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Arbitration and Mediation, Best Practices

At the New York City DrupalCamp3, in a session on open source and business, the presenter strongly emphasized including an arbitration clause in any contract. He stressed that not only could it save a small design firm from being buried by the expense of a lawsuit, it gives a chance for the relationship with a client to be preservedd.

A New England dispute mediation provider gave further insight:

I'd certainly advise people to avoid putting AAA in contracts because they are far more expensive than anyone expects. I think the best clause would first push people to mediate as opposed to arbitrate and use arbitration as a last resort.

Mediation allows the parties to repair broken lines of communication and often regain a positive business relationship. If mediation is unsuccesful, which is surprisingly rare, the parties can still enter into arbitration.
The reason people often include AAA in a contract is because a) they can spell it b) seems like what everyone has always done c) they are a national organization.

I would recommend that people word their clauses to say arbitration at a mutually agreeable forum or in the case of an inability to reach agreement, AAA. This allows people to use a local program like mine that is less expensive and provides a much higher level of individualized attention.

I appreciate the offer to substitute Case Closed for AAA, but honestly, I couldn't do much for someone that wants an arbitration set up in Nevada or some other far off locale. I am basically a local program and just cover New England. Mainly Mass and Ct. It might be worth bringing up the topic of on-line mediation as an early alternative to other forms of dispute resolution. I have several mediators in my network that are promoting these types of options. It is certainly easier and more geographically feasible in many cases.

Let me know what people have to say. I'm always available to answer questions and feel free to suggest me to anyone who is in New England.

These useful thoughts are from David F. Babik, whom you can contact at Case Closed Babik Dispute Resolution Services.

For background see Arbitration and Mediation Definitions.

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