Alternative Dispute Resolution
Over coffee, Client Clem asked about reducing his company’s exposure to the uncertainty, expense and delay of litigation. I asked if he had considered alternative dispute resolution (“ADR”). Here is a quick overview.
Litigation is classic dispute resolution but as Clem pointed out it is time consuming, costly, and outcomes can be difficult to predict with the certainty business owners seek. Still, its effective. Most cases settle prior to trial.
Arbitration is the out-of-court resolution of a dispute between parties to a contract, decided by an impartial third party (or parties). It is generally faster and more cost effective than litigation. Cases are tried to an arbitrator or panel of arbitrators. The process is generally governed by a set of rules promulgated by various associations, the most popular of which is the American Arbitration Association (the other “AAA”).
Parties may also enter into agreements pertaining to the arbitration, such as the selection of an arbitrator or panel of arbitrators. A roadmap and cost overview can be found here.
Mediation is an informal negotiation assisted by an impartial third party (the mediator) that encourages parties to work towards their own crafted solution. A skilled mediator creates the space necessary for that to occur.
Mediation is often attractive because it enhances the likelihood of continuing a business relationship. Mediation can take place prior to, during, or sometimes even a lawsuit or arbitral proceeding has been filed. And parties don’t necessarily need to be adverse; those simply trying to get a deal done can benefit as well.
Negotiation is a discussion aimed at reaching an agreement. It is different from a discussion aimed at winning. Those directly involved with the underlying facts can enter into a negotiation, but it’s often effective to involve people at other levels of the organization.
Is your situation ripe for mediation or another form of ADR? Feel free to reach out.