Alternative Dispute Resolution (ADR)

Alternative Dispute Resolution (ADR) is the procedure for settling disputes without litigation, such as arbitration, mediation, or negotiation. ADR procedures are usually less costly and more expeditious. They are increasingly being utilized in disputes that would otherwise result in litigation, including high-profile labor disputes, divorce actions, and personal injury claims.

One of the primary reasons parties may prefer ADR proceedings is that, unlike adversarial litigation, ADR procedures are often collaborative and allow the parties to understand each other’s positions. ADR also allows the parties to come up with more creative solutions that a court may not be legally allowed to impose.

Common Forms of Alternative Dispute Resolution (ADR)

The most common forms of ADR for civil cases are conciliation, mediation, arbitration, neutral evaluation, settlement conferences and community dispute resolution programs.

1. Facilitation

Facilitation is the least formal of the ADR procedures. A neutral third-party works with both sides to reach a resolution of their dispute. Facilitation assumes that the parties want to reach a settlement. The negotiation is done through telephone contacts, written correspondence, or via e-mail. Facilitation is sometimes used by judges at settlement teleconferences exploring alternatives to taking the dispute to trial.

2. Mediation

Mediation is more formal but still leaves control of the outcome to the parties. An impartial mediator helps the parties try to reach a mutually acceptable resolution to the dispute. The parties control the substance of the discussions and any agreement reached. A typical session starts with each party telling their story. The mediator listens and helps them identify the issues in the dispute, offering options for resolution and assisting them in crafting a settlement.

Mediation can take many forms, depending on the needs of the parties, such as:

• Face to face: Parties directly communicate during the process,
• Shuttle: The mediator separates the parties and shuttles between each one with proposals for settlement,
• Facilitative: The mediator helps the parties directly communicate with each other, or
• Evaluative: The mediator makes an assessment of the merit of the parties’ claims during separate meetings and may propose terms of settlement.

When Should You Use Mediation?

Mediation should be considered when the parties have a relationship they want to preserve. So when family members, neighbors or business partners have a dispute, mediation may be the best ADR procedure to use. Mediation is also effective when emotions may get in the way of a solution. A mediator can help the parties communicate in a non-threatening and effective manner.

Mediation is available to the parties at any point in the litigation process including through the appeal.

3. Arbitration

Arbitration is the most formal of the ADR procedures and takes the decision making away from the parties. The arbitrator hears the arguments and evidence from each side and then decides the outcome of the dispute. Arbitration is less formal than a trial and the rules of evidence are usually relaxed. Each party can present proofs and arguments at the hearing. There isn’t, however, any facilitative discussion between the parties. Unlike other forms of ADR, the award is often supported by a reasoned opinion (though the parties can agree that no opinion will issue).

Arbitration can be “binding” or “non-binding.” Binding arbitration means the parties have waived their right to a trial, agree to accept the arbitrator’s decision as final and, usually, there is no right of appeal of the decision. If there is a binding arbitration clause in a contract, the matter must proceed to arbitration and there is no trial.

Non-binding arbitration means the parties can request a trial if they don’t accept the arbitrator’s decision. Some courts will impose costs and fines if the court decision is not more favorable than that awarded in arbitration. Non-binding arbitration is increasingly rare.

When Should You Use Arbitration?

Arbitration is good for cases where the parties want a third person to settle the dispute but want to avoid the cost of money and time that accompanies a court trial. It is also appropriate where the parties want a decision maker experienced in the subject of the dispute.

Other Types of Alternative Dispute Resolution (ADR)

Neutral Evaluation

Neutral Evaluation is a procedure where each party presents their case to a neutral party who gives an opinion on the strengths and weaknesses of each parties’ evidence and arguments and how the dispute should be settled. It is effective where the subject matter of the dispute requires an expert in the field. The evaluator’s opinion is often used to negotiate a settlement.

Neutral Evaluation is best for cases with technical issues that need an expert and where there aren’t significant emotional or personal barriers to reaching a settlement.

Settlement Conferences

Settlement Conferences may be voluntary or mandatory depending on the judge. The parties will meet with the judge or a referee to discuss a possible settlement of their dispute. The judge will not make a decision but will assist the parties in evaluating the strengths and weaknesses of their case.

Community Dispute Resolution Program

In Michigan there are Community Dispute Resolution Centers that are staffed with trained community volunteers who provide low-cost mediation as an alternative to costly court procedures. This type of mediation is tailored to handle a wide range of private and public conflicts such as landlord/tenant, business dissolutions, land use, public education or adult guardianships/conservatorships. Most of the cases are referred by the courts.

ADR is becoming more popular with courts across the country. The main reason parties prefer ADR proceedings is that, unlike adversarial litigation, ADR proceedings allow the parties to understand each person’s position and create a solution that works for them.