Alternative Dispute Resolution (“ADR”) Trends: The Growth and Prevalence of ADR in Litigation

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Alternative Dispute Resolution (“ADR”) Trends: The Growth and Prevalence of ADR in Litigation
The Growth and Prevalence of ADR in Litigation

By Bradley A. Kletscher

Those who have been through litigation over the course of many years have seen a gradual change in how litigation is conducted. Litigation has gone from trial “by ambush” to full discovery and trial, to Alternative Dispute Resolution (“ADR”) without a trial. ADR is the process through which litigants attempt to resolve a dispute short of a full trial on the merits before a judge and jury.

The Trend Toward ADR

Over the past two decades there has been an explosion in the number of cases filed in state and federal courts across the country. This is a result not only of the growing economy of this country, but also the growing number of individuals and businesses across the country involved in litigation. As the number of cases have grown, courts have looked for a method by which they can reduce the number of cases on their docket short of a full trial and decision on the merits. The method to accomplish this is ADR.

In addition to the Court’s desire to clear their docket of cases is the interest of individuals and businesses in reducing the cost of litigation and obtaining a certainty of result. For those who have been through litigation, the cost of such litigation can be expensive. This cost includes not only attorneys’ fees, but also disbursements made to conduct litigation from the expense of depositions, to copying costs, to expert witness fees to basic lost time expense for personnel of a business. Since the discovery phase of litigation is often equal to or greater than the cost of a trial, ADR is often seen as a tool to reduce costs. As a result, the interest in ADR has exploded.

Finally, ADR can be less confrontative than an actual trial. Because of this, ADR appeals to some people who wish to avoid conflict and confrontation. This desire to avoid confrontation in an every increasingly confrontational world has also encouraged the development and trend toward ADR.

The two basic methods of ADR that are available are mediation and arbitration.

Mediation

Mediation involves a process of negotiation between two parties to a dispute facilitated by an independent mediator. The goal of mediation is to negotiate a settlement of the dispute between the parties on mutually agreeable terms. Mutually agreeable terms means terms that both parties agree to after negotiating the settlement.

The most prevalent method of mediation occurs as a caucus after a lawsuit has been commenced. In caucus mediation the two parties and their counsel are separated into two (or more) different rooms. The mediator then “shuffles” back and forth between the two parties conveying offers of settlement. In the process, the mediator will discuss with the parties the strengths and weaknesses of their case, the cost of litigation and the potential of bringing closure to the process.

Mediation can be conducted at any time in the litigation process, but generally will occur before the commencement of a lawsuit, before completion of discovery, after completion of discovery, but before dispositive motions, after dispositive motions are heard, and on the eve of trial.

Arbitration

Arbitration, as compared to mediation, is a mini trial before an arbitrator or panel of arbitrators. Arbitration can generally occur in two forms. Agreement to arbitration without litigation, or arbitration during litigation.

Agreement to arbitration without litigation involves putting a matter into arbitration from the very beginning. This often occurs when a contract between two parties calls for arbitration. The parties then proceed to a hearing before an arbitrator or panel of arbitrators with limited or no discovery.

Arbitration in litigation often occurs as a result of agreement of the parties during the litigation to arbitrate the dispute. The parties may agree to such arbitration to speed up the process of reaching a decision or to reduce costs.

Arbitration can also be either “binding” or “non-binding”. Binding arbitration generally means that the decision of the arbitrators is the final binding decision on the parties absent a reversal by an appellate court. Non-binding arbitration means that the decision of the arbitrators may be accepted by both parties to the arbitration or rejected by either party to the arbitration so that a trial on the merits before a court and jury may occur.

No statistical data is currently available on whether arbitration actually reduces the cost of litigation. For this reason, the embracing of arbitration has been slower than the embracing of mediation. In the end, each individual case must be analyzed to determine which method, if any, of ADR is appropriate to use.

Conclusion

The modern trend to resolve disputes is to use some method of ADR. While ADR shows great promise in reducing the costs of litigation, the costs and benefits to each party must be analyzed in light of the facts and circumstances involving that case to determine what method of ADR is appropriate. However, since the Rules now require some method of ADR, a party to litigation should anticipate that they will be involved in ADR during the course of litigation.

Bradley A. Kletscher practices in the Business Litigation section of Barna, Guzy & Steffen. Brad can be reached for questions regarding this article at (763) 783-5113 or bkletscher@bgs.com.

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