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The Benefits of Mediation and Arbitration for Dispute Resolution in Entertainment Law
by Jason Aylesworth
Litigation requires a huge investment of time and money for an uncertain verdict. Clients
in the entertainment industry must also risk irreparable damage to their reputation. Gossip
websites such as TMZ, E! and omg! exploit and sensationalize even minor disagreements which
celebrities then have the additional burden to publicly defend. Once a celebrity commences
litigation; it is practically guaranteed that the court filings will appear on The Smoking Gun
website.
Any litigator will attest that litigation has become a lengthy and expensive proposition. It
is a stressful process that destroys relationships. As some disputes will inevitably arise, lawyers
seeking to best serve their clients must consider other forms of dispute resolution in order to
avoid much of the delay, expense and disruption of traditional litigation. Mediation and
arbitration, both of which are responsive to party needs in a way that is not possible in a court
proceeding, are two of the most frequently utilized forms of dispute resolution. They have
particular applicability in the field of entertainment law. Consider a screenwriter who was not
given the proper credit in an upcoming film release. Would a court be able to quickly resolve
this non-monetary dispute as efficiently as an arbitration hearing could? How about the
bookwriter, composer and lyricist that collaborated on a musical that is about to move into a
Broadway theatre, only to learn that the director who developed the piece at a hole-in-the-wall
theatre demands part of the author's share in a profit pool? Would a judge with no knowledge of
the industry be as helpful as a neutral third party who could be chosen by all of the parties
involved?
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Mediation and arbitration are no longeralternative dispute resolution mechanisms, but
have become common in the resolution of commercial and non-commercial disputes between
and among business entities and/or individuals. Mediation and arbitration are routinely
incorporated into contracts as the method of choice for resolving disputes that may arise in the
future. They are also routinely used after problems arise and the parties seek an appropriate
means to resolve their disputes. We will explore the benefits of incorporating the following
dispute resolution endgame provision into an agreement between parties in the entertainment
industry:
"Any claim, dispute, misunderstanding or controversy or charge of unfair dealingarising under, in connection with, or out of this Agreement, or the breach thereof, shall be
submitted to mediation, before resorting to arbitration."
Many agreements expressly provide for alternative options in resolving conflicts. We
will explore the benefits in choosing a path as written in the provision above, where the parties
attempt to resolve the dispute in mediation first, before proceeding to arbitration, to encourage
parties in the field of entertainment to draft such provisions.
Mediation
Mediation is the process in which parties engage a neutral third party to work with them
to facilitate the resolution of a dispute. The focus is on resolving the dispute, rather than winning
the dispute. The advantages of mediation include the following:
1. Opportunity to Listen and Be Heard. Parties to a mediation have the
opportunity to directly air their views and positions, in the presence of their adversaries. The
process can thus provide a catharsis for the parties that can engender a willingness to resolve the
differences between them. Moreover, since parties are heard in the presence of neutral authority
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figures, the parties often feel that they have had "their day in court." In the entertainment
industry, there are lots of egos at stake. Clients that have suffered may want an opportunity to
tell their story, and clear up any misrepresentations that are exploited to the public.
2. Preserving an Existing Relationship. The litigation process can be very
stressful, time consuming, costly and often personally painful. At the end of litigation, the
parties are often unable to continue or restart a relationship. In contrast, mediation disputes can
be resolved in a manner that saves a business or personal relationship that; ultimately, the parties
would prefer to preserve. Many relationships in the entertainment industry are of a collaborative
nature, and it is pretty common for the parties in dispute to have had some success in prior
artistic collaborations. If the creative parties are able to overcome the hurdle of the dispute
through mediation, there is the potential that the parties can continue producing successful
artistic endeavors.
3. Creative Thinking and Problem Solving. Litigation can never resolve both
parties' issues in a way that is simultaneously favorable to both parties. In a mediation, all
parties involved can brainstorm together to find solutions that address most, if not all, of the
issues that are presented in the mediation. As stated earlier, people in the entertainment industry
are creative by nature, and are known to think outside of the box. Mediation should be the least
foreign process to anyone involved in any aspect of the entertainment industry.
4. Avoid the Uncertainty of a Litigated Outcome. Resolution during mediation
avoids inherently the uncertain outcome of litigation and enables the parties to control the
outcome. In the event that the mediation does not resolve all of the issues, which are then left to
be settled in arbitration, both parties may have a better understanding and more realistic
assessment of the value of their position in their dispute. A mediator without any stake in the
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outcome or advocacy bias can be an effective "agent of reality" in helping the parties to be
realistic as to their likely litigation or arbitration alternative.
5. Confidential Process and Result. Mediation is covered in private. Only the
mediator, the parties and their representatives participate. The mediator is generally bound not to
divulge any information disclosed in the mediation. Moreover, confidentiality agreements are
often entered into to reinforce the confidentiality of the mediation. Furthermore, the parties may
agree to keep their dispute and the nature of the settlement confidential when the matter is
resolved. The drama that may play out in a private mediation is essentially protected from
becoming a soap opera over the internet.
6. Less Emotionally Draining. Since mediation can be conducted sooner, more
quickly, less expensively and in a less adversarial manner, there typically is much less of an
emotional burden on the individuals involved than proceeding in a burdensome and stressful
trial. Furthermore, proceeding through trial may involve publicly reliving a particularly
unpleasant experience, or exposing an unfavorable business action which gave rise to the
dispute. This is avoided in mediation.
