General Information
What is ADR?
ADR, or alternative dispute resolution, generally refers to several formal and informal
methods of resolving disputes. The purpose of ADR is to encourage parties to come to a
creative and voluntary settlement of the dispute with as little delay as possible. Because
of the voluntary nature of the settlements, the relationships between the parties can often
be preserved, an outcome that is highly unlikely in the adversarial enviornment of the
courtroom. Mediation and arbitration are both the most commonly used and most commonly
known methods of ADR.
Arbitration, Mediation and Apriori
Arbitraiton refers to the submission of a dispute to one or more impartial parties, or
"neutrals," for the purpose of coming to a binding decision. Usually, arbitrators are
attorneys or experts from a relevant field. The parties involved control both the scope
of the issues that will be decided by the arbitrator and the range of damages that may be
awarded. In some cases, the parties may even decide that the award will only be advisory.
Although mediation also involves the use of a neutral third party, such a person plays an
entirely different role than an arbitrator. In mediation, the neutral person aids the
parties in effecting a settlement by making suggestions. Resolution of the problem, however,
ultimately rests with the parties themselves.
In deciding between the use of mediation and arbitration the parties need to ask one simple
question - how much control am I willing to give to the neutral party?
Apriori ....
Why ADR?
- Effectiveness and Speed: For years litigation was considered to be the
proper way to resolve a dispute. But, just as Chief Justice Warren Burger once noted, clients
are more concerned with the result than with the process, they "want relief, and they want it
as quickly and inexpensively as possible." ADR realizes the wisdom in this statement and
provides clients a less expensive and flexible manner in which to resolve their disputes.
Unlike the court system, the speed at which a resolution will be reached is constrained only
by the parties' willingness and not by the parties' position on a docket. The American
Arbitration Association boasts a history of achieving settlements within weeks of commencing
a mediation.
- Cost: Litigation may take months or years to conclude, and even then,
may be subject to continuation through the appellate process. Such a lengthy process results
in high attorneys' fees and leaves the client without satisfaction for an extended period
of time. By mediating and settling a case early in the process, more money will be available
for settlement, leaving parties in a better position following conclusion of the dispute.
- Acceptance: The goals and processes of ADR have existed for well over
sixty years, but only recently have they come to receive greater acceptance. With the
enactement of the Civil Justice Reform Act in 1990, Congress dramatically expanded the role
of ADR in the federal courts, requiring every federal district court to adopt a civil justice
expense and delay reduction plan. ADR earned additional favor with the passing of the Federal
Arbitration Act and the Supreme Court's recent decision in Mastrobuono v. Shearson
Lehman Hutton, Inc., 115 S. Ct. 1212 (1995).
Acceptance has also increased at the state level and with professionals. In 1993, the U.S.
District Court for the Northern District of California began requiring certain civil actions
be subject to a mediation program. A similar step was taken by over 600 of the nation's
largest companies when they signed a corporate policy statement issued by the the Center for
Public Resources in New York commiting each business to the use of ADR before filing action
in court.
- Informality and Flexibility: In ADR the rules of evidence do not apply.
The relaxed evidentiary standards provide parties with the opportunity to thoroughly explain
and support their position. Arbitrators or mediators are left to exclude such evidence that
is obviously hearsay or not relevant. In addition to the increased amount of testimony that
is allowed, the less formal nature of ADR allows parties to hold hearings after business hours
or at the site of the dispute. The informality gives participants a greater degree of control
over the process, thereby reducing the chance of a coerced settlement where parties finally
just "split the difference."
ADR Today
Virtually every type of dispute -- from domestic relations to disputes involving management
and labor -- may be resolved by ADR. Numerous state and federal jurisdictions are taking
advantage of the alternative by diverting portions of their caseload to ADR sponsored programs
in an effort to lighten their dockets. As a result, more than 60,000 cases per year, or the
equivalent of one-fourth of the cases filed in federal courts are being processed by the
American Arbitration Assocociation.
The inclusion of just one sentence in a parties' agreement may avoid the necessity of a
courtroom trial and ensure that the dispute is resolved in the most expedient and cost
effective manner - with ADR.