I.

INTRODUCTION
BRIEF DESCRIPTION OF ADR SYSTEM
Alternative Dispute Resolution (ADR) also known as external dispute resolution in some
countries, such as Australia includes dispute resolution processes and techniques that act as a means for
disagreeing parties to come to an agreement short of litigation. It is a collective term for the ways that
parties can settle disputes, with (or without) the help of a third party.

Despite historic resistance to ADR by many popular parties and their advocates, ADR has gained
widespread acceptance among both the general public and the legal profession in recent years. In fact,
some courts now require some parties to resort to ADR of some type, usually mediation, before permitting
the parties' cases to be tried (indeed the European Mediation Directive (2008) expressly contemplates so-
called "compulsory" mediation; attendance that is, not settlement at mediation).

The rising popularity of ADR can be explained by the increasing caseload of traditional courts, the
perception that ADR imposes fewer costs than litigation, a preference for confidentiality, and the desire of
some parties to have greater control over the selection of the individual or individuals who will decide
their dispute.

Some of the senior judiciary in certain jurisdictions (of which England and Wales is one) are strongly in
favor of the use of mediation to settle disputes.1

A type of dispute resolution that seeks to limit the costs of litigation by using alternative, often out-of-
court means, such as arbitration, conciliation and summary possession proceedings. Alternative dispute
resolutionoptions are voluntary, and often involve a neutral third party to make decisions.2

BASIC PRINCIPLE OF ADR

 ADR is based on several key principles. First, consensual processes (participation, scope and
structure) are more likely to result in outcomes satisfactory to the disputants than a solution
imposed by a court. Inherent in this principle is the ability of the parties to structure a process
that is tailored to the situation and to the dispute at hand. There is ample experience
demonstrating that disputants are more likely to achieve outcomes that serve all disputants’
interests and purposes -- the “win/win” solution -- than solutions imposed by an outside decision
maker.

 The second key principle is the involvement of a third-party neutral whose presence can improve
the dynamics of the dialogue needed to achieve a settlement and, in environmental disputes,
knowledge and expertise to evaluate the merits and to help frame options for solution if so desired
by the parties. The third party’s role is to assist in the process, not to dictate the outcome. This
individual is neutral in the sense of having no stake in the outcome or in the parties. A third-party
neutral has no authority except as granted under the order or agreement defining the ADR
process.

 One of the principal objectives of the ADR process is to help the parties communicate with each
other civilly, by providing a clear statement of the interests driving the dispute and, most
importantly, by truly listening to the other side of the dispute. Parties often lack a clear idea of
what they are fighting for, much less a good idea of what needs are driving their opponents.

1http://en.wikipedia.org/wiki/Alternative_dispute_resolution
2
http://www.businessdictionary.com/definition/alternative-dispute-resolution.html#ixzz204cSk0Xz
  Finally, ADR processes generally are confidential except as otherwise agreed by the parties, with
the exception of public policy disputes that often facilitate in full public view. Agreements to
engage in most ADR processes typically have a confidentiality clause. Mediation conducted in
Michigan court proceedings is expressly made confidential by MCR 2.411(C)(5). As of mid 2010,
the confidentiality provisions under MCR 2.411 are being considered for revision. SCAO August
2010 Report on MCR 2.411.

 When the ADR process is not ordered under MCR 2.411, the parties must provide for
confidentiality by agreement. Where disputes are mediated before or during civil litigation, MRE
408 and FRE 408 make settlement offers and conduct and statements made in settlement
negotiations (i.e., during the ADR process), not admissible. These rules, however, do not require
the exclusion of evidence otherwise discoverable merely because it is presented in the course of
settlement discussions.

 The Michigan mediation rule expressly provides that a mediator may not disclose anything that
transpired during the mediation to the trial judge except the date of completion of the process,
who participated in the mediation, whether settlement was reached and whether further ADR
proceedings are contemplated. MCR 2.411(C)(3). Best practice in drafting the mediation
agreement should provide the express requirement that the mediator make his or her report to
the court in writing with copies to the parties, so that the parties can be assured this rule has been
observed. Note that this rule does not permit the mediator to report to the trial court whether any
party appeared to be acting in good faith.

