What’s the Difference Between Mediation, Arbitration, and Litigation?

When a legal dispute comes up, figuring out how to handle it can feel overwhelming. There’s no one-size-fits-all answer—but understanding your options is a great place to start. The three most common ways to resolve a dispute are mediation, arbitration, and litigation. Each has its own approach, benefits, and trade-offs.

Here’s a breakdown of what each process looks like—and how to know which might be right for your situation.

Mediation: A Conversation with Help

Mediation is a more informal way to resolve a dispute. A neutral third party, called a mediator, helps both sides talk things through and try to reach an agreement. It’s collaborative, not combative.

• Is it binding? Only if both parties reach a settlement and sign off on it.

• When is it useful? When you want to preserve a relationship (think business partners or family members) or resolve things quickly and quietly.

• Pros: It’s private, usually faster and less expensive than other options, and gives both parties more control over the outcome.

• Cons: There’s no guarantee you’ll reach a resolution.

  
  

Arbitration: Like a Private Courtroom

Arbitration is a step up in formality. It looks more like a trial, but it happens outside the courtroom. A neutral arbitrator (or panel) hears both sides and makes a decision.

• Is it binding? Usually, yes. Most arbitration decisions are final and very hard to appeal.

• When is it useful? When you want a quicker resolution than litigation, but still need someone else to decide the outcome.

• Pros: It’s private, often faster than court, and the rules can be more flexible.

• Cons: It can be costly and limits your ability to appeal or dig deep into evidence (discovery).

  
  

Litigation: The Traditional Court Process

Litigation is what most people think of when they hear “legal battle.” It’s the formal process of resolving disputes through the public court system.

• Is it binding? Yes—and it includes the right to appeal.

• When is it useful? When the issues are complex, legal precedent matters, or public accountability is important.

• Pros: There’s a clear structure, decisions are enforceable, and the right to appeal protects against error.

• Cons: It’s often the most expensive and time-consuming path—and it’s public.

  
  

Choosing the Right Path

Each of these options has a time and place. The best choice depends on what’s most important in your situation—speed, cost, privacy, control, or setting a legal precedent.

Taking the time to understand these differences can help make a difficult situation a little easier to manage. And if you're facing a dispute, knowing your options is the first step toward making a smart, strategic move.