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Mediation, arbitration should precede litigation of disputes


September 7, 2006

Read Time

2 minutes


By David Mack

An attorney, once on board in a legal dispute between an association and a second party, should work with the client to develop a strategy on how to proceed.

The strategy might include a decision not to talk with the other side any further. With a vendor, for example, the association might have had its fill of poor service.

“You don’t want to negotiate any more. You want to litigate,” said Howard Dakoff of the law firm of Levenfeld Pearlstein.

Attorney and client might decide other expert assistance is needed. They could determine that it’s necessary to hire an architect, an engineer or an accountant to ascertain if it’s prudent to proceed further.

“These are all professionals that a board may have to hire to evaluate the strength of its claim,” Dakoff said. A lawyer won’t necessarily know everything about a construction defect or a financial irregularity. The experts might have to testify later if preliminary negotiations with the other side’s counsel do not produce a settlement, and some form of official dispute resolution becomes necessary. Then, it might be determined if the association’s position has sufficient merit to withstand close judicial scrutiny.

When the association’s team has determined what financial compensation or other arrangement is to be sought to resolve the dispute, the request is presented to the defendant.

When no resolution has been reached, at some point the board and its attorney must decide if they want to settle or fight. If it’s the latter, one of three legal courses of action can be followed: mediation, arbitration or litigation.

Mediation is the simplest and least expensive of the methods. A third-party mediator is hired and listens to the arguments of both sides, going back and forth between them.

“It’s no different than shuttle diplomacy,” Dakoff said. “The mediator helps both parties come to a solution.” Both sides share equally in the cost.

There are two forms of arbitration. “The arbitrator makes the decision for you,” Dakoff said.

In the non-binding approach of arbitration, if the solution reached by the arbitrator isn’t acceptable to either party, the dispute can be taken to court. Some disputants will use non-binding arbitration simply to learn the strength of their positions.

Binding arbitration has no escape clause. The decision of the arbitrator is final, and the combatants must live with it.

“You use binding arbitration when you want to be done with the dispute,” Dakoff said. Again, both parties share the expense of the arbitration.

The last alternative is litigation, for “when you have no choice,” Dakoff said.

He said the firm he works for, Levenfeld Pearlstein, prefers litigation to either mediation or arbitration, especially in claims about construction defects.

“There’s better binding law for association/developer disputes, so we feel it’s better to litigate them,” he said. However, in the final analysis, “what we end up doing really depends on the matter,” he said.

Filed under: Community Association

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