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Alternative Dispute Resolution: 5 Types And Benefits

Disputes can arise— either in a personal or business setting— when individuals don’t agree. If you or your business is experiencing legal problems with another party, you may be wondering if there’s another way to solve the issue without having to go through court proceedings. 

This is where alternative dispute resolution can help. 

What Is Alternative Dispute Resolution?

Alternative Dispute Resolution (ADR) is pretty self-explanatory. It refers to the different methods of settling a legal dispute without going to court. These alternatives are increasingly being utilized in legal disputes that would otherwise result in litigation including divorce actions, personal injury claims, and high-profile labor disputes. 

Although different types of ADRs have different processes, all ADRs are often collaborative and allow both parties to come up with more creative and peaceful solutions that a court may not be allowed to impose legally. 

Also, most ADRs will always have an expert ‘man-in-the-middle,’ which is usually a legal professional. Or you can also hire a professional law firm within your location, such as Hopkins Roden to oversee an ADR.

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Different Forms Of Alternative Dispute Resolution

Before we dive into the different forms of ADR, know that some methods are not legally binding. 

If it’s not legally binding, then there’s no legal implementation of the agreement if a party suddenly changes their mind later on. As a result, the case will be brought back to the legal court where a judge will make a legally-binding decision. 

1. Independent Negotiation

Negotiation is usually the first option for parties wanting to resolve a dispute. In some cases, both parties want to quickly solve arguments by simply placing their ‘cards on the table’ and trying to negotiate a compromise. 

If necessary, a dispute resolution specialist can negotiate on behalf of the parties. However, this type of ADR is often ignored because of the obvious. An unbiased third party can help in assisting the parties throughout the negotiation. The parties need to work together to reach an argument. And although they may reach a conclusion, most of the time, negotiations aren’t legally binding. 

2. Mediation

Mediation is a voluntary process that involves an independent experienced mediator facilitating communication between involved parties to come up with a resolution or end up in a settlement. 

There’s no set procedure for mediation, but it usually starts with the parties exchanging their case summaries and providing important documents before mediation. 

The mediator explains the ground rules and allows all parties to present their positions. The mediator then confers between parties to find common ground and possible solutions. A key aspect of mediation is that the mediator can help each party reach a conclusion but keep their own views regarding the dispute hidden. 

Agreements reached in mediation are not legally binding. However, both parties can sign a statement with specified terms agreeing to be legally bound to the agreement.

3. Arbitration

Arbitration is a more formal type of ADR than mediation. It’s fixed by an arbitrator— a neutral 3rd party who the involved parties have chosen to resolve the dispute. 

In general, an arbitrator should be an expert in a specific field where the dispute arises. Take note, however, that you can choose more than one arbitrator and have a panel of arbitrators that are presided over by a chairman. 

Arbitration can be applicable in disputes that require a deeper understanding of specific knowledge and international concerns, where confidentiality is of utmost importance. This type of ADR runs as a judiciary process and any decisions made are legally binding. 

4. Conciliation

This type of ADR is commonly applied for employment issues and disputes. Conciliation is a mandatory process before an employee can file a claim to the appropriate Tribunal. 

With conciliation, there’s a conciliator who will discuss the matter in question and try to help each party reach an agreement. Unlike a mediator, a conciliator can impart their insights after assessing the situation and different arguments from each party. Their opinion and view of the dispute can help achieve a conclusion or form a settlement. 

5. Adjudication

An adjudication is a special type of ADR that’s often reserved for disputes that occur in the construction industry and contracts. However, it is also available for non-construction disputes where parties have agreed to it after a dispute occurred in their contract. This is a formal process that involves:

  • Providing Notice of Adjudication
  • Appointment of adjudicator
  • Serving a referral notification
  • Response to referral notification
  • Decision within the specified number of days from the referral notification

Benefits Of Alternative Dispute Resolution

1. Lower Costs

ADR is generally more cost-effective than going to court. You have to pay the discovery process for going to trial including exorbitant total costs, such as attorney’s fees and court reporter fees. There are also expenses with printing and mailing of documents, and the indirect costs of a long, drawn-out court trial that requires parties to remain off from work for weeks or even months. 

2. Faster 

Court proceedings can drag on for months or years before your case can finally go to trial. ADR, on the other hand, can bypass the long lines of lawsuits filed to the court and offers a swift resolution of a dispute. 

Parties can schedule an ADR at any time, without waiting for a court schedule, speeding up the entire process. 

3. Neutrality

With ADRs, a neutral third party is chosen to oversee the dispute. This third party is often a specialist with no connection to any of the parties nor interest in the outcome of the dispute. 

The parties are free to choose a third party with special and relevant knowledge of the dispute instead of leaving the decision to a jury or a judge who may not fully understand the subject matter. 

4. Confidentiality

Court trials are public records, and thus, they can be accessed by anyone. Whereas ADR is a confidential process. If parties settle through an ADR, no public record exists of what occurred at the negotiation meetings nor the amount of settlement that was agreed upon. 

5. Reduce Friction Between Parties

In a lawsuit, once a verdict is delivered, it’s common for one side to be disappointed with the result. This can be reduced with ADR through cooperative negotiations. 

These processes can provide an opportunity to preserve the relationship between the two sides. ADR is usually less acrimonious than litigation and allows each party to discuss the core of the problem and come to a more reasonable conclusion. 

Take Away

The different types of alternative dispute resolution are a more attractive option than going to court, thanks to their numerous benefits. From the cost and time saved to reducing friction and maintaining a good relationship with both parties involved, ADR methods allow for a more peaceful way of settling disagreements and legal issues. 

Author’s Bio:

Lance Smith is a successful family lawyer serving Idaho area for the past 10 years. He has helped hundreds of individuals and families handle a variety of family disputes and court proceedings. His passion for justice and law extends past his successes in the courtroom and is highly active in his community, educating families and providing pro-bono representation to those who can’t afford legal counsel. 

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by Lance Smith

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