7. Less Financial Burden. By resolving disputes earlier in mediation rather than
later in litigation, parties can save tremendous sums in attorney's fees, court costs and other
related expenses. Particularly for new artists, filmmakers and producers who are just making
ends meet to support their craft, most of them do not have a reserve account to fund litigious
battles.
8. Control by the Parties. Each dispute is unique, and the parties have the
opportunity to design their own unique approach and structure for each mediation. They can
choose the mediator who has the experience and knowledge they require, and, with the help of
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the experienced mediator, plan how the mediation should proceed and decide what approaches
make sense during the mediation itself.
9. The Mediator Plays a Crucial Role. The mediator's goal is to help the parties
settle their difference in a manner that meets their needs and is preferable to the litigation
alternative. An experienced mediator can serve as a sounding board, help identify and frame the
relevant interests and issues of the parties, help the parties test their case and quantify the
risk/reward of pursuing the matter, and, if asked, provide a helpful and objective analysis of the
merits to each of the parties, foster and even suggest creative solutions, and identify and assist in
solving impediments to settlement. This is often accomplished by meeting with the parties
separately in private caucuses, as well as in a group, so that all participants can speak with total
candor during the mediation process. The mediator can also provide the persistence that is often
necessary to help parties reach a resolution.
10. Mediation Helps In Complicated Cases. When the facts and/or legal issues are
particularly complicated, it can be difficult to sort them out through direct negotiations, or during
trial. By contrast, mediation provides an opportunity to break down the facts and issues into
smaller components, thereby enabling the parties to separate the matters that they agree upon,
and those that they do not yet agree upon. The mediator can be indispensable to this process by
separating, organizing, simplifying and addressing relevant issues.
11. Expeditious Resolution. The mediation can take place at any time. Since
mediation can be conducted at the earliest stage of a dispute, the parties avoid the potentially
enormous distraction from their businesses and the disruption in their personal lives that results
from protracted litigation.
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12. ThePro Se Litigant. Mediation can be very helpful when a party does not have
an attorney and is therefore representing him/herselfpro se. Court litigation can be very difficult
for thepro se litigant who is unable to navigate the complexities of the court process and trial.
Dealing with apro se litigant in court can also create difficult challenges for the party that is
represented by counsel. However, in mediation, the parties can more easily participate in the
process and benefit from the involvement of an experienced mediator.
13. Parties Retain Their Options. Since resolution during mediation is completely
voluntary, the option to proceed thereafter to trial or arbitration is not lost in the event the
mediation is not successful in resolving all matters.
Arbitration
Arbitration for the most part is an abbreviated trial. It is a process in which parties
engage either a third party neutral arbitrator or a panel of three arbitrators to conduct an
evidentiary hearing and render an award in connection with a dispute that has arisen between
them. Even after a mediation where most of the issues have been resolved, parties may still have
certain impediments that they could not overcome and were stuck at an impasse. Since such
impediments are nevertheless a small portion of the scope of the original dispute, arbitration
would be the appropriate forum to reach a quick verdict. The advantages of arbitration in lieu of
litigation include the following:
1. Control. Both parties can design the process to meet the needs of the parties
involved, including choosing the arbitrator or panel of arbitrators. Parties cannot choose a judge
when they are entering the arena of litigation. Moreover, parties can select arbitrators that may
have expertise in the specific area of dispute, which arbitrator may have a better basis of judging
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issues on the merits rather than a justice who may only have a basic general knowledge of what
is customary in that particular industry. In addition, the parties will also have input in scheduling
the arbitration hearing at a time that is convenient to everyone involved. Litigation does not
offer parties a mutual calendar that takes in consideration everyone's obligations.
2. Speed and Efficiency. Disputes in arbitration tend to arrive at a conclusion much
sooner than in litigation. Arbitrations can commence and conclude within months, and often in
less than a year. It is rare for cases in litigation to be resolved within a year, and that does not
even factor in appeals which can stretch the period of resolving disputes to a number of years.
3. Economical. The arbitration process can result in substantial savings of
attorney's fees, court costs and other related expenses because the arbitration process generally
does not include time consuming and expensive discovery that is common in litigation (e.g.
pricey motion practice, costly depositions and very extensive e-discovery).
4. Finality. In court proceedings, parties have the right to appeal the decision of a
judge or the verdict of a jury. In contrast, the grounds for court review of an arbitration award
are very limited. The award of an arbitrator is final and binding on the parties.
5. Privacy. Arbitrations are conducted in private. Only the arbitrators, the parties,
counsel and witnesses attend the arbitration. Confidentiality of the arbitration proceedings,
including sensitive testimony and documents, can be agreed to in advance by the parties. In
contrast, court proceeding are generally open to the public. Moreover, the parties suffer less
damage to their potentially ongoing relationship in the entertainment industry since the format in
a private arbitration is less adversarial. Finally, the awards could be made confidential, so
outsiders cannot make presumptions on winners or losers.
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Not giving a client the option of choosing which process to use in resolving a dispute can
be a costly disservice. Most parties cannot afford the time and money spent drudging through a
grueling and contentious marathon to resolve the dispute. Attorneys should direct their efforts to
resolving a dispute in mediation, rather than wasting resources to achieve a result that may
ultimately burn bridges. Litigation is counterintuitive to creative people. While talented artists
and producers may fight for their artistic beliefs and convictions, most have accepted that theirs
is a collaborative process. That same spirit of collaboration can and should be extended to the
resolution of disputes.
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