 Likewise, communications made during ADR processes convened by a federal court are protected
from disclosure, 28 USC 652(d), although the scope of the protection is not as broad as under the
Michigan Court Rules. 3

In its August 2005 resolution (Resolution ALJ-185), the Commission announced five basic principles that
are the foundation of the CPUC ADR program:

VOLUNTARY

The parties usually must agree to submit their dispute to mediation or early neutral evaluation. An ALJ,
however, may require parties to attend facilitated workshops, settlement conferences, or meet with a
neutral to explore the feasibility of mediation.

TIMELINESS

ADR should shorten, not prolong, proceedings. But even if a negotiated settlement takes longer, the result
may be more beneficial to all.

GOOD FAITH

Those who engage in ADR should do so in an attempt to reach agreement--not to delay or secure tactical
advantage.

CONFIDENTIALITY

Most ADR processes require confidentiality so that the parties' fundamental interests can be explored.

COMMISSION APPROVAL

3
http://envdeskbook.org/CH19/Ch19ADR.htm#_Toc325551391
The CPUC will expeditiously approve settlements that are legally sufficient. 4

UNDERSTANDING DISPUTE RESOLUTION OPTIONS

There are many ways to approach dispute resolution. The great majority of problems encountered by
small business are resolved through simple discussion and common sense between the parties and do not
escalate into a dispute.

In virtually all instances, small businesses should at first attempt to resolve their disputes through direct
discussion and negotiation.

Disputes will occur, however, where there is a lack of communication, where there are unrealistic
expectations or where there is a grievance that cannot be resolved through direct discussion.

When a dispute occurs, each party has a choice about the dispute resolution method that they would like
to pursue. Unfortunately, litigation is usually the norm and dispute resolution is often approached as a
matter between lawyers and the Courts. There are, however, a variety of other approaches available which
may save time and money and preserve business relationships.

Dispute resolution options for small business range from negotiation-based methods, where the parties
have full control over the outcome (generally known as 'alternative dispute resolution' - ADR), to
adversarial methods where the parties have less control over the outcome (such as arbitration and
litigation). Where a negotiated settlement is reached through ADR, the terms of the settlement, once
agreed and signed by the parties, are legally binding and can be enforced if necessary.

The chart below sets out some of the advantages and disadvantages of different approaches to dispute
resolution.

DISADVANTAGE
ADVANTAGES METHOD
S

 Parties  Does Not

Control Establish
Outcome Legal
Alternativ
 Time - Precedent
→ e Dispute
Efficient ←  Not Open
Resolutio
 Cost - n (ADR) To Public
Efficient Scrutiny
 Confidenti
al

 Maintains
 Not
Business
Appropriate
Relationsh
For Fraud
ips
Or Criminal
 Non-
Behaviour
Adversaria
l, Informal
Process

4
http://www.cpuc.ca.gov/PUC/ADR/adrprinciples.htm
  Appropriat
 Parties
e For
Have
Fraud Or
Limited
Criminal
Control
Matters
Over The
 Can Adversal
Outcome
Establish a Approach
 High Cost &
Legal es
→ Lengthy
Precedent ←
Process
 Appropriat litigation
arbitratio  May
e Where
n Destroy
One Party
Business
Has No
Relationshi
Intention
ps
Of
Complianc
e

AN EXPLANATION OF ALTERNATIVE DISPUTE RESOLUTION METHODS

ASSISTED NEGOTIATION
 The parties engage a professional negotiator or 'go-between' to assist parties reach a desired
result. It is usually informal and the negotiator can either be appointed by one party or both. In
the latter situation he/she is a joint negotiator. This method is often helpful in smaller disputes
where parties are still talking to one another and need help to break an impasse, and where they
have identified all the issues to be negotiated.
MEDIATION
 Mediation is a process where an independent person is used to assist the parties in dispute to find
a mutually acceptable solution. The mediator will systematically work through the issues, help
identify alternatives, and facilitate final agreement. The process is non-adversarial and focuses on
the parties' resolving the dispute themselves using the skills of a mediator. The key principle of
mediation is that the parties work together to arrive at an agreement that suits both. This is in
contrast to litigation and arbitration where a judge or arbitrator imposes a decision which may be
disappointing for one or both parties.

