Alternative Dispute Resolution represents a collection of techniques for resolving differences:
- Alternative - refers to alternatives to litigation in court or before administrative agencies
- Dispute - refers to any sort of disagreement between entities - whether people, businesses or government
- Resolution - means getting the issue solved or reaching an understanding that allows each party to manage the situation
The court system was the earliest form of "alternative dispute resolution." It served as a civilized alternative to warring factions taking revenge on each other for real or assumed affronts by retaliating against representatives of the other faction. A wise elder was enlisted to decree an answer to the problem that was accepted by all. From this process, various systems of adjudication evolved, including the modern civil justice system.
Why ADR? As the court system necessarily acquired more formality, more rules and more protections for the benefit of people using the courts, it also became more complicated and more expensive. From the days of the circuit-riding judge who came into town, held court, decided cases (with or without a jury) and rode on, we now have an ordered system with many sets of rules and procedures designed to standardize justice and insure fairness. The byproduct of this effort, however, is a system of rules, calendars and procedures that require specialized legal counsel, extend case resolution for months and years, and incur costs that can swamp the value of many disputes. In addition, while a court decision produces a result, it is a result decreed by a third party (judge or jury) taking the decision out of the hands of those involved and often surprising both parties.
Thus, ADR serves as an off-ramp from the litigation process. Just as a plea bargain provides certainty by imposing a conviction and sentence that satisfies the prosecution's duty to society and the defendant's duty to answer for the crime, a settlement provides certainty to parties in civil disputes and the ability to design an agreement that meets their needs. ADR has the added benefit of providing a specialized forum for resolving complex and technical disputes. High tech, medical device, securities and environmental disputes may be resolved with the assistance of highly skilled and trained specialists in these fields.
When is a good time for ADR? Anytime.
- Pre-dispute: From the very beginning, before there is any real disagreement, ADR can provide a way to collaborate on the terms of agreement. Parties to a transaction can use the process to identify the relevant issues and design terms mutually acceptable to all sides, and many complicated agreements now contain provisions under which the parties must engage in a period of mediation prior to resolving the dispute in arbitration or the courts. Many divorce agreements are reached without court intervention through early participation in such a collaborative process. The agreement reached by the parties is then jointly submitted to a court for approval.
- Dispute looming: Before a case is filed, participation in ADR can set ground rules for the litigation, provide agreed security for the potential outcome in the form of escrows or liens, and can potentially resolve the whole case through the process of identifying issues and potential outcomes.
- Case pending: Even after a case has been filed, ADR can be used to resolve side issues, to limit the claims that have to be decided by the court or jury, to set parameters for the litigation itself (agreed facts, high-low agreements, schedules), and to potentially resolve the whole case as the areas of true disagreement are identified.
- After decision or during appeal: When the court issues a decision, it may not satisfy either party and may lead to lengthy appeals. ADR can be used to resolve interim issues (re-instatement, custodial schedules, pending payments), to clarify issues arising from the implementation of the court's order/decision, and potentially resolve the whole case as each side evaluates the impact of the decision.
Thus, at every stage of civil litigation, there are a series of decisions - which, if not made by the parties, are made by the court sometimes all at once, but more often, one at a time, with briefing and argument, court appearances and expense. The parties through ADR can make any of these decisions so long as they have sufficient information and motivation to engage in the process.
When is not a good time for ADR? When parties have insufficient factual information about their respective positions, are facing uncertain legal standards, are not motivated to resolve the dispute, or are unable to make a decision.
For ADR to succeed, the participants need to understand the facts underlying the various negotiating positions; where those facts converge and where they diverge. A disagreement on facts will not prevent dispute resolution, but will inform the parties of the risk of their respective positions should a fact finder determine the disputed facts one way or the other. Too many unknown facts deprive the parties of the ability to make rational assessments of risk. Similarly, opposite or diverging views on applicable legal standards will not prevent resolution in all cases, but often a preliminary legal ruling from the court or agency is needed to allow ADR to be effective. When litigation is implemented solely for strategic purposes, there may be less that ADR can accomplish. Similarly, when a party is unable to come to a decision, ADR is not an option, and a court decision is needed.
What are the types of ADR available? Generally, ADR falls into three categories:
- Arbitration - a panel of one to three decision makers produces a decision after some form of presentation of evidence; the decision may be binding or non-binding.
- Mediation -the parties, with the help of a mediator, talk over the dispute or trade proposed solutions until a settlement is reached.
