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Alternative Dispute Resolution: What to Know About Avoiding the Courtroom

Lerch Early Legal Update

With the vast majority of lawsuits resolved without going to trial, companies should be aware of the pros and cons of options for avoiding the courtroom. Alternative dispute resolution (ADR) is the term applied to resolution of a case outside of the courtroom, and it can take many forms.

Mediation

One of the most common forms of ADR is mediation. Typically conducted by a trained mediator, a retired judge, or practicing attorney, mediations are nonbinding, informal proceedings. Parties and their attorneys confer with a mediator versed on the facts of the case who attempts to resolve the case or close a gap between opposing positions. Mediation is low-risk and confidential; however, mediation is nonbinding, and any party is free to walk away if it finds the process or suggested resolution unsatisfactory. This may result in a party failing to reveal some fact(s) critical to settlement, believing that withholding information will be beneficial if the mediation fails and the parties must proceed to trial. In order for mediation to work, both sides must be willing to participate fully and in good faith.

Arbitration

Arbitration is another common form of ADR. Many commercial contracts contain an arbitration provision, requiring the parties to participate in binding arbitration upon one party’s demand, rather than going to court. Arbitrations are confidential and are conducted by trained arbitrators, usually practicing attorneys whom the parties can research and select themselves. The parties set their own resolution schedule with the arbitrator. Arbitration usually necessitates at least some discovery of documents and depositions of witnesses, as well as a full hearing similar to a trial, which may be held in a location inconvenient to one of the parties. Therefore, arbitration often provides only moderate cost and time savings to the parties compared to litigating in court. In addition, the arbitrator may or may not have the same level of experience as a judge who regularly hears cases on many subjects. Perhaps most importantly, the grounds for vacating an arbitration award are extremely limited, which presents a high risk for the losing party.

Collaborative Divorce

A growing form of ADR in the family law context is collaborative divorce. Both parties retain attorneys and sign a binding participation agreement requiring them to disclose relevant financial information. It also requires an attorney to withdraw from the process and representation if his or her client is not being honest or participating in good faith. A process of informal discussions and conferences enables the parties and their respective attorneys to create agreements that address their unique concerns and circumstances without going to court, thereby providing a private, less litigious atmosphere to resolve intimate family disputes.

Private Jury Trial

An uncommon but new form of ADR is a private jury trial. It combines the positive aspects of a conventional jury trial (among them, having added perspectives from a group of fact finders), but removes the public aspect. It instead uses paid jurors and a mock judge, selected by the parties, in a private, confidential trial setting. However, paying a company to establish and conduct a private jury trial is expensive and may be comparable in overall cost and timeframe to a public jury trial.
 
Whatever the method used, there are pros and cons to ADR. It is prudent to evaluate the company’s needs and the particular context of the dispute before choosing litigation or ADR, especially which method to use.
 
Caitlin Grant is a litigation attorney who works on a broad range of commercial litigation, advising clients on the risks and benefits of litigation, preparing for trial, and serving as a determined advocate. For more information on ADR, contact Caitlin at (301) 347-1272 or ccgrant@lerchearly.com.
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This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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