A mediator is appointed by the parties to help establish effective communication and by doing so
find a solution which satisfies both their needs and interests. The informal process is speedy and
cost effective and caters for on-going business relationships.
INTERMEDIATION
 Similar to Mediation in concept but more sophisticated. The neutral third party closely interacts
with the parties in dispute to assess all relevant material, identify key issues, and most
importantly, helps to design a process that will lead to resolution of the dispute.

The process involves separate meetings with the parties at their offices to conduct extensive
reality testing, and analysis of parties' legal, commercial and financial positions. The process
utilises creative thinking techniques and is suitable for more complex, large or sensitive matters.
FACILITATION
 The parties appoint a neutral facilitator to manage the dispute resolution process, identify issues
and apply specialist techniques to achieve the desired outcome. The facilitator assists by
preparing an agenda, chairing meetings, distributing relevant information between the parties
and steering them to reach agreed objectives. The process is less formal and more flexible than
Mediation. It has wide application and is often used where there are several parties or groups
involved with differing points of view, such as creditors or multi-party claimants, joint venture
negotiations, and environmental and planning disputes.
EXPERT DETERMINATION/RECOMMENDATION
 The parties agree to an independent expert to provide a report on specific aspects of a dispute by
examining relevant documentation and material. The expert is usually commissioned to report on
technical matters such as standards, compliance, quality specifications, quantification of loss or
similar issues. The expert may be asked to provide a recommendation or a determination on the
matter depending on the circumstances.
PARTNERING
 Often used for long term contracts or in the building/construction industries and in joint venture
type projects. A Partnering agreement or charter is based on the parties' need to act in good faith
and with fair dealing to one another. The Partnering process focuses on the definition of mutual
objectives, improved communication, the identification of likely problems and development of
formal problem solving and dispute resolution strategies. It is useful, for example, where there is
a need to complete a technical or building project with a minimum of disruption and cost and
within a tight time frame.

AN EXPLANATION OF ADVERSARIAL DISPUTE RESOLUTION METHODS

LITIGATION
 Litigation is an adversarial legal process conducted in a Court of law, in accordance with strict
procedures, where the parties present legal arguments and evidence to support their claims
before a judge. The judge applies the relevant law to the evidence, resulting in a judgement in
favour of one of the parties involved.
ARBITRATION
 Arbitration is an adversarial process, agreed by the parties in dispute, in which each party
presents legal arguments and evidence, in accordance with formal procedures, to a mutually
agreed arbitrator. The arbitrator makes a determination in favour of one of the parties. This
determination is usually legally binding.

Advantages/Benefits and Disadvantages of Alternative Dispute Resolution

The take-up of ADR depends on a combination of three critical factors. First, the extent to which
disputants and their advisors are aware of ADR. Second, the adequacy of the supply of ADR services for
those that would wish to take-up ADRservices. Third, the perceived advantages and disadvantages of
ADR.

This section is concerned primarily with the third of those factors. It notes, however, the low level of
awareness of ADR among disputants, the critical and influential position of lawyers in determining
whether disputants seek resolution through ADR, and comments on the extent to which the court system
raises awareness about the potential for ADR as a dispute resolution pathway.

Benefits of ADR

ADR has been both; increasingly used alongside, and integrated formally, into legal systems
internationally in order to capitalise on the typical advantages of ADR over litigation:

 Suitability for multi-party disputes

 Flexibility of procedure - the process is determined and controlled by the parties the
dispute
 Lower costs
 Less complexity ("less is more")
  Parties choice of neutral third party (and therefore expertise in area of dispute) to direct
negotiations/adjudicate
 Likelihood and speed of settlements
 Practical solutions tailored to parties’ interests and needs (not rights and wants,as they
may perceive them)
 Durability of agreements
 Confidentiality
 The preservation of relationships;[11] and the preservation of reputations.5

The international literature on ADR identifies five major outcomes from ADR. They are:

 increased settlement
 improved satisfaction with the outcome or manner in which the dispute is resolved among
disputants
 reduced time in dispute
 reduced costs in relating to the dispute resolution
 increased compliance with agreed solutions.

Among stakeholders there is broad agreement that dispute resolution throughADR mechanisms can be
beneficial. Nevertheless, there are some significant variations among stakeholders about the extent and
nature of those benefits for disputants. ADR practitioners are most enthusiastic about the benefits of
ADRtake-up. Lawyers and disputants tend to be more qualified with regard to the actual benefits
associated with ADR.

