Alternative dispute resolution (ADR) is the process of settling a case by means other than litigation. Because ADR is less costly, more private, and typically faster than litigation, it is becoming more and more popular and is increasingly being used to resolve a variety of legal issues, including commercial and labor disputes, divorce actions, personal injury and medical malpractice claims.
There are many ways to resolve a legal dispute besides litigation. The two major forms of ADR include:
Also known as conciliation, mediation is the fastest growing ADR method. Unlike litigation, mediation gives the parties an opportunity to resolve their own disputes with the help of a neutral third party, or mediator.
Mediation is not binding since the mediator cannot impose a decision upon the parties. Instead, the mediator’s job is to keep the parties talking and ease them through difficult points of conflict. A typical mediation consists of the following stages:
- Initial agreement on various procedural matters
- An exchange of the parties’ initial positions
- “Shuttle diplomacy,” a process during which the mediator meets with each side separately to explore settlement options
- The mediator carries offers and counteroffers back and forth between the parties
- If the parties agree, they sign a settlement agreement
Mediation allows both parties to retain control of the process and to strike their own bargain. Upon agreement, there are no appeals, delays, or unknown risks – the dispute is officially over.
In arbitration, a neutral third party, or arbitrator, hears the arguments of the parties out of court and imposes a final and binding decision that is enforceable in court. Typically, the parties agreed to arbitration in advance before any dispute arose, and it can be voluntary or required as part of a contract. Unlike litigation, arbitration offers no appeal process, and when a decision is issued, the case is ended.
The types of disputes most likely to be resolved through arbitration include labor, commerce, auto insurance claims, securities, antitrust, international business, and employment discrimination, and its popularity may be on the rise. According to Bloomberg, a group of six attorneys from Washington, London, and Paris announced in February 2014 that they plan to open a global arbitration firm later in the year.
Because arbitration is usually easier, cheaper, and faster than litigation, arbitration clauses have become a standard feature in many employment contracts, although it should not be taken lightly, since parties who agree to it are bound to their agreement and must satisfy any award ordered by the arbitrator.