Arbitration vs Court Costs: Which Is Cheaper? (2026)

If you are weighing whether to resolve a dispute through arbitration or a traditional lawsuit, one question dominates every decision: which one costs less? The short answer is that arbitration is often cheaper than court, but not always. The real savings depend on the type of dispute, the complexity of the case, and how each process plays out in practice. This article breaks down the actual numbers behind both options so you can make a clear, informed legal fees comparison for your situation in 2026.

For a deeper look at arbitration pricing alone, see our guide on How Much Does Arbitration Cost? Complete Fee Guide.

Breaking Down Litigation Cost: What Court Really Runs You

Many people assume that going to court is the default and that it must be affordable because the government runs the system. That assumption misses several expensive realities.

Filing Fees and Court Costs

Federal court filing fees sit at $405 for a civil case as of 2026. State court fees vary widely, ranging from $50 to over $500 depending on the jurisdiction and the type of claim. These initial fees are low compared to what follows.

Attorney Fees in Litigation

Attorney time accounts for 60 to 70 percent of total litigation cost. Civil litigators charge anywhere from $150 to over $1,000 per hour depending on the market and experience level. A business dispute or employment case that stretches 18 to 24 months can generate attorney fees between $75,000 and $150,000 before trial even begins.

According to a 2024 report from the U.S. Chamber of Commerce Institute for Legal Reform, tort system costs in the United States reached $529 billion in 2022, roughly 2.1 percent of GDP and $4,207 per American household.

Discovery: The Hidden Budget Killer

Discovery is the phase where litigation expenses often spiral out of control. Interrogatories, depositions, document production, and expert witness fees can easily double a case budget. The U.S. Courts Litigation Cost Survey found that discovery costs represent the single largest expense category across nearly all civil case types. For cases that reach trial, discovery and trial preparation together consume the majority of total legal spending.

What Arbitration Actually Costs

Arbitration shifts the cost structure. You pay less for drawn-out procedures but more for the decision-maker. Understanding the breakdown is key.

Filing and Administrative Fees

In consumer arbitration, filing fees are capped at $225 under the AAA Consumer Arbitration Rules (revised May 2025), with the business covering most administrative and arbitrator costs. For commercial disputes, administrative fees scale with the claim amount. A commercial case with three arbitrators carries a minimum initial filing fee of $2,275, a proceed fee of $3,400, and a final fee of $3,975 under AAA's commercial schedule.

Want to know who picks up the tab? Read Who Pays for Arbitration? Fee Allocation Rules for a full explanation.

Arbitrator Compensation

Unlike judges, who are paid by the government, arbitrators charge by the hour or by the day. Rates typically range from $300 to $1,500 per hour depending on the arbitrator's background and the complexity of the case. A single-arbitrator case lasting one or two days might cost $3,000 to $12,000 in arbitrator fees alone. A three-person panel multiplies that figure. For a detailed look at how these rates work, check out Arbitrator Fees: Understanding Hourly Rates and Structures.

Total Arbitration Cost Range

For straightforward disputes, total arbitration costs (including attorney fees, filing, and arbitrator compensation) generally fall between $10,000 and $40,000. Complex commercial cases can exceed $100,000, though this remains far below the cost of equivalent multi-year litigation.

Where Arbitration Is Cheaper Than Court

The biggest savings in arbitration do not come from lower fees at the front end. They come from compressing the timeline and cutting procedural overhead.

Shorter Timelines Mean Lower Attorney Bills

A 2017 study comparing federal court and arbitration outcomes found that the average time to trial in U.S. district courts was 24.2 months, compared to 11.6 months in arbitration. That 12-month difference translates directly into fewer hours billed by your attorney. If your lawyer charges $400 per hour and you cut six months off an active case, you can save $20,000 to $50,000 in legal fees alone.

For more on timing, see How Long Does Arbitration Take? Timeline and Duration.

Limited Discovery Cuts Expenses

Under the Federal Arbitration Act (9 U.S.C. sections 1-16), arbitration discovery is intentionally narrower than court discovery. Arbitrators have broad discretion to limit depositions, restrict document requests, and prevent the kind of sprawling e-discovery battles that drive up litigation cost. As the American Bar Association noted in its "Seven Factors to Consider" guide on choosing between litigation and arbitration, streamlined discovery procedures are one of the primary cost advantages of the arbitration process.

No Jury Trials, No Prolonged Hearings

Arbitration hearings typically last one to five days for a standard commercial dispute. Court trials, by contrast, often stretch over weeks once jury selection, opening and closing statements, witness schedules, and judicial calendar conflicts are factored in. Every additional day in a courtroom adds attorney fees, travel expenses, and lost productivity.

When Court Might Actually Cost Less

Honesty matters when making a legal fees comparison. Arbitration is not automatically the cheaper option in every case.

