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Published: 2008-03-26

What are the Benefits to Alternative Dispute Resolution?



Time

According to statistics compiled by Judith Resnik, 95 percent of all federal lawsuits settle, most of them on the courthouse steps (see Judith Resnik, Falling Faith: Adjudicatory Procedure in Decline, 53 U. Chi. L. Rev. 494, 511-12 [1986]). Implementation of a carefully considered ADR strategy early in the case -- often in the context of a pending court case -- can result in a just resolution months or even years earlier than through litigation alone.

Money

For many routine business disputes, litigation procedures under the rules of court are simply too cumbersome and slow to produce cost-effective results. The discovery process is not based on the notion of obtaining the most relevant information at a reasonable cost, but provides for the discovery of all information likely to lead to the discovery of admissible evidence. Although courts will restrict discovery that is burdensome to a party, often they do so long after any balance between cost and benefit has been lost.

Various studies on negotiations, including an important study by Roger Fisher and William Ury of the Harvard Negotiation Project, confirm that the later in the process settlement is reached, the higher the cost. As the parties dig in their heels, attempt to justify, prove, and bolster their respective positions, they consume more and more time and expense preparing for trial, and the cost of settlement invariably rises. Resolution through ADR frequently enables the parties to eliminate or minimize the expenses of discovery and motion practice -- the greatest expenses in litigation -- and reach an acceptable resolution earlier in the process.

Results

While routine business disputes are frequently and efficiently resolved through the use of ADR processes, complex cases involving many parties and huge stakes are also suited to resolution using ADR. Some of the largest and most difficult disputes have been resolved through court-ordered mediation. These were cases the parties themselves doubted could ever be settled, given the stakes or emotions involved. Yet, as with most disputes, even highly charged, incredibly complex disputes can be resolved through negotiations when both of the parties appreciate the risks of losing control over the result. In Minnesota, many high-stakes cases of great complexity have been resolved through ADR, including securities fraud class actions, large business disputes, merger and acquisition claims, RICO claims, environmental disasters, and international transactions.

The success of ADR in resolving complex cases was noted by the American Bar Association's Standing Committee on Dispute Resolution:

The use of ADR to resolve all pending litigation following the L'Ambience Plaza construction collapse in Bridgeport, Connecticut within 20 months of the disaster, a process that involved five judicial bodies, more than 44 plaintiffs, approximately 40 potential defendants, several government agencies, and nearly 200 attorneys, represents a dazzling display of the potential impact of the sophisticated use of ADR in complex cases.
-- J. Michael Keating, Jr., ABA Dispute Resolution Kit (1989)
ADR holds other important advantages in addition to savings of time and money. For example:
  • Confidentiality of disputes involving highly sensitive corporate information can oftentimes be assured through an ADR mechanism. In a multimillion-dollar dispute between General Electric and three Ohio utility companies, a federal appeals court confirmed the confidentiality of a summary jury trial (see Cincinnati Gas & Electric Co. v. General Electric Corp., 854 F.2d 900 (6th Cir. 1988), cert. denied, 489 U.S. 1033 [1989]). The confidentiality of ADR processes may also minimize future claims of a similar nature, especially in employment/discrimination suits.
  • Business relationships or employer-employee relationships that might otherwise be lost through the acrimony that frequently characterizes litigation, can be preserved.
  • Disputes can be resolved privately and without setting future precedent.
  • Complicated facts can be sifted through and considered with the assistance of industry experts instead of non-expert, lay juries.
  • International disputes can be resolved according to ground rules the parties agree upon in advance, thereby avoiding the uncertainty inherent in being subjected to the jurisdiction of foreign courts.
  • Workplace distractions and the emotional burdens imposed on the individuals involved in litigation, especially in employer-employee disputes, are minimized.