Which type of dispute resolution often precedes a lawsuit?

The process of arbitration and mediation often precedes a lawsuit because these methods are designed to resolve disputes without resorting to the formalities of a court trial. In many contracts, parties agree to these alternative dispute resolution (ADR) mechanisms as a first step for resolving any conflicts that may arise.

Arbitration involves a neutral third party who makes a binding decision on the matter, while mediation focuses on facilitating a dialogue between the parties to reach a mutually acceptable solution. Both methods can save time, reduce costs, and provide more flexibility compared to going through the court system.

This approach can also foster better relationships between the parties, as it encourages collaboration rather than confrontation. Other options, such as court trials and hearings or verbal negotiations, do not consistently serve as preemptive steps before litigation, nor do cancellations of agreements resolve disputes but rather indicate a breakdown in negotiations. Thus, arbitration and mediation are particularly recognized for their role in resolving disputes prior to legal action.