ADR Practitioners' View of ADR Benefits

Participants in the ADR Practitioners Survey were convinced of the efficacyof ADR techniques in resolving
disputes that were already or could be filed in the District or High Courts. Two thirds of the respondents
(66 percent) reported that they believed that more that 80 percent of disputes could be resolved through
ADR. Only 4 percent reported that they believed that 55 percent or fewer disputes were amenable to
effective resolution through ADR (Table 4.1).

ADR Practitioners' Estimates of Disputes Effectively Settled by ADR(ADR Practitioners

Survey n=139)*

ADRPractitioners
Proportion of Disputes Settled by ADR
Responses %
0-20 percent of disputes 0 0
21-30 percent of disputes 1 <1
31-40 percent of disputes 0 0
41-50 percent of disputes 4 3
51-60 percentof disputes 9 6
61-70 percent of disputes 5 4
71-80 percent of disputes 28 20
81-90 percent of disputes 32 23
91-100 percent of disputes 60 43

5
http://en.wikipedia.org/wiki/Alternative_dispute_resolution#Benefits
* Six missing cases.

It was noted in the ADR practitioner focus groups, however, that not all ADRtechniques generated
benefits in the same way or to the same extent. A strong distinction was made between mediation and
arbitration. Table 4.2 represents ADRpractitioners' assessment of the relative potential of arbitration and
mediation in relation to the benefits typically associated with ADR.

ADR Practitioner Views on the Relative Potential of Arbitration and Mediation

Arbitration Mediation
Reduced financial costs Low-Medium Medium-High
Flexible solution Low High
Confidentiality High High
Ability to influence outcome Low High
Disputant control Medium High
Disputants satisfaction Low-High Medium-High
Speedy resolution High High

ADR practitioners see the real benefits of arbitration lying in the abilityof the disputants to select an
arbitrator by mutual agreement and the considerable specialist expertise an arbitrator may bring to the
resolution of a dispute with substantial technical components. It is for the latter reason that arbitrators
have so frequently been used in technical sectors such as the building industry.

 Lawyers' Perceptions of ADR Benefits

The majority of lawyers believe that disputants seek ADR resolution ofdisputes in an effort to:

 reduce the cost of a dispute

 speed resolution, and
 reduce uncertainty around the outcome of judgment in the court system (Table 4.2).

Lawyers' Perceptions of Disputants' Reasons for ADR Take-up* (Lawyers Survey)

Perceived Disputant Reason Responses % of Lawyers (n=196)

Want to reduce costs 183 93.4
Want speedy resolution 159 81.1
Uncertainty of court outcome 142 72.4
Preservation of ongoing relationship 86 43.9
Desire for compromise solution 82 41.8
Desire for more control over process and outcome 80 40.8
Privacy and confidentiality 74 37.8
Directed by contract, statute or existing agreement 61 31.1
Desire for creative solution 48 24.5
Concerns about court procedures [8] 39 19.9

* Multiple response.

Mediation and negotiation are seen as more likely than arbitration to generate ADR benefits including:
  increased opportunities to resolve a dispute in a way satisfactory to the parties
 increased likelihood of the parties complying with the remedies or solutions generated through
ADR
 reductions in time delays
 reductions in costs, and
 maintenance of confidentiality about both the dispute, the remedies sought and the outcomes.

For lawyers, reaping the potential benefits of ADR is by no means straightforward. For most lawyers the
effectiveness of ADR is contingent on two major factors. Firstly, the willingness of disputants to engage in
a resolution process, and, secondly, the experience of the ADR practitioners (Table 4.3).

Lawyers' Perceptions of Determinants of ADR Efficacy (Lawyers Survey)

Lawyers Working Lawyers Working Lawyers Working Equally

Perceived Total Primarily in District Primarily in High in High Court and District
Determinant
Court (n=74) Court (n=64) Court (n=58)
Disputant willingness 76.0% 80.8% 78.1% 69.0%
Experienced ADR
62.8% 68.5% 60.0% 66.1%
practitioner
Supportive counsel 40.3% 37.5% 40.6% 45.6%
Judicial support 14.8% 21.9% 10.9% 10.7%
Ongoing relationship
14.3% 13.7% 15.6% 14.3%
between disputants

The quantitative data does indicate some of the subtleties around this issue, however, in relation to the
importance of judicial and counsel support as factors in the efficacy of ADR. Overall, 40.3 percent of
lawyers saw counsel support as an important determinant. Lawyers working in the High Court or equally
in the District Court and High Court were over-represented among those who saw counsel support as an
important factor. Lawyers working primarily in the District Court were significantly more likely than
lawyers working primarily in the High Court to see judicial support as an important factor in the efficacy
ofADR.

