1. Business Law with UCC Applications, 13e
Alternative Dispute Resolution
Chapter 4

2. Learning Objectives Identify the shortcomings of litigation
List the advantages and disadvantages of ADR
Identify the advantages of mediation
Explain the nature of an arbitration hearing
Outline the med-arb process
Relate the role of an early neutral evaluator

3. Learning Objectives
Describe the process of running a summary judgment trial
Clarify the private options available under proactive ADR
Specify the governmental options available under proactive ADR
Discuss the advantages and disadvantages of the science court proposal

4. Question?
What occurs whenever individuals attempt to resolve disagreements by stepping outside the usual adversarial system?
Alternative dispute resolution
Substitute resolution
Dispute optional resolution
Alternative resolution
The correct answer is “A” - Alternative dispute resolution. See next slide.

5. Alternative Dispute Resolution
occurs whenever people attempt to resolve disputes by moving outside the traditional adversarial system and using creative settlement techniques
State Variations Many state legislatures have enacted alternative dispute resolution programs. Colorado,
for example, encourages or mandates ADR in specific subject areas, such as domestic relations and
worker’s compensation.

6. Problems with Litigation
Justice often goes to those who can afford it
Litigation can be expensive
Litigation can be time consuming
Some jurisdictions require litigants to submit to hearings before securing a trial date
Teaching Tips Before discussing the pros and cons of adversarial litigation, have students form teams
of 3–4 learners each. The teams should be assigned the task of defining the adversarial
system and developing lists of the advantages and disadvantages for that system.

7. The ADR Option
Time involved in settling a dispute can be shortened and expenses lowered
Proactive ADR anticipates and deals with disputes before they occur
Depending on the ADR technique employed, the time involved in settling a dispute can be shortened
considerably and the expenses lowered significantly. Arbitration and mediation, for
example, can be scheduled quickly, even before a lawsuit is filed. When scheduling either
a mediation or an arbitration session, the parties need not consult the court’s dockets or
worry about any preliminary requirements, such as a case management conference. Moreover,
even if the arbitration or mediation session does not end the dispute, it can save time
by narrowing the issues or providing an evaluation of the strength of each side’s case. The
arbitration or mediation session may also, in some cases, provide a shortcut to discovery,
thus saving time and lowering expenses.

8. Shortcomings of ADR
Private administration of justice hampers the development of the law
Many critical social issues may never reach the judicial system
Limited scope
Some legal conflicts, notably employment, contract, and tort cases, are especially
well suited for ADR. However, other legal problems, primarily those involving constitutional
law, civil rights, and criminal law, could never be brought before an ADR panel.

9. Early neutral evaluation
ADR Techniques
Mediation
Arbitration
Med-arb
Early neutral evaluation
Summary jury trials
Private civil trials

10. Question?
What is the process where a neutral third party works with the parties to reach a mutually agreeable settlement?
Arbitration
Mediation
Negotiation
Adjudication
The correct answer is “B” – mediation. See next slide.

11. ADR Techniques Mediation
a non-binding process where a neutral third party works with the parties to reach a mutually agreeable settlement
The mediator acts as an impartial outsider who can suggest solutions that will please all the parties involved in the dispute
Getting Students Involved
Use one of the example cases in the chapter to create a mock mediation session. Have one of the students serve
as the mediator while the others represent each party to the dispute. If possible, also assign students
to play the roles of attorneys for each side in the mediation process.

12. ADR Techniques Arbitration
process by which the parties invite a third party, called an arbitrator, to settle their dispute
Required arbitration is called mandatory arbitration
Background Information
The American Arbitration Association was founded in It now has ADR employment plans in
place that cover more than 3,000,000 workers.

13. Shortcomings of Arbitration
Hearing is run like a trial but without the safeguards that come with the rules of civil procedure, discovery, and motion practice
Wide discretion granted to arbitrators can lead to unreasonable decisions and unjustifiable awards
One shortcoming is that an arbitration hearing is run like a trial but without the safeguards that come
with the rules of civil procedure, discovery, and motion practice. This characteristic
may actually extend the time involved in arbitration because attorneys and negotiators
must prepare a wide variety of legal arguments, some of which might have been eliminated
during motion practice. Discovery also sometimes reveals facts that lead the parties
into settlement negotiations that might not otherwise take place. Moreover, the wide
discretion that is usually granted to arbitrators has, in some cases, led to unreasonable
decisions and unjustifiable awards. Sometimes the decision made by an arbitrator comes
under the review of the courts, which may result in a reversal of the arbitration order

14. ADR Techniques Med-arb
process that combines mediation with arbitration
If after mediation, a dispute is still unsettled, parties can move to an arbitration hearing
Under med-arb procedures, the parties first submit their dispute to a mediation session. If the dispute is settled
via mediation, then all of the parties can leave satisfied. If, however, some matters are left
undecided, the parties can move on to an arbitration hearing. During the hearing, the undecided
issues would be placed before an arbitrator for final deliberation.

15. Question?
What is the process by which the parties permit a referee to assess their case based on the facts and legal arguments alone?
Early neutral evaluation
Summary jury trial
Civil judgment
Neutral judgment
The correct answer is “A” – early neutral judgment. See next slide.

