Alternative Dispute Resolution CHAPTER 2 Alternative Dispute Resolution

Learning Objectives Define what ADR is Explain how and why ADR is used in business Tell what the most popular types of ADR are Give the pros and cons of different types of ADR Determine the appropriateness of different types of ADR for various disputes Explain how administrative agencies have increasingly mandated ADR Set forth newly emerging ADR alternatives specifically for business Suggest ways that ADR can help business

What is ADR? Alternatives to litigation Some conflicts can be resolved outside of court Forums for legal dispute resolution Traditional Non-traditional

What is ADR? Traditional: Courts Non-traditional Alternative Dispute Resolution (ADR) Options to resolve legal disputes outside of courts Certain types of disputes can be settled through ADR Employment Contract Negotiations Offers facilitative advantages May be required by contract clause

Increased Knowledge and Awareness Design your Own Solution Ten Reasons to Use ADR Accessible Cost Effective Fair and Neutral Saves Time Structured Dialogue Increased Knowledge and Awareness Design your Own Solution Confidential Better Relations It Works

ADR as viewed by the Courts ADR in recent years has increased in popularity Rodriguez de Quijas et al. v. Shearson/ American Express, 490 U.S. 477 (1989)

Types of ADR THREE MOST COMMON TYPES OF ADR Conciliation/Negotiation Mediation Arbitration

Conciliation/Negotiation An alternative dispute-resolution method in which the disputant parties try to resolve their differences Oral or written communication exchanged between the parties without the presence of a third neutral party Informal process No cost Nothing lost if no resolution reached Can move to the next ADR step

Mediation Informal process where the two sides select a neutral third party to help resolve their differences by facilitating their discussions Preserves the relationship of the parties. If the parties reach agreement, the dispute is settled. If the dispute is not settled, the parties can choose to proceed with arbitration or litigation.

Arbitration Arbitration Resolution of a dispute by a neutral third party who hears the concerns and evidence of both parties and makes a decision much like a judge. Binding or Non-Binding If Binding, it is called Award** If Non-binding, a party not satisfied with the arbitrator’s decision can proceed to litigation to resolve the dispute Arbitrator not required to follow legal precedent, but must follow established arbitration procedures

Other ADR Alternatives In addition to the common types of ADR, parties may also use several other alternatives developed in recent years which may be appropriate for their dispute. Mock Trials Mini Trials Summary Jury Trial Regulatory Negotiation

Other ADR Alternatives MOCK TRIALS An attorney may wish to use this to determine how a jury might react to his or her case. The attorney assembles a mock jury made up of ordinary citizens, presents the case as if in court, then requests them to make a decision MINI TRIALS Neutral third party serving as advisor evaluates the case and presents settlement options to senior executives of the disputing corporations who have settlement authority.

Other ADR Alternatives SUMMARY JURY TRIAL A small (about 6 people) jury is chosen, like a regular jury, to hear the case in summary fashion by the parties, and the jury renders a verdict. Based on the jury’s input, the parties are urged to negotiate a settlement if it is appropriate. The selected jury is not told their decision is not binding.

Other ADR Alternatives REGULATORY NEGOTIATION Used by administrative agencies to avoid future litigation with interested groups over regulations which the agency wants to issue. Agency meets with these groups before formally proposing the regulations, often with a third party such as a mediator present, and attempts to negotiate the provisions of the regulations.

Other ADR Alternatives REGULATORY NEGOTIATION (cont’d) Minimizes likelihood of a challenge once the regulations are promulgated Example: The Environmental Protection Agency (EPA) has used this method for air and water quality regulations to be imposed in the future.