Small Consumer Claims

For disputes under $10,000, small claims court is often the most affordable path. Filing fees run from $30 to $75 in most states, no attorney is required, and the process wraps up in weeks. If your dispute qualifies for small claims court, arbitration's administrative fees and arbitrator compensation may exceed what you would spend in court. Explore our article on Free or Low-Cost Arbitration Options for budget-friendly alternatives.

Cases Needing Extensive Discovery

Some disputes, particularly those involving fraud, hidden assets, or complex financial records, depend on broad discovery to build a case. In arbitration, limited discovery can be a disadvantage if you need access to the other side's documents. In those situations, a court's broader discovery powers may save money in the long run by avoiding an arbitration that drags on due to insufficient evidence.

Disputes Where Precedent Matters

Court decisions create public records and legal precedent. Arbitration awards are private and typically cannot be appealed on the merits (see Hall Street Associates, LLC v. Mattel, Inc., 552 U.S. 576 (2008), where the U.S. Supreme Court held that the grounds for vacating arbitration awards under 9 U.S.C. section 10 cannot be expanded by contract). If establishing a legal precedent is a strategic priority, the value of litigation extends beyond dollars.

Watch for Unexpected Fees

Administrative fees, hearing room rentals, postponement charges, and panel fees can add up in ways parties do not expect. Our article on Hidden Costs in Arbitration: What to Watch For covers these line items in detail.

A Side-by-Side Cost Comparison

Here is a practical breakdown for a mid-range commercial dispute valued at $250,000:

| Cost Category | Court Litigation | Arbitration | |---|---|---| | Filing fees | $250 - $500 | $2,275 - $6,000 | | Attorney fees (total) | $75,000 - $200,000 | $30,000 - $80,000 | | Discovery costs | $15,000 - $75,000 | $5,000 - $15,000 | | Expert witnesses | $10,000 - $50,000 | $5,000 - $25,000 | | Arbitrator/judge fees | $0 (taxpayer-funded) | $10,000 - $40,000 | | Hearing room/court costs | $500 - $2,000 | $1,000 - $5,000 | | Estimated total | $100,000 - $327,500 | $53,275 - $171,000 | | Typical duration | 18 - 30 months | 6 - 12 months |

These are estimates. Actual costs vary based on jurisdiction, case complexity, and the parties' approach to the process. The key takeaway: arbitration's lower attorney and discovery costs often more than offset its higher administrative and arbitrator fees.

For strategies to drive these numbers down further, read Reducing Arbitration Costs: Strategies for Savings.

How Arbitration.net Can Help

Choosing between arbitration and court should come down to the facts of your dispute, not guesswork about costs. At Arbitration.net, our fully digital platform cuts the overhead that makes traditional arbitration expensive. No travel, no hearing room rentals, no scheduling delays. Cases move through a secure online system with real-time tracking, and our streamlined process means faster resolution at a lower price point.

Whether you are dealing with a contract dispute, employment disagreement, or consumer claim, we can help you understand the true cost of your options. Visit arbitration.net or connect with us at (888) 885-5060 to get a clear picture of what your case will cost.

Frequently Asked Questions

Is arbitration cheaper than court for small disputes?

It depends on how small the dispute is. For claims under $10,000, small claims court typically costs less because filing fees are minimal and no attorney is needed. For disputes between $10,000 and $75,000, arbitration is often the more affordable option because it avoids the extended timelines and discovery costs of full civil litigation.

Why do arbitrators charge so much if arbitration is supposed to save money?

Arbitrators are paid professionals, often retired judges or senior attorneys, who serve as private decision-makers. Their hourly rates ($300 to $1,500) reflect their experience. However, the total cost of a two-day arbitration hearing is usually far less than what you would pay your own attorney over 18 to 24 months of court proceedings. The savings come from a shorter process, not a cheaper decision-maker.

What is the biggest hidden cost in arbitration vs court?

In litigation, discovery is the hidden budget killer. Depositions, document production, and e-discovery can consume 50 percent or more of total legal spending. In arbitration, the most overlooked expenses are postponement fees, panel fees for multi-arbitrator cases, and hearing room costs. Understanding these line items ahead of time prevents surprises.

Can I switch from court to arbitration (or vice versa) to save money?

If your contract contains a binding arbitration clause, you are generally required to arbitrate under the Federal Arbitration Act (9 U.S.C. sections 1-16). If there is no arbitration agreement, you can choose court. In some cases, parties agree to move a pending lawsuit into arbitration by mutual consent. The decision should be based on a realistic cost estimate for both paths, not assumptions.

How can I keep arbitration costs as low as possible?

Choose a single arbitrator instead of a three-person panel. Agree to limited discovery upfront. Use a digital platform like Arbitration.net to eliminate travel and facility costs. Prepare your evidence thoroughly to avoid delays and continuances. For personalized cost guidance, reach us at (888) 885-5060.

This information is for educational purposes and should not be treated as legal advice. Consult with a qualified attorney for guidance specific to your situation.