The Pros and Cons of Alternative Dispute Resolution
Due to the high costs of litigation, alternatives have arisen to provide a means to solving legal disputes. Some common forms of alternative dispute resolution (ADR), as well as the advantages and disadvantages of each method of ADR, are discussed below.
Arbitration
Arbitration is basically a mini-trial with one or more arbitrators hearing the case and issuing their decision. The advantages of arbitration are that it is cheaper and faster than litigation (many of the procedural litigation rules do not exist or are modified in arbitration), can be private (court hearings are almost always open to the public) and offers more flexibility in scheduling than litigation.
The disadvantages of arbitration are the potential for a partial arbitrator or panel of arbitrators (arbitrators are often chosen by each party); little explanation is usually given for the basis of a decision; and when arbitration is binding (it often is), there is little recourse for the losing party.
Mediation
Mediation involves an impartial mediator facilitating discussions between the parties by using techniques that encourage dialogue that would not otherwise take place. The advantages of mediation are that it can be private, mediation can preserve relationships (since a mediator facilitates a discussion between the parties), and medication can be very quick (even faster than arbitration).
Disadvantages of mediation are that it is usually binding on the parties, so a party is in trouble if they later change their mind later on. Another disadvantage is that both sides must be willing to discuss the disagreement and cooperate with the process. Unlike litigation, a party in mediation can suddenly decide to leave. Mediation’s other disadvantage is that it lacks procedural rules that protect the parties. For example, there is no formal discovery process in mediation. This means that it’s easier for one side to use secrets to its advantage.
Early neutral evaluation
Early neutral evaluation (ENE) is the process where an impartial party (usually a licensed attorney who specializes in an area of law that covers the legal dispute) evaluates the dispute and informs each side with strengths and weaknesses of their position. The advantages of ENE are that it is can allow parties to become more realistic about their legal position and therefore facilitate a resolution to a dispute. Another advantage is that ENE allows each side to receive a “reality check” about the merits of their case.
There are at least two disadvantages of ENE. First, it is only usually available once a lawsuit has commenced. ENE is intended to bring together the parties to a newly commenced lawsuit and facilitate settlement. In contrast, mediation and arbitration can begin any time before a lawsuit begins. Another disadvantage is that ENE can make a dispute worse if the impartial party does not provide an accurate or realistic evaluation of the case.
For more information about litigation and alternative dispute resolution options, please contact us.