Arbitration is a better settlement device when the sides are entrenched. Arbitration usually involves a mini or summary trial. The rules of evidence are relaxed to permit admission of evidence without the formalities required in jury trials. For example, medical reports, rather than actual medical testimony, may be used to prove damages. This greatly reduces the time and expense of litigation.
If the arbitration is binding, the ruling of the arbitrator ends the dispute. If it is nonbinding, the ruling is advisory only. Both sides will learn a great deal about the case and its merit during the course of the arbitration. Often, settlement takes place shortly after a nonbinding arbitration.
High-low arbitrations are a special kind of arbitration in which each side submits a monetary figure. The arbitrator selects either the high figure, which, of course, is the one submitted by you, or the low figure submitted by the insurance company. He or she will not split the difference.
The reason for this is that it makes both sides submit their absolute best offer, because if they are too far off, the arbitrator will choose the other side’s figure. If the arbitrator could split the difference, then each side would exaggerate their position. It is kind of like when a parent lets one child break the candy bar in half and lets the other have first pick. Both take great care and precision to achieve the best result.
There are various kinds of high-low arbitrations. This is just one kind. Again, imagination is the key to finding a process on which both sides can agree.