Introduction

You probably already know that very few cases filed in civil court ever travel as far as the courthouse steps. By some estimates, less than 5% of all civil case filed actually go to trial. Rather, as you probably also know, most cases "settle" after a long, drawn out process of negotiation, give and take, posturing, saber rattling, cranky letters and depositions. All of this has significant costs: time, money, emotional distress and a sense that someone must win or lose. There is no middle ground here, and the risk of both sides ultimately losing is great.

ADR: Fast, informal and inexpensive

By contrast, alternate dispute resolution ("ADR") offers a totally different way of resolving disputes, one that is informal, collaborative, less costly and has as its mission the search for creative ways of accommodating the interests of each side. Note well, however, that ADR is not appropriate in every circumstance, and the process does not always succeed. However, one attribute of ADR is absolutely compelling and worth keeping in mind: the chance that your case would settle is more than 95%.

Why not cut to the chase and use ADR to air everyone's grievances, complaints, desires and demands and thus get to the same place? No rights are given up by doing so; ADR hearings are confidential and cannot be used as evidence if there is subsequent court hearing or trial. There are many different types of ADR, including the familiar ones such as mediation and arbitration. Moreover, there are different formats and setting in which ADR can take place, including online dispute resolution, known as “ODR” a relatively new service that has grown up with the internet. For more information on this unique type of dispute resolution, click here to read more.

Types of ADR

Although there are many different types of ADR and variations of each, we will examine four types that are commonly used: mediation, arbitration, early neutral evaluation and dispute resolution boards. All four are less formal than pursuing a lawsuit, less costly and more time-efficient.

Mediation
In this type of ADR, there is an impartial, third party chosen by the parties that assists each side in reaching a resolution. Unlike an arbitrator or a judge, a mediator does not make a decision regarding the outcome of the dispute nor does he or she rule on evidence or testimony. The resolution may or may not result in a money settlement, since mediation allows the parties to determine the best solution between themselves.

Although the process is informal and procedurally simple, the mediator often sets down "ground rules" and provides a structured forum so all sides can be heard.

Arbitration
In arbitration, a neutral third party who is jointly chosen by each party hears arguments and testimony (including evidence) from each side and then decides on the outcome of the dispute. Arbitration may be "binding" which means that each of the parties waives their right to a trial and accept the arbitrator's decision as final. Nonbinding arbitration means that the parties can request a trial (pursue a lawsuit) if they do not accept the decision of the arbitrator.

Early Neutral Evaluation (“ENE”)
This type of ADR is often part of a court-mandated program and is administered by the court. Parties are required to attend an evaluation session that is directed by an attorney who is an expert in the legal area that is in dispute. Following the presentation of each side's case, the attorney-evaluator will give an opinion on the strengths and weaknesses of each party's case, including the evidence offered and arguments given. This often gives the parties an opportunity to identify areas of agreement and assess the potential liability and range of money damages.

Dispute Review Board or Dispute Resolution Board
This type of ADR is unique in several aspects but may represent the future of ADR since it emphasizes dispute avoidance or management. Currently, DRBs are most popular in the construction industry where untimely and costly disputes could mean financial disaster for firm operating under a spider's web of contracts. A DRB is typically a three person panel of neutrals who are hired at the start of a project to help resolve on-site issues prior to the filing of any formal claims or complaints. Usually the neutrals do not possess binding authority, but issue recommendations. Board meetings are held to review the project management of the work and to determine where disputes might be on the horizon.

The use of DRBs or some derivative of a DRB in the workplace and other settings is now being considered by many corporations and represent a structural change in how corporations resolve disputes quickly and in a relatively painless fashion.

Advantages of ADR

Voluntary
The process can go forward only with the consent of all parties; each party reserves the right to withdraw for any reason and the right to pursue a lawsuit.

Parties control, not courts
Parties control the process and outcome. In ADR,each side has the opportunity to tell his or her side without the formalities, constraints and intimidation of a trial or deposition.

Fast results
ADR is a very quick process. Often a dispute can be settled within a matter of months or even weeks. Lawsuits, as you probably know, can take at least a year or more and often do not reach the courthouse despite months of preparation, depositions and evidence gathering.

Less expensive
ADR offers significant savings of money. A lawsuit,no matter how small, inevitably requires expenditures on attorneys' fees, court costs, expert witnesses, deposition costs and opportunity costs associated with the time involved in preparing for
trial.

Preserves relationships
Because ADR is not adversarial and less hostile, there is a much greater chance that relationships can be preserved if that is important to both parties.

Quickly determines merits of case
ADR offers a problem-solving environment, with the advantage of a disinterested, third party present.This also offers the opportunity for all parties to assess the merits of each other's case -- and their own. Often, ADR is used as a way of evaluating the merits in an informal setting.