It is unclear why those differences emerge. The lawyer survey data suggests that there may be some
relationship between the ADR skills and experience oflawyers and the extent to which they perceive the
importance of their own role in encouraging effective ADR. The High Court lawyers are more likely to be
trained in and/or engaged in delivering ADR services than the lawyers working primarily in the District
Court (Table 4.4).

ADR Training* and ADR Practice Among Lawyers (Lawyers Survey)

Lawyers Working Lawyers Working Lawyers Working Equally in

Primarily in District Primarily in HighCourt High Court and District
Court (n=74) (n=64) Court (n=58)
N % N % N %
Combines legal practice
8 10.8 17 26.6 12 20.7
with ADR Practice
Trained LEADR
2 2.7 13 20.3 3 5.2
Accreditation Workshop
AMINZ Associate or
3 4.1 2 3.1 6 10.3
Fellow
Massey University
Dispute Resolution 1 1.4 0 0.0 1 1.7
Diploma
Dispute Resolution
1 1.4 1 1.6 1 1.7
paper(s) as part of LLB
On-goingADR training -
4 5.4 8 12.5 4 6.9
workshops, seminars etc

* Multiple response.

In relation to the willingness of the disputants, it was also noted by manyADR practitioners, lawyers and
the judiciary that although disputants may initially feel hesitant and uncomfortable about ADR,
disputants in retrospectoften find the experience very useful. This view is consistent with the findingsof
the disputant research project.

Disputants' Perceptions of ADR Benefits

In-depth interviews with 60 disputants with civil cases filed with the court system in the 2000-2002
period revealed that only fourteen used ADR to help resolve their dispute.

As shows, settlement was achieved in eleven of those cases throughADR and for a further case ADR
resolved some issues. Eleven of those fourteen disputants reported that they would use ADR if ADR was
'suited' to the nature ofthe dispute.

Disputant Views on ADR's Contribution to Resolution of their Dispute (Disputant In-depth

Interviews n=14)

ADR's Contribution to Resolving the Case Interviewees

The case settled as a result of ADR 11
ADR did not lead to settlement 2
ADR resolved some issues in the case 1
Total 14

Overall, thirty of the sixty disputant interviewees had had some experienceof using ADR to resolve a
dispute. A further twenty disputants knew of ADR. Forty-nine of the sixty disputants involved in in-depth
interviews felt able to make some comment about the advantages and disadvantages of ADR. It is clear
that ADR is seen as a less costly approach to dispute resolution than having the dispute resolved through a
judgment given by the Court. Almost as many see ADRas a comparatively faster mechanism for dispute
resolution (Table 4.6).

Disputant Views on the Advantages of ADR Identified by Interviewees (Disputant In-depth

Interviews n=49)*

ADR Advantages Responses (n=49)* % ofInterviewees

Cheaper resolution 30 61.2
Faster resolution 27 55.1
More control 8 16.3
Informal process/relaxed/less stressful 6 12.2
More creative solutions 5 10.2
Other 5 10.2
Preserves relationships 3 6.1

* Multiple response.

Disadvantages of ADR

There was widespread support across stakeholders for the use of ADRtechniques to resolve disputes. ADR
was not always seen as an alternative to resolution through the courts, however. Moreover, even the most
enthusiastic supporters of ADR - ADR practitioners - still saw some potential disadvantagesfor disputants
in using ADR.

ADR Practitioners' Views on the Disadvantages of ADR

Unlike other stakeholders, ADR practitioners tended to see any disadvantagesof ADR for disputants as
being related primarily to the particular ADR technique used or the methods by which ADR techniques
are implemented.

It has already been noted that ADR practitioners, like lawyers and disputants, see arbitration as a less
attractive ADR technique than mediation. It should also be recognised, however, that even within
mediation, some processes are seen as more likely to achieve all the benefits claimed for ADRthan others.

