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Litigation vs. Arbitration in Florida: What Businesses Should Consider Before Signing a Contract

In the fast-paced world of business, conflicts are often inevitable. When they arise, how those disputes are resolved can significantly impact cost, timing, and outcomes. For Florida businesses, one of the most important decisions happens long before any disagreement begins: choosing between litigation and arbitration in your contracts.

Both litigation and arbitration are methods of resolving disputes, but they differ significantly in formality, cost, confidentiality, and strategic implications. Understanding these differences can help business owners make smarter decisions and avoid unpleasant surprises down the road.

Here’s a deeper look at what every Florida business should consider:

What Is Arbitration?

Arbitration is a private dispute resolution process where a neutral third party—an arbitrator—hears both sides of the case and renders a binding decision. It’s typically faster and less formal than court proceedings, though it still involves legal briefs, evidence, and witness testimony.

What Is Litigation?

Litigation refers to resolving disputes in state or federal court. It’s a public process governed by strict rules of procedure and evidence, often resulting in a longer and more expensive path to resolution. However, it offers the right to appeal and more structured legal protections.

Key Differences That Matter for Florida Businesses

1. Cost and Speed

Arbitration is often promoted as being faster and cheaper than litigation. While that’s sometimes true, it depends on the complexity of the dispute and the number of arbitrators involved. Some arbitrations, especially those requiring three arbitrators, can rival litigation in cost.

Litigation, while slower, allows for formal motions, discovery, and appeals. This can be critical if the case involves complex legal issues or significant financial exposure.

2. Confidentiality

Unlike litigation, which plays out in public courtrooms and creates a public record, arbitration proceedings are typically private. This can be a major advantage for companies concerned about reputational risk or the disclosure of sensitive business information.

3. Right to Appeal

One of the most important distinctions: arbitration rulings are usually final and binding, with very limited options for appeal. If the arbitrator makes a legal or factual error, you may have little recourse. In contrast, court rulings can be appealed through the judicial system.

4. Choice of Decision-Maker

In arbitration, parties often choose their arbitrator(s), which can be beneficial in highly technical or industry-specific disputes. In litigation, the judge is assigned. This means you may end up with a decision-maker unfamiliar with your business or industry.

5. Enforceability

Both arbitration awards and court judgments are enforceable, but arbitration is often favored in international business because arbitral awards are recognized in more countries under treaties like the New York Convention. For Florida businesses with international ties, this can be crucial.

What to Include in Your Contracts

If you choose arbitration, don’t just rely on boilerplate language. Work with your attorney to specify:

• Whether arbitration is mandatory or optional
• The governing rules (e.g., AAA, JAMS)
• The number of arbitrators
• The seat (location) of arbitration
• How fees will be divided
• What disputes are covered

If you prefer litigation, consider:

• Specifying jurisdiction (e.g., Broward County, Florida courts)
• Waiving jury trials (if desired)
• Outlining mandatory mediation before trial

Industry Trends in Florida

In industries like construction, finance, and healthcare, arbitration clauses are increasingly common. However, many business owners don’t realize they’ve signed away their right to sue until it’s too late.

South Florida’s commercial litigation climate remains active, especially in jurisdictions like Miami-Dade, Broward, and Palm Beach Counties. Whether you’re doing business locally or internationally, knowing the dispute resolution landscape can prevent costly mistakes.

Final Takeaway

There’s no one-size-fits-all answer. Litigation offers structure and safeguards. Arbitration offers speed and privacy. The best path depends on your company’s goals, risk tolerance, and industry.

At Conrad & Scherer, we help businesses across Florida and beyond draft dispute resolution clauses that match their legal strategy and protect their bottom line. Before you sign—or revise—your next contract, make sure your dispute clause serves you, not just the other party.

Need help evaluating your contracts or dispute resolution strategy? Contact Conrad & Scherer today.