Alternative Dispute Resolution (ADR) a Growing Trend in Settling Disputes Without Litigation

A trial is an expensive, time-consuming tool to use in a search for justice and is especially stressful for a plaintiff who may have been severely injured and in the midst of extensive medical treatment or rehab.

That is why many litigators rely on other strategies and methods to avoid a trial when feasible. A common option, of course, is to negotiate an out-of-court settlement which provides justice at an agreed upon level without undergoing the rigors of a trial.

While some attorneys are better than others at negotiating an out-of-court settlement, the process is unscientific, unpredictable, and at times unprofessional. Furthermore an out-of-court settlement can being a high risk endeavor putting both sides at the mercy of an emotional process often determined by outside forces meeting in high-powered, closed door sessions developing strategies to spring a trap on the unsuspecting plaintiff who only wants justice - not high-noon drama.

Increasingly, the shortfalls of settlement bargaining are being overcome by relying upon Alternative Dispute Resolution (ADR), a growing trend for commerce and government as well as for the legal system.

Alternative Dispute Resolution involves the use of procedures for settling disputes by means other than litigation. ADR commonly involves the use of arbitration, mediation or mini-trials. These procedures are less costly and more expeditious than litigation and are increasingly being used in commercial and labor disputes, divorce actions, in resolving motor vehicle and medical malpractice tort claims, and for other disputes that would otherwise likely end up in a trial.

By the early 2000s, ADR was being used more and more as plaintiffs, lawyers and judges agreed these procedures could help resolve legal disputes quickly, cheaply and more privately than conventional trials. Many reformers also felt ADR is a creative tool more focused on problem solving than litigation which is based on an adversarial model.

Because Alternative Dispute Resolution has been so effective, only about 5 percent of all cases actually go to trial while the remaining 95 percent are resolved through out-of-court settlements or with ADR. So what once was an alternative is now becoming the norm.

The most common procedures are arbitration and mediation. For this reason, I will not linger long on either method. Briefly, mediation or conciliation provides a forum in which parties can resolve their disputes with the help of a neutral third party. Mediation depends upon the commitment of the disputants to solve their own problems. The mediator never imposes a decision but keeps both parties talking until an agreement is reached.

Arbitration involves use of a neutral third party who, after hearing the evidence and arguments, imposes a binding decision that is enforceable by the courts. The disputing parties agree ahead of time to live by the arbitrator's decision and both parties ahead of time agree upon who will be the arbitrator. Often one or both parties are unhappy with the results but the matter will be resolved.

A more interesting and less-known ADR procedure is the mini-trial which allows each party to present its case as in a regular trial except that the case is not tried by a judge but is "tried" by the parties themselves in an abbreviated manner. This process is often used for complex questions of mixed law and fact such as product liability, massive construction, and anti-trust cases.

In a mini-trial lawyers and experts present a condensed version of the case to top management of both parties. Often a neutral adviser sits with management and conducts the hearing. After the presentations, top management attempt to reach an agreement. If they cannot, they will ask for the neutral adviser's best guess on what will be the expected outcome and after hearing the best guess will resume negotiations. By providing a look on how an outsider views at the dispute, a mini-trial often sets the stage for a settlement.

Another tool, an Early Neutral Evaluation (ENE), is used when one or both of the parties seek the advice of an experienced individual (usually an attorney) about the strength of their case. An evaluation by an informed outsider can move parties away from unrealistic stands as well as providing insight into the strengths and weaknesses of their case. If the parties have faith in the third party, and are willing to compromise, an ENE can lead to a successful agreement.

Another ADR tool is a summary jury trial, a procedure used primarily in federal courts where cases can be tried in an abbreviated fashion before a jury which then renders an advisory opinion. An advisory opinion can assist both parties in assessing the strengths and weaknesses of their case, leading to a settlement. A summary jury trial, like an ENE, can be scheduled much quicker than a trial, thus avoiding the delay, expense and stress that occur in litigation.

State and federal governments have enacted a series of enabling legislation to encourage the use of ADR processes and to make the processes more fair and effective. Michigan law, for instance, provides for conciliation, four types of mediation (general civil mediation, domestic relations mediation, Friend of the Court mediation, and Community Dispute Resolution), mediation/arbitration, Early Neutral Evaluation, Case Evaluation, Domestic Relations Arbitration, Mini-Trial, Summary Jury Trial, and Settlement Day.