ADR practitioners recognise that mediation may encompass a variety of models, ranging from developing
consensual solutions to risk management or evaluative models for dispute resolution. As Boulle notes,
mediation is:

"a decision-making process in which the parties are assisted by a third-party, the mediator; the
mediator attempts to improve the process ofdecision-making and to assist the parties reach an outcome
to which each of them can consent". [9]

Many ADR practitioners believed the full range of potential benefits, especially those related to increased
user satisfaction with outcomes and compliance with ADR resolutions, were less likely to be achieved
where mediation focused on risk assessment, cost-benefit review, or evaluation of the likelihoodof success
in court rather than consensual solution development.

Many ADR practitioners, both those who combine their ADR practice with legal practice and those who
do not, expressed considerable concern at techniques directed primarily at trading-off the probability of
success in court. This was perceived as particularly prevalent in the Auckland region and was
characterised by some ADR practitioners as a model which allowed disputants to be 'bullied'. It was a
model that some found antithetical to what they believed to be the core philosophical values of mediation
and the core elements which led to better quality solutions - the empowerment of the disputants, and the
expectation that disputants should take responsibility for mutually generating and committing to
consensual solutions.

A trading-off approach in mediation was perceived by ADR practitioners to be particularly widespread in

disputes around insurance and employment matters. Some concern was expressed that if that type of
approach became prevalent, or the dominant perception of mediation, there would be a backlash against
mediation, a hesitancy to take-up mediation opportunities, and a failure to capture the potential benefits
of mediation such as solution flexibility, reduction in stress and relationship repair.

Lawyers' Views on the Disadvantagesof ADR

For lawyers concerns about ADR focus on three issues. Those are whether ADR:

 delivers reduced costs and increases timeliness

 delivers a sound and fair outcome, and
 generates agreements that can be sustained and enforced.

Lawyers were directly involved in two of the stakeholders research projects. Some of the ADR
practitioners were lawyers and some practising lawyers were participants in the ADR practitioner
research project as well as the lawyers' research project.

What emerged from the lawyer and ADR practitioner research projects as well as the disputant research
project was that lawyers have, perhaps more than anyof the other stakeholder groups, a diversity of views
around the merits and potential problems of ADR. In particular there is a view among some lawyers
thatADR both delays dispute resolution and increases costs. Increased cost was seen by lawyers
participating in the lawyers' survey as a particular limitation ofarbitration. Delay was seen as a particular
problem associated with mediation.

As shows only a minority of lawyers participating in the lawyers' survey saw significant limitations with
ADR techniques. It is notable that the pattern of those minority concerns differed in relation to arbitration
and mediation respectively. With regard to arbitration a substantial minority oflawyers expressed concern
that arbitration increased the costs of dispute resolution. By comparison, with regard to mediation the
most substantial minority of lawyers expressed concern that mediation could be used as a delaying tactic.
A smaller but still substantial minority of lawyers expressed concerns about mediation's enforceability.

Limitations of Arbitration and Mediation (Lawyers Survey)

Limitations of Arbitration (n=196)* Limitations of Mediation (n=196)*

Key ADRLimitation
Responses % of Lawyers Responses % of Lawyers
Enforceability 17 8.7 54 27.6
Delaying tactics 35 17.9 74 37.8
Increased Costs 80 40.8 35 17.9

* Multiple response.

Only a minority of the lawyers participating in the lawyers' survey expressed concerns about those issues.
However, the disputants research does reveal how powerful lawyers' views can be in relation to take-up of
ADR. A small group ofdisputants were explicitly advised by their lawyer not to take-up ADR on the
grounds that it was too expensive or ADR would be ineffective. Some disputants assumed that if lawyer-
to-lawyer informal discussion had failed to resolve the dispute then ADR would simply not be an option.

Overall, however, surveyed lawyers tended to be supportive of ADR. Indeed, among the lawyers
participating in the lawyers' survey around 64.4 percent accepted the notion that there might be merit in
the court ordering parties to take-up ADR prior to proceeding with a case. It is notable, however, that only
22.2 percent of the participant lawyers felt court orders to arbitration were acceptable, compared to 53.7
percent who accepted the notion of the courts ordering parties to mediation.

