Dispute Resolution

Practical examples of alternative dispute resolution cases

ADR or Alternative Dispute Resolution has been around since the 1980s.

To keep firms out of court and away from the type of litigation that devastates winners almost as much as losers.

Over the next few years, more than 600 multinational organizations embraced the Center for Public Resources’ ADR policy statement, and many of them claimed significant time and money savings.

However, ADR’s high hopes quickly vanished.

Even for many of the corporations that had embraced ADR, damage awards, legal bills, and the number of litigation in the United States continued to climb. Indeed, one study revealed that, rather than lowering costs and delays, one type of ADR, court-annexed arbitration, actually raised them.

The Problem

What went wrong, exactly? Is ADR only a promise made in good faith?

We believed it was not, but the lack of success with ADR at so many companies prompted us to look at how managers were implementing the ADR process.

We didn’t think so, but the lack of success with ADR at so many organizations drove us to investigate how managers put the ADR process in place.

It is said to be both bad and positive news.

The bad news is that ADR, as it is currently done frequently, is devolving into a private judicial system that looks and costs the same as the litigation it is meant to avoid.

ADR procedures at many organizations now include a lot of extra baggage in the shape of motions, briefs, discovery, depositions, judges, lawyers, court reporters, expert witnesses, publicity, and damage awards that are excessive (and beyond contractual limits).

The good news is that many businesses have figured out how to utilize ADR effectively, and they’re getting the benefits that ADR promised: cheaper costs, faster dispute resolutions, and outcomes that preserve and sometimes even improve relationships.

For example, at Chevron, ADR-based mediation of a single issue costs $25,000, compared to $700,000 for mediation through outside counsel and $2.5 million for going to court over a three- to five-year period.

A Reversal Arbitration Board set up by Toyota’s U.S. division to settle disputes between the corporation and its dealers over automobile allocation. Sales credits have resulted in a continuous drop in the frequency of these cases, from 178 in 1985 to 3 in 1992.

What do Chevron and Toyota do that other businesses don’t? The level of devotion is the main difference between success and failure.

Companies that prioritize ADR do save a significant amount of time, money, and relationships. Companies who allow old litigious tendencies to creep into the process, on the other hand, may as well return to court.

Here are some practical examples of alternative dispute resolution cases

A focus on case of AT&T

NCR is one of the few companies that has properly committed to ADR (recently renamed AT&T Global Information Solutions).

NCR leadership made a clear commitment to alternative dispute resolution a decade ago. The results have been dramatic: the number of filed lawsuits in the United States (excluding covered risks) plummeted from 263 in March 1984 to 28 in November 1993.

Only nine conflicts cost more than $20,000 last year, and total outside legal fees of less than $1 million was less than half of what they were in 1984.

Furthermore, the cost of in-house counsel has not grown due to the decrease in outside fees. With only four in-house lawyers and four paralegals, NCR administers its pending cases.

Furthermore, the cost of in-house counsel has not grown due to the decrease in outside fees. With only four in-house lawyers and four paralegals, NCR administers its pending cases.

NCR spent hundreds of thousands of dollars defending itself in traditional litigation several years ago, even though it did not have an arbitration clause and still lost a multimillion-dollar jury judgment.

NCR has paid out less in awards and settlements, as well as outside and in-house counsel costs, for all of its ADR actions in the last five years than it has spent on that single case.

Global Origin of Cases

Top management of NCR and many other corporations we know, including AT&T, US WEST, BankAmerica, and Chevron, has decided that winning at all costs is too expensive.

Lawyers, contract managers, and paralegals are evaluated on the number of cases won or lost and the number of problems avoided, expenses saved, and the creation of solutions that protect or even improve existing relationships.

It will often be necessary to present arguments that will be persuasive to judges, juries, and associates. The Legal Assistant, especially in large

Legal departments use quantifiable measures and targets to gradually reduce the number of pending cases, the amount of time and money spent on each fight, and the level of financial risk.

As a result of this focus, NCR can resolve and close more than 60% of all filed cases within a year of its initial filing.

Case of Toyota

Toyota’s Legal Department Founded The Board. The board has three distinguishing characteristics. First, rather than allowing the arbitration process to grow on its own, it established its rules.

Second, it made arbitration decisions enforceable against Toyota while allowing dealers to challenge them.

This program component has had the unintended effect of enhancing dealer acceptance of arbitration findings by emphasizing the procedure’s fairness.

It established an open file of case histories, allowing Toyota and its dealers to cite precedents and avoid going through the arbitration procedure in many cases.

Because most conflicts are similar, even dealers with limited legal knowledge can go through the details and uncover useful trends.

Key to Success

Preparation is the key to good negotiation. Long hours were spent with the participants before the meeting by the ombud.

The ombudsman and her team also devised a legal risk analysis that outlined both parties’ financial exposure and developed several options that considered both the customer’s and NCR’s interests.

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by RajkumarWP

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