Alternative dispute resolution, or ADR, has grown in popularity in recent decades for many reasons.
ADR refers to different legal processes that all have the aim of helping businesses and individuals resolve lawsuits or potential lawsuits before their cases proceed to a trial.
Provided the other side agrees, businesses can try ADR while litigation is pending or even early on in a legal claim. Sometimes, a court’s rules or the provisions of a contract will require the parties to use ADR to resolve their dispute.
In the world of commercial litigation, two common types of ADR are arbitration and mediation.
Mediation involves all sides working with a neutral third party, called a mediator, to resolve their disputes. Mediators are often experienced attorneys or those with expertise in a particular industry, like construction, for example.
A mediator does not make decisions about the case but will try to help all sides negotiate an agreement with which they can live. If the mediation succeeds, the mediator may also help draft the agreement. Otherwise, the parties can move forward with a court case.
The process is voluntary and confidential, so those participating should neither feel forced to enter an agreement nor fear that what they said in mediation will come back to haunt them later.
Unlike mediation, arbitration can be and often is binding on those who participate. In an arbitration, the neutral third party, or arbitrator, will hear the dispute and enter a decision, much like a judge.
The difference is the arbitrator can get right to the substance of a dispute without having to follow rules of evidence and other formal procedures. The goal is to get an efficient and well-informed decision about a claim, usually by someone with expertise in the field.
Although not right in every case, ADR offer several advantages to businesses
Whether ADR is right for a business will depend a lot on the business’s circumstances and the facts of their dispute.
Still, before going to court, a business should consider several advantages to ADR:
- The process tends to be less costly both in terms of time and money than going through with a trial in court.
- The process is more confidential than a public court hearing.
- Businesses going to trial always face some uncertainty about how a judge or jury will decide a case. This is so no matter how strong compelling a business believes its case to be. ADR gives a business the means of controlling their risk.
