This is a question I am asked so often, I thought an explanation would be appropriate.
Mediation is a process where a third party, a “Mediator” helps you and your spouse settle the issues in your divorce. It is the best way to resolve your issues, costs the least amount of money and usually results in a settlement that will stick. Most optimally mediation is used in low to medium conflict divorces and where the assets to be shared are straight forward and uncontested.
The mediator is not there to make the decisions for you; the mediator will help you understand each other’s position and help you reach a compromise that is acceptable for both parties. A good mediator will often make suggestions as to how they have seen things done by other couples or where they see a way through an impasse, but ultimately, the decision is yours. Mediation is not binding so if the results are too biased one of the parties can just walk away without any harm, other than wasted funds on mediation fees. That is why mediation works and is successful; the positions reached are not horrible for either party. I phrase it that way because a good settlement is where both parties are slightly unhappy. Neither of you won or lost.
Sometimes you attend mediation with your lawyers. This happens in higher conflict divorces where the parties cannot easily talk to each other or where one party needs additional support. All of the parties, (you and lawyer, spouse and lawyer and mediator) can be in one room, the mediator can work with the lawyers and the lawyers step out to talk to the clients or the mediator can go back and forth between the parties, each in different rooms, to negotiate a settlement.
Arbitration is used where there is no meeting of the minds by the parties on the issues and they need a third party to make the decision for them. Arbitration is similar to going to court in that each side presents their case to the Arbitrator and then the Arbitrator makes the decision.
In arbitration an Arbitrator is hired, (typically a retired Judge or highly experienced attorney) and each side presents their arguments to the Arbitrator as to why they think their position is the best way to resolve the case. Arbitration is like a trial. Witnesses may be called and testify, under oath, and can be cross-examined. Exhibits are put into evidence. At the conclusion there are summations and the Arbitrator makes a decision. Who should get/pay a certain amount of alimony for X number of years, who should get what assets and at what value and who should assume what debts is presented to the Arbitrator until every issue is decided.
Arbitration is an excellent alternative to a trial in court. With arbitration you have more control over the process which costs you less in legal fees. If you have a trial, the judge may have to deal with more pressing issues (domestic violence/Temporary Restraining Orders) or preside over uncontested divorces while you all wait in the hall. Additionally if you use the courts it is often difficult for the judge to give you blocks of continuous time so a trial can end up spreading over many court dates. All of this is very costly in legal fees.
Arbitration is also a good idea if there is privately owned business involved and where the owners may be expensing non-business expenses to the business (personal travel/entertainment or cell phone use for example). If this is revealed to the court, the court is required to report this to the IRS which could cause tax issues for the business owner and their spouse who typically would have filed joint tax returns.
You typically should ask for binding arbitration; this is where the Arbitrator’s decision is final and binding for all parties. Going through this process when it is not binding seems like a bit of a waste of time. If it is non-binding, and one party does not like the decision they can just walk away and you have to start all over, likely this time with a trial. If money is not an issue (aka more money than brains) this is a way to see how the case might be tried by a court but the emotional toll will be enormous, even if you have money to burn, so if you use this method, make it binding so you can get on with your life.
Arbitration can be used if there are only a few things that you cannot agree upon; you would mutually agree only to deal with those issues and it could be a fairly quick process.
The level of conflict and the parties’ willingness to reach a settlement will ultimately determine if you end up with mediation or arbitration. Start with mediation and see if you can make that work. You would then move to arbitration if there is no ability to reach agreement. The Arbitration Decision or Opinion can be used as your property settlement agreement and once in hand, and you have a parenting agreement, it is fairly simple to finalize your divorce.