In Michigan, case evaluation is a process through which a panel of attorneys not involved in the case hears the issues and renders a monetary evaluation of the case. Penalties may be attached for not accepting the award. An example is the Mediation Tribunal Association, a non-profit that processes cases of the Third Circuit Court - about 4,100 hearings a year.

Settlement Day in Michigan is more of a case management tool than an ADR technique. The court will suspend trial activity for a day and concentrate on the settlement of long-pending civil trials. The idea is that the litigants have a good chance to settle if they meet in an informal setting to discuss a settlement. Volunteer attorneys trained in mediation are often selected to assist. Oakland and Kent counties have successfully used this method to reduce a backlog of older cases awaiting trial.

In summary, ADR can be an effective tool when a dispute first arises, before a lawsuit has been filed, at any point during the course of a trial, after a trial has taken place and a decision has been made, or during or after an appeal.

The principal advantages of ADR are that it:

· * Saves time

· * Saves legal expenses

· * Provides parties greater control over the dispute resolution process

· * Allows parties to resolve a conflict in a more creative way than if left to a judge or jury

· * Gives greater privacy in resolving the dispute than in a public courtroom

· * Reduces the emotional toll a lawsuit can take

· * Can permit valued relationships among the parties to be preserved.

Because of these advantages plaintiffs seeking justice when first contacting an attorney should examine that law firm's skill and experience in Alternative Dispute Resolution and question the attorney about how he/she feels about ADR procedures as an option to going to trial.

There is more than one path to justice and a skilled, experienced attorney committed to justice for clients rather than the highest fees can help you find the best path.

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Dispute Resolution Alternatives for Business in the UK

In this article I look at some of the alternatives to court litigation which are available in the UK for UK business dispute resolution. Known as "ADR" (alternative dispute resolution), these methods offer privacy, flexible procedures over which the parties involved can have some control, and the potential for a quicker outcome.

First some caveats. This article is not intended to be advice and should not be relied on as such. I have written it in an English law context only, and as a non-lawyer based on my training and experience as a UK ADR practitioner. The position may be different in other jurisdictions. Also there are significant differences between the ADR methods themselves and suitability is a consideration. Accordingly parties contemplating an ADR procedure may wish consider obtaining suitably qualified legal advice.

Essentially, ADR methods in the UK require the consent of the disputing parties to have effect and produce a binding and enforceable result. They offer privacy, the prospect of a relatively quicker outcome than litigation, a less costly process, and through ring-fencing of the problem, the possibility of preserving perhaps an otherwise effective working relationship between the parties.

So what are these UK ADR methods? Probably the three main ones are: arbitration, expert determination, and mediation. There are variations and combinations of these, and other methods, but we can leave that for another time. The use of arbitration and other ADR in the resolution of international cross border disputes is also a matter for separate comment and is left for now.

In summary, UK arbitration involves an appointed neutral tribunal of one or more persons deciding the dispute, and the parties agreeing that the decision of the tribunal is binding on them. Its scope is similar to litigation and a range of enforceable court-like remedies are available. Ordinarily arbitration's in England (and Wales and Northern Ireland) are supported by the English Arbitration Act 1996, subject to which, and amongst other things, the parties can choose their arbitrator, the hearing venue, if there is to be a hearing, and otherwise how the matter is to be dealt with.

Expert determination in the UK is a contractually based process and usually less formal than arbitration - there is no supporting and supervisory Act of Parliament. It is commonly used when a valuation is required or an expert opinion is needed on a technical matter. Although there are significant differences, like UK arbitration the parties ordinarily agree that the decision of the expert is binding on them.

Mediation in the UK has similar attributes to the above UK ADR methods but is otherwise entirely different. The role of the appointed mediator is to assist the parties in reaching their own binding settlement and the matter could be concluded within one day.

Of course, each of these methods involves the appointment of a third-party to resolve or assist in the resolution of the dispute. If the parties can resolve their dispute themselves by direct negotiation, it probably goes without saying that this would seem the preferred option.

In certain circumstances court litigation may be the only appropriate option in the UK. Generally, however, as ADR alternatives are available for the resolution of business disputes, disputing parties in the UK may wish to consider all of their options.

Daniel Djanogly is Principal of Daniel Djanogly, Forensic Accountants & Chartered Arbitrators based in London, England. For more information on our services visit our forensic accounting and dispute resolution ADR web site locations.

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