Even among lawyers who believed the benefits of ADR were such as to justify some mechanism by which
the courts could order parties to mediation, there was still a concern that ADR should not be promoted in
a manner that compromised litigants' access to justice.

Disputants' Views on the Disadvantages of ADR

Although ADR was seen by the disputants participating in the in-depth interviews as a less costly pathway
than the court system, a small proportion ofthe 49 interviewees who felt they could comment on the
merits of ADR, identified a series of potential drawbacks with ADR. Those are set out in Table 4.8

Disadvantages of ADR Identified by Interviewees (Disputant In-depth Interviews n=49)*

Key Disadvantages Identified Responses % of Interviewees

Lackof enforcement 10 20.4
Increased costs 9 18.4
Delaying tactic 9 18.4
Other 7 14.3
Compromise of principles 7 14.3
ADR practitioner may not have the technical skills required 3 6.1
Need other party to be willing to come to the table 2 4.1
No right of appeal 2 4.1

* Multiple response.

Twelve of 49 disputants stated that they saw only advantages and no disadvantages associated with ADR. 6

BENEFITS OF ALTERNATIVE DISPUTE RESOLUTION7

Cost:

One of the largest reasons parties choose to resolve their disputes outside of the courts is cost. Alternative
dispute resolution usually costs much less than litigation, allowing smaller financial disputes a financially
viable way to be settled.

Speed:

ADR can be scheduled by the parties and the panelist as soon as they are able to meet. Compared to the
court process, where waits of 2-3 years are normal, dispute resolution is as fast as the parties want it to be.

Control:

The parties control some of the process; selecting what method of ADR they want to follow, selecting the
panelist for their dispute resolution; the length of the process; and, in a mediations case, even the
outcome. Opposed to the court system, where the legal system and the judge control every aspect, ADR is
much more flexible.

Confidentiality:

Disputes resolved in court are public and any judgments awarded are also public. Mediation, arbitration,
and mini trials are all conducted in private and in strict confidentiality.

Experienced Neutral Panelists:

6
http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civil-
cases/4-advantages-and-disadvantages-of-adr
7
http://www.ibabc.org/idrsbc/benefits.html
Our panelists are professional mediators and arbitrators with training and expertise in dispute resolution
and insurance. Disputing parties are able to select their panelist from a list of qualified individuals who
are specialized in specific aspects of insurance. In the court system, binding decisions are made by judges
who may lack expertise in insurance practices.

Cooperative Approach:

All ADR services take place in a more informal, less confrontational atmosphere. This is more conducive
to maintaining a positive business relationship between the two parties. With mediation, specifically, the
result is collaboration between the two parties.

COMPARISON BETWEEN Litigation AND ADR8

At some point in life, and perhaps several times, you will be faced with a dispute that needs to be settled
and you must decide just how to reach a solution. Court based adjudication and ADR are two of the
methods used in settling those disputes; and distributive and integrative are two types of bargaining
utilized in the ADR processes.

Litigation (Court Based Adjudication)

Litigation is a lawsuit to be decided in court before a judge or jury. However, litigation can be
intimidating and risky for the litigants. In addition, because court proceedings are adversarial, a battle
between lawyers, the truth is not always the end result. A prominent New York defense attorney and
Criminal Court Judge said in all honesty, “I have nothing to do with justice…Justice is not even part of the
equation.”

Through the courts and litigation you can obtain money, put a stop to certain activities, and have statutes
and documents interpreted; but the outcome is that one person wins and one loses. Litigation is
expensive, sometimes prohibitively, preventing some from taking their cases into the courts. Even if one
can afford litigation, then you must face the crowded court docket and be willing to wait as the lengthy
process begins – a lengthy process which keeps disputes broiling and relationships torn apart.

An additional issue is the fact that the dispute must be able to be translated into legal issues – so some
disputes that seem real may not be able to be framed into a legal issue that can be decided in court.

On the plus side, litigation ends in a decision that is binding and enforceable; and it is appealable.
Adjudication is public and has more safeguards than many other processes. Secondly, court decisions are
based on precedent and are more predictable than alternative resolutions which can be formulated by the
neutral party.

