Alternative Dispute Resolution: An Alternative to Costly Litigation

Alternative Dispute Resolution ("ADR") refers to the use of a private neutral party to settle business or personal disputes. ADR is often faster and much less expensive than traditional litigation, which is why parties are increasingly turning to ADR to resolve conflicts.

ADR typically includes early neutral evaluation, negotiation, mediation, and arbitration.

Early Neutral Evaluation

Early Neutral Evaluation involves an impartial third party looking at the matter in dispute and providing an objective assessment of its strengths and weaknesses. The person conducting the evaluation is often an attorney who is experienced in the subject matter of the dispute. The evaluation process allows the parties to assess the strength of their respective positions and to evaluate whether proceeding with the case is worth the effort and money.

Negotiation

Negotiation is what individuals and businesses do every day when they have divergent interests. In the context of a legal dispute, negotiation allows the parties to meet formally to discuss their positions in order to come to a settlement. The negotiation can be conducted among the parties themselves without the intervention of a third party. However, once a dispute has arisen, the parties may no longer be able to negotiate productively and may benefit from the negotiation being facilitated by an attorney or other experienced facilitator. Unlike mediation and arbitration (discussed below), the main advantage this form of dispute settlement is that it allows

the parties themselves to control the process and the solution.

Mediation

Mediation is a negotiation between disputing parties with a trained mediator directing the process. The mediator assists the disputing parties in problem identification and bargaining. The mediator tries to help the parties find common ground and come to an acceptable settlement, but he or she has no power to impose an agreement.

Arbitration

Arbitration is normally used for the resolution of commercial or labor disputes. Like mediation, arbitration is a method of having a dispute resolved by trained impartial persons who are knowledgeable in the subject matter. Although arbitration is private means for resolving disputes, arbitration procedures are governed by state and federal law. Unlike mediation, arbitration decisions are usually final and binding (although parties may elect non-binding arbitration). As a result, in choosing binding arbitration, the disputing parties generally give up their right to pursue the matter through the courts, since a binding arbitration award is subject to review by a court only on a very limited basis.

Although some think of ADR as an alternative to the court system, the two approaches to dispute settlement often work closely together. Parties can begin their dispute settlement using ADR or be ordered to an ADR forum by the court after litigation has begun. Given lengthening court queues, rising costs of litigation, and increasing time delays, it might be worth having your business explore ADR as a means to simplify dispute settlement in the future.

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