- Neutral Evaluation - a neutral third party hears each party's view of the disputed issue and gives a dispassionate opinion of potential outcomes, usually leading to mediation.
The facilitator in each case is known as a "neutral." The above categories do not mean that there are not other forms of ADR that are useful in certain situations: flipping a coin can solve problems that cost more in uncertainty that would be lost in an unfavorable result; similarly offloading a decision to an "expert" or panel of experts can provide a supportable answer to an intractable problem without damaging either side's credibility.
Each form of ADR has incentives and drawbacks. Arbitration allows a case to more quickly reach a decision maker than in a court litigation, but often the arbitration, because it is a trial on the evidence, can have equivalent discovery, preparation and presentation costs as proceeding in court. Binding arbitration produces an end result with no appeal or further recourse to the courts. Non-binding arbitration produces a result, but one that may be wasted since either party can reject the result. Mediation allows the parties to explore different and creative avenues for settlement but may not result in a solution if one or both parties are unwilling or unable to decide. Mediation is only as effective as the parties" preparation and willingness to craft an agreement. Neutral evaluation produces a quick, inexpensive "answer" or at least a relatively informed prognostication of the result, but one without teeth as either party can dispute the evaluation. In such cases, the evaluation simply provides an opinion on the disputed issue. At bottom, any form of ADR requires the cooperation and investment of all parties - otherwise, the only alternative is coercive and that means court.
What are the forums and resources available? With the complexity of disputes and court proceedings on the rise, ADR resources have evolved. ADR may be mandated by statute or contract. For example many construction contracts require ADR prior to any suit being filed and many insurance contracts now require ADR instead of suit. Certain types of matters have associated ADR opportunities. For example, Equal Employment Opportunity disputes, Human Rights disputes, tax appeals have administrative alternatives to court proceedings. Business associations may offer ADR services. For example, the automobile dealers and lawyers provide dispute resolution services for consumers. And, the New Hampshire Courts provide extensive ADR resources through the Office of Mediation and Arbitration.
http://www.courts.state.nh.us/adrp/index.htm
Specifically, the New Hampshire Superior Courts, and to a lesser extent the Family and District Courts, mandate ADR in most cases. There is a volunteer mediator program that supplies "free" neutrals to the parties in litigation. Parties may also select from a court-approved list of "paid" neutrals or may select from professional private mediators in the legal marketplace. There are certification programs for mediators, though certification is not uniformly required. There are as many forums and specialized ADR services available as there are types of disputes. Whether the situation needs a specialist or a generalist in ADR depends on the degree to which the details of the dispute control the outcome. For example, a dispute over price or delivery terms may not require a neutral knowledgeable in the mechanics of the product, while a dispute over the suitability of the product for the application may require a neutral who understands the technical specifications of the product.
How do I find an ADR neutral? Neutrals are available from a variety of resources. Industry and trade groups often provide contacts to specialized mediators. The courts provide a directory. Mediation and Arbitration service centers provide listings on line. And a variety of professionals including attorneys, former judges, accountants, social workers, and counselors advertise ADR services. As with any professional, it is important to secure a neutral with the proper "fit" to your ADR needs; one who understands the issues and is committed to helping to reach resolution. Sometimes it is not the years of experience, but the compatibility of the neutral to the parties and the dispute that is the most important.
Can/Do/Should lawyers participate in ADR? It depends. Sometimes the dynamic of the dispute lends itself to resolution by the parties to the dispute - without lawyers. Resolution of family matters is often most successful when the parties work collaboratively with a trained facilitator. Either party can have an attorney review the working agreement but the mediation sessions are not sidetracked by the presence of the "lawyers." Similarly, lawyer-less processes often available in consumer settings can cost-effectively deal with resolution of modest disputes. Disputes that have further legal ramifications, involve complicated documentation, require complex factual and legal presentations or serve multiple interests often need the involvement of lawyers to guide and contribute to the resolution process. Some neutrals will not engage in ADR with unrepresented parties when it is likely that the unrepresented party will be looking to the neutral for legal advice.
Of course not all disputes lend themselves to ADR. Where a dispute can be resolved only with a decision of a fundamental legal principle, where governmental policy is involved, or where the issue affects others not involved in the dispute, a court determination may be the only solution.
Rather than "see you in court" where someone else decides the issue, ADR allows the parties to maintain control of their time and resources and to a large degree the outcome of the matter.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass + Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.
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