What is the Difference Between a Settlement and Mediation?

When you are involved in a personal injury case, you will hear the terms “settlement” and “mediation” used interchangeably. However, they are not the same thing. There are two main types of dispute resolution. The first is mediation which is often easier to carry out and usually more personal. The other is the settlement which is done through an arbitrator or a judge. While both of them have their merits and their own strengths, they can differ a lot. This blog will look at some of the key differences between them and what this means for you as a consumer.

What is a settlement?

A settlement is often defined as an arrangement or agreement between two parties, usually in an adversarial situation. The parties involved in the settlement either agree to a set of actions they will take or agree that they will not take some actions. If a party fails to perform the agreed-upon action, the other party is able to sue them to force them to perform the settlement. These settlements are often constructed by lawyers and judges, not by the parties involved.

Moreover, a settlement is when your service provider and a third party come to an agreement and settle their differences. In many cases, the settlement is reached for financial considerations. If a client is not happy about the work you have done for them, they may report you to their credit card company or refuse to pay a bill. Your credit card processor will then contact you to figure out how much the client allegedly owes and they will request they pay it. When the client refuses to pay the amount, the processor and the client will negotiate a settlement. This is when you would be required to pay a portion of the amount and/or remove the negative comment from your client’s account.

What is Mediation?

Mediation is a form of alternative dispute resolution (ADR) where two parties resolve a dispute by using a third-party neutral facilitator to assist in their discussion. This can be conducted by a judge, lawyer, arbitrator, or professional mediator. The role of the mediator is to help parties discuss the dispute, helping with finding possible solutions. Training as a mediator is not a requirement to conduct mediation. Mediators can come from any profession and often have a background in conflict resolution. They must be impartial and show no favors to either party. Mediation is cheaper and faster than going to court and it also helps the parties resolve their dispute more satisfactorily.

Moreover, mediation is a way for people to avoid a long and costly trial and arrive at an amicable solution to the dispute that works for both parties. Mediation is not a single process and does not require everyone involved in a dispute to participate. It is important to choose a mediator that you trust and feel is unbiased.

Differences between a settlement and a mediation

Here are a few differences between a mediation and a settlement.

First, mediation is voluntary and settlement is not. In a mediation, the party can opt out at any time. But in a settlement, one party cannot opt out. Second, in a settlement, the judge is telling the parties what the solution will be. But during mediation, the parties determine the solution themselves.

The other difference between a settlement and mediation is that in mediation. There is a neutral third party to help guide the process. This can be influential in the outcome, as the third party can offer opinions on what the best option for a settlement is for the parties involved. This is unlike a settlement, in which the parties have to determine an outcome that is mutually beneficial to both parties.

A settlement is when parties come to an agreement without a judicial decision. Mediation is when parties resolve a dispute through a mediator, who does not make a decision or give advice. Instead, the mediator helps the parties reach a resolution on their own.9

How do you choose between settlement and mediation?

There are a number of factors that one has to consider before deciding whether to settle or go for mediation.

The first and most important factor is the cost of the process. While settlement is cheaper. It also means that you will have to accept a settlement that is less than what you actually deserve. On the other hand, mediation can be expensive but it also offers greater chances of getting a better result.

Another factor is the amount of time and energy involved in each process. With the settlement, all you need to do is talk to your lawyer and make some changes to your contract. So that you can get what you want. But with mediation, there are many more steps involved like finding an appropriate mediator and then going through their availability calendar, etc.