Torts are cases of alleged civil rather than criminal wrongdoing. The accusations presented in a tort do not result in judicial punishments such as imprisonment but may order financial compensation. Personal injury suits are among the most common torts.
When a large number of people suffer closely related injuries due to the actions or negligence of a single or multiple parties, attorneys can seek compensation through a mass tort. These torts allow many injured parties to seek compensation without the expense and hassle of securing their own attorneys.
Although class action suits follow this same blueprint, they differ from mass torts in some aspects. Most significantly, any group in a class action suit is considered a “class” represented by a single class representative. By contrast, the court treats each party in a mass tort as distinct from all others, meaning that each party must prove certain facts in the case.
In dispute resolution between two parties, especially involving interpersonal conflicts or breach of contract with substantial consequences like financial loss, most parties opt for the courts to assist in resolving the issue. However, alternative dispute resolution pathways exists – mediation and arbitration. The differences between the two include the setting, the third party, the proceedings, and the final decision maker.
Mediation is a dispute resolution process involving negotiations to solve a dispute – an independent third party delves into the conflict and offers advice on options to settle the matter. The method may be initiated voluntarily, as part of a dispute resolution clause in a contract, or from court orders.
Unlike arbitration, where the parties in dispute share a room, mediation usually involves placing the two parties in separate rooms, with the mediators shuffling between the two during the mediation process. Also, rather than giving advice or taking sides, the mediator is expected to listen to both sides and use the provided information to offer independent solutions.
The scale of the mediation process usually depends on the parties involved. Disputes featuring serious breaches of contracts with severe consequences, like commercial disputes with the risk of substantial financial loss, often feature retired judges and senior lawyers as the mediators.
Unlike arbitration, which typically takes from six months to at most a year, mediation typically takes one day. However, the parties may request that they reconvene if other critical matters arise.
Compared to arbitration, mediation has a less formal setting and structure. The process also allows the parties to negotiate settlements other than financial compensation to ensure a win/win situation and the protection of both parties’ commercial interests. However, this scenario is rare when the parties’ relationship seems irredeemable.
Arbitration, on the other hand, is similar to standard litigation. The primary difference is that the process occurs outside of the courts. Instead of a judge, an independent adjudicator decides the dispute based on the provided evidence.
Parties bound by a contract, especially in a business deal, voluntarily seek arbitration options for dispute resolution, often involving a breach of contract, rather than court proceedings to keep the matter private and for quicker resolution.
The parties agree on the preferred arbitrator to handle the arbitration process. However, in some cases, the parties may disagree on the preferred choice. In such a case, the only option is to select an independent body or neutral individual to make the selection.
Arbitration differs from mediation. The former has more structure and follows a much more formal process. Unlike mediation, arbitration has a formal hearing like in a court case. The process may include a lengthy pre-arbitration period, pleadings, discovery, and witness statements.
The arbitrator may also cross-examine both parties, especially in cases where the solution is not straightforward and requires more insight. Last, as the arbitrator’s decision should be binding, they often prepare a detailed written decision after the hearing.
Other than privacy, parties pursue arbitration rather than court litigation for more flexibility on the case, efficiency, and shorter resolution times. Unlike courts, arbitrators rarely queue or adjourn the cases.
Also, the arbitrator, legally qualified and guided by the Resolution Institute Arbitration Rules, typically has a legal background and expertise in the area of dispute, for example, contractual agreements. Among other parameters, the rules mandate that the arbitration proceedings and final decision remain confidential.
In most cases, arbitration costs roughly the same as litigation, as the parties pay legal fees to the American Arbitration Association, the adjudicator’s fees, and miscellaneous costs like room hire. Usually, the losing party pays for these fees.
In 2021, the United States was home to some 4,200 commercial banking institutions with Federal Deposit Insurance Corporation (FDIC) coverage and nearly 72,200 individual commercial bank branches. Whether a bank or other institution provides a wide range of boutique services or specialized financial support, such institutions face several shared threats, including fraud or breach-of-contract claims and insurance policy coverage issues.
