simply an option but is embedded in the very fiber of being a REALTOR®. Under Article 17 of the NAR Code of Ethics, REALTORS® (principals) must mediate certain contractual and non-contractual disputes, if mediation is required by the Local Board. Even when not required, disputes, including many ethics complaints, can voluntarily be resolved through mediation.
Local boards, as well as the state association, may have a mediation officer or officers, appointed by the Board or Board President. These officers serve as the mediators when REALTORS® mediate disputes and, typically, are selected based on their impartiality, familiarity with real estate laws and regulations, and knowledge of the Board’s arbitration procedures. Procedures vary by Board, but below are some high points from NAR’s model guidance.
- The Process – Parties may request mediation through the Local Board, or the Board’s professional standards administrator can refer a dispute to a mediation officer. Remember, the professional standards administrator may be required to refer certain disputes to mediation, while he or she may simply advise the parties of the option when mediation is not required.
- Good Faith Participation - REALTOR® parties involved in mediation must participate in good faith, even when required to participate. Good faith participation means that the parties truly attempt to resolve the dispute. Failure to act in good faith may subject the party to ethics violations.
- Mediate Then Arbitrate – Even when mandatory, mediation can still fall apart before the parties resolve the dispute. When this occurs and the dispute is ongoing, arbitration may be required.
- Failed Mediation – When mediation results in a signed agreement, REALTORS® must abide by the terms. However, if a REALTOR® does not abide by the terms of an agreement achieved through mediation, the aggrieved party should seek enforcement through a court instead of arbitration.
- Due Process Required – While mediation need not include attorneys, the parties should receive adequate notice of the mediation. However, the parties may waive this right.
About Ham Wilson
Mr. Wilson is the General Counsel of the Alabama Association of REALTORS® and managing partner of the law firm Ball Ball Matthews and Novak PA. He is a Fellow in the American College of Trial Lawyers. He is also a member of the Federation of Defense and Corporate Counsel and Alabama Defense Lawyers Association. In 2011, 2012, 2013, 2014, and 2015 Mr. Wilson was honored as an Alabama “Super Lawyer,” a distinction received by only 5% of the attorneys practicing in the state of Alabama. He is also a long-time Martindale-Hubbell AV rated trial attorney. Mr. Wilson has tried more than 75 cases throughout Alabama to jury verdict. He has handled professional liability, medical negligence cases, and personal injury cases for over 25 years.
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