16. ADR Techniques Early neutral evaluation
process by which the parties permit a referee to assess their case based on the facts and legal arguments alone
At the outset of an ENE process, an independent, objective referee is provided with an overview of the facts
involved in the dispute and a summary of the legal arguments on which each side has built
his or her case. The evaluator, after examining the facts and the law, renders an impartial
assessment of the legal rights of each party and a determination of the amount of the award
that should be rendered, if any.

17. ADR Techniques Summary jury trial
shortened version of a trial conducted in less than a day before an actual jury which then renders an advisory verdict in the case
Offers litigants a chance to see how a jury would react
Background Information
One of the first summary jury trials in federal court involved a product liability case. The case focused
on an allegedly defective football helmet. The summary jury trial, which was held in 1980, led
to a settlement of the case.

18. ADR Techniques Private civil trial Advantages
parties hire a retired judge or magistrate to hear their dispute following the same rules used in an official trial
Advantages
parties can hold trial at a time and place of their choosing
parties can choose their own judge
Background Information
One private firm that will arrange private jury trials is known as Judicial Alternatives of Ohio, Inc.
The firm is located in Columbus, Ohio.

19. Proactive ADR Partnering ADR contract clauses Settlement week
Negotiated rule making
Post-Appellate procedures
International arbitration agreements
Science court proposal
Since ADR has become so popular in recent years, some business people are taking a proactive
approach to the situation by agreeing in advance to submit to one of the alternative dispute
resolution tools should a disagreement between the parties arise at a later date.

20. Proactive ADR Partnering
process that establishes supportive relationships among the parties to a contract in order to head off disputes before they occur
Best used when a contract involves complex interrelationships among a wide variety of different parties
Partnering attempts to deter the disorder that can arise during a dispute by drawing up
certain ground rules that all the parties agree to observe. The entire process begins with a
meeting held after the contract has been finalized but before the project has begun. The
meeting is held at a location that is unrelated to the business of any party to the contract. In
this way, the process can proceed in an uninterrupted fashion.

21. Proactive ADR ADR contract clause
specifies that the parties to the agreement have promised to use an alternative resolution dispute technique when a disagreement arises rather than litigating the issue
Like partnering, the drafting of ADR contract clauses is a proactive attempt
to ensure that litigation will be avoided should a dispute arise. Unlike partnering, which is
best suited to long-term construction contracts, ADR clauses can be included in just about
any contract.

22. ADR Contract Clause Advantages
helpful when two or more parties have an extended affiliation that may involve numerous contracts
beneficial to those parties with the weakest position in a contractual relationship
Like partnering, the drafting of ADR contract clauses is a proactive attempt
to ensure that litigation will be avoided should a dispute arise. Unlike partnering, which is
best suited to long-term construction contracts, ADR clauses can be included in just about
any contract.

23. Question?
What is the five day period during which a court’s docket is cleared of all business, except for settlement hearings?
A. Mediation week
B. Settlement court
C. Settlement week
D. Arbitration week
The correct answer is “C” – settlement week. See next slide.

24. Proactive ADR Settlement week
five day period during which a court’s docket is cleared of all business, except for settlement hearings
Cases are matched with mediators and a schedule is established
Getting Students Involved
One state trial court that has a very successful record with settlement week is the Delaware
County Court of Common Pleas. Have students write to the court at 91 North Sandusky Street, Delaware,
Ohio, for details of the process.

25. Proactive ADR Negotiated rule making (reg-neg)
process by which an agency invites the people and the organizations to be affected by a new rule to have input into the writing of that rule
All representatives have the opportunity to present their point of view in relation to
the proposed rule. Discussions follow, during which all of these issues are examined.
Eventually, the team is expected to formulate a rule that reflects a consensus of the representatives.

26. Proactive ADR Post-appellate procedures
involve taking a case that has been rejected or dismissed by a domestic court to an international organization
The post-appellate case is brought against the government of the aggrieved party for allegedly failing to provide an appropriate legal remedy to redress the grievances of the victim.

27. Proactive ADR International arbitration agreement
involves a pledge to use arbitration should the parties find themselves in disagreement as to the enforcement rights under the original contract.
There are several clear advantages to entering an international arbitration agreement.
First, because the parties to the agreement are incorporated in different nation states,
they are free to specify whatever forum they can agree upon as the place to hold an arbitration hearing, should that become necessary.
Second, when negotiating an arbitration agreement, the parties are also free to specify
the identity of the arbitrators or leave open the option to choose the arbitrators at the time of the dispute from a large pool of potential experts.

28. Question?
Which court acts as a forum for disputes involving scientific and technological controversies?
Technology court
Science court
Science resolution body
Technology appellate board
The correct answer is “B” – Science court. See next slide.

29. Proactive ADR Science court
acts as a forum for disputes involving scientific and technological controversies
Judges on the science court are scientists educated in the areas under investigation, allowing them to use their expertise
Individuals and institutions with concerns about certain scientific activities, such
as genetic engineering, nuclear energy research, and so on, might ask the court to act as an
impartial arbitrator in the evaluation of those concerns.
Teaching Tips
To get students involved in a lively discussion of the science court concept, have them read, discuss, and write a
report on the novel Brothers by Ben Bova (New York: Bantam Books, 1996).