If there’s one aspect of contracts frequently misunderstood or rarely given due consideration, it’s provisions relating to dispute resolution, and specifically, the increasingly common use of the alternative dispute resolution (ADR) procedures of mediation and arbitration. Those who fail to fully appreciate the relative advantages and disadvantages of including such provisions in agreements may be surprised to discover what rights they have given up by agreeing to such provisions.
Whether you realize it or not, odds are good that you’ve already agreed to arbitration. Arbitration provisions have become increasingly common in a wide variety of consumer services, such as cellular telephone contracts and credit card agreements. Arbitration provisions are also finding their way into photographers’ agreements.
"For as long as I was an active member of the American Society of Magazine Photographers, the ASMP sample contract forms specified arbitration as the means of dispute resolution between photographers and clients for most complaints," writes Christine Valada, a self-described recovering lawyer and professional photographer in Los Angeles, Calif., and author of the blog F/8 and Beware. "I believe the same held true for the Graphic Artists Guild forms as well, and for many of the generic forms available to photographers and artists."
Even today, the ASMP maintains an online tutorial on terms and conditions that photographers may wish to include in their agreements. With regard to disputes, the tutorial presents a provision requiring arbitration for any claim over $5,000, and permits claims below $5,000 to be submitted to any court.
Unfortunately, many people include arbitration provisions in agreements without realizing the consequences of using such provisions. "As soon as I saw the results of [an arbitration provision] in practice as a lawyer," writes Valada, "I changed my forms and advised my clients to do the same thing. Arbitration, especially if you can specify using an organization like the California Lawyers for the Arts, can be a useful means of dispute resolution someTimes. But it has become a huge barrier for most artists…."
Mediation And Arbitration Explained
For those unfamiliar with the concepts, mediation and arbitration are forms of alternative dispute resolution, meaning that they’re alternatives to having disputes resolved by a court or through a trial.
In mediation, the parties meet with a mediator—typically, a retired judge or attorney—who attempts to help the parties find ways to resolve their dispute. In such a proceeding, the mediator has no real power: He or she can’t decide the issues in the case or force the parties to do anything other than try to find a way to settle their case. However, a good mediator will gain a thorough understanding of the case, ascertain what the parties really need or want out of a dispute, and work to bridge the gap between parties. The biggest cost of mediation is the mediator’s fee, with each party typically paying half of the mediator’s hourly rate. The benefit of resolving a case in mediation is that the parties have the ability to control their own futures and to walk away with a certain result; the parties may not gain as much as they would if they won at trial, but at the same time, they walk away with more than they would had they lost at trial.