2. Alternative Dispute Resolution
CHAPTER 2
Alternative
Dispute
Resolution

3. 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

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

5. 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

6. 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

7. 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)

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

9. 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

10. 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.

11. 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

12. 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

13. 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.

14. 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.

15. 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.

16. 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.