Legally speaking, fraud can be defined as one party intentionally misrepresenting facts or withholding important information in a way that results in some form of harm for other parties, such as financial losses. Regarding financial institutions, fraud claims are sometimes made by customers who have noticed unauthorized withdrawals or spending on their accounts. In other instances, anti-fraud security systems alert financial institutions to potentially fraudulent behavior.
Financial institutions must be prepared to respond to fraud claims quickly and effectively. Claims may require an investigation to determine whether fraud occurred and, if so, what party is liable. In 2022, bank transfer and payment fraud alone represented a loss of $1.59 billion.
Fraud claims also play a key role in client satisfaction and retention: one consumer survey report found that 77 percent of financial institution clients would leave if they did not receive a refund for fraudulent spending on their accounts. Conversely, nearly half said they would consider pulling out of their institution if faulty fraud-detection technology stopped a legitimate transaction.
At other times, financial institutions may need to protect themselves against fraudulent client behavior. A false statement on a loan application may be classed as a white-collar crime punishable by up to three decades in prison. Studies indicate that as many as 11 percent of loan applications contain false or insufficient information regarding income and employment.
A breach-of-contract claim, meanwhile, occurs when one or more elements of a contract have been violated. A contract breach may be minor or unintentional, such as a late payment, while other instances are far more complex and costly. There are several ways a client or third party might claim a breach of contract against a financial institution; in some cases, these can support fraud claims. A 2019 Financial Industry Regulatory Authority (FINRA) report found 1,711 breach-of-contract claims the year prior.
In 2023, the Consumer Financial Protection Bureau began pursuing legal action against Bank of America. Claims range from the wrongful withholding of credit card rewards to double dipping on various account fees.
Financial institutions may require legal support to pursue a breach-of-contract lawsuit. For instance, debt-collection lawsuits are typically filed for breach of contract: the debtor agreed to repay a debt at a specific time and amount but failed to do so, which constitutes a breach.
Finally, insurance policy coverage issues can create serious problems for financial institutions. While the FDIC protects account holders from losses up to a point, institutional leaders should pursue numerous other areas of support to provide the organization with coverage. Important policies include standard crime, errors-and-omissions, and directors-and-officers liability insurance. The latter protects institutional leaders from personal losses. Banker’s blanket bonds are a class of fidelity bonds that protect institutions if an employee commits a criminal act.
Financial institutions may need to contend with additional threats like partnership conflicts, problem-loan issues, and real property disputes. Organizations must maintain a legal staff capable of addressing these matters before they impact the normal business flow.
Bethany Recht is an experienced attorney from Cincinnati, Ohio. She earned her juris doctor from Northwestern University School of Law and, since 2010, has served as a partner at Keating Muething & Klekamp PLL. Bethany Recht is co-chair of the firm’s Diversity Committee and specializes in real property disputes, insurance policy coverage issues, and breach of contract claims.
A breach of contract occurs when one of the parties involved doesn’t honor their obligations or comply with the terms of the contract. However, not all instances in which the agreements outlined in a contract aren’t met are considered a breach of contract. Parties can be in non-compliance of the contract without breaching it, as long as they have a lawful excuse, which includes mutual mistakes regarding important clauses and signing a contract under duress.
There are several different types of breach of contract, including minor breach and material breach. A minor breach, sometimes called a partial breach, happens when one party fails to deliver a particular component of the contract. A supplier failing to deliver the exact amount of materials to a manufacturer would be an example of a minor breach. A material breach occurs when the breaching party delivers something entirely different than what the non-breaching party asked.
Other examples include an anticipatory breach, fundamental breach, and actual breach. Non-breaching parties in contracts have the right to seek compensation through the courts, mediation and negotiation, and alternative dispute resolution.
Bethany Recht 
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