In the final analysis, each person deserves their day in court if that is the method they prefer. However,
regardless of the pros and cons of litigation, one major consideration in making a decision as to the
resolution method is the importance of the relationship between the two parties in the dispute. In
litigation most relationships are left unable to be repaired. If your relationship with the opposing party is
important to you or it is one that must be maintained, it is time to perhaps consider an ADR process.

Alternative Dispute Resolution (ADR)

ADR is a series of methods for settling disputes other than court based adjudication. There are several
ADR processes which can be voluntary or ordered by the courts. Some states require persons to enter into
arbitration or mediation before their case can be heard in court. Hoping the case can be settled in this
manner, states do this for economic reasons as well as to assist in clearing court dockets. In other cases

8
http://general-law.knoji.com/litigation-vs-alternative-dispute-resolution-adr/
such as employment and some other contracts, arbitration is required for settling disputes. In these
contractual cases arbitration decisions are final and cannot be appealed in court in most instances.

One of the objections to litigation is that it can be intimidating – the powerful against the weak – the rich
against the poor. The fact is that some forms of ADR like arbitration can prove to be just as intimidating.

Methods of negotiation in ADR can be divided into two basic types: distributive; and, integrative.

Distributive:

Distributive negotiating has a win or lose outcome – the pie only has so many pieces and the more one
side gets, the less the other side has. Most often this type of bargaining is utilized when there are fixed
resources in dispute such as money or property. Personal relationships are low on the scale of importance.

Distributive processes are often criticized because they put emphasis on the parties’ differences and lead
to destructive actions. To be successful in distributive negotiating parties must guard their information
and try to get as much information from the opponent as possible. Hardball is often necessary in
distributive techniques and relationships become second place or are neglected and ignored.

Even when some cooperative bargaining techniques may prove beneficial and are put in place, there may
be portions of the negotiations that can only be settled by dividing the pie or using distributive techniques.

Integrative:

Integrative bargaining is interest based and looks for a win/win solution. These techniques encourage
cooperative problem solving which addresses all parties’ needs and interests. Negotiators here envision a
pie with more unlimited pieces and desire an outcome that will maintain, rather than destroy,
relationships.

At times, even in disputes that involve money, it becomes clear to neutral parties that they must mend the
relationship before the money issue can be resolved – this means including integrative bargaining. In
order to be successful in integrative negotiations all the interests on both sides must be identified and
fears must be addressed. The goal is to have both sides work on a solution that will be beneficial to both
and allow their relationship to remain intact.

While there are many ADR processes, they all utilize either distributive or integrative strategies; or a
combination of both. These processes cover a wide spectrum from binding arbitration normally narrow in
scope to reconciliation being a lengthy process focused on mending relationships between people, races,
religions and even countries.

If the dispute you are involved in has a fixed quantity to work with and the other party is not a friend or
someone with whom you must maintain a relationship, then you could chose from court ordered
adjudication, arbitration (binding or non-binding), mediation (non-binding); but consider the time and
the expense of court. Consider too, that ADR can also be expensive and if you chose to go to court when
ADR fails, then you can be faced with great expense. The process here will be the distributive type –
adversarial, demanding concession, win at all cost.

If, on the other hand, the dispute involves friends or lasting relationships, you might wish to avoid court
and work to maintain those relationships. Here the process will be the integrative type – parties are joint
problem solvers, focusing on interests, and working toward a wise decision that is good for all. You could
utilize mediation, a reconciliation process, restorative justice or restitution among others.
 The deciding factors in your decision of whether to go to court or utilize one of the many ADR methods
will be the type of dispute, the outcome you desire, the relationship you have with the opposing party, and
the cost involved in each. Should you decide on ADR, then you will need to decide whether this will be a
distributive or integrative negotiation.

Litigation and ADR Contrasted9

A crucial distinction between litigation and ADR is that whilst many legal practitioners engage in ADR
processes, there is no legal or professional requirement for either the ADR practitioner or for party
representatives at ADR processes to be legally qualified or to be members of legal professions such as the
bar or the law society. Many of those who engage in ADR practice are first and foremost experts in
particular fields such as architects, builders, civil engineers, mariners, scientists and social workers, albeit
with a thorough understanding of ADR processes and some knowledge and understanding of law. In
house legal experts in large corporate organisations can take part in the entire ADR process without
engaging professional lawyers thus cutting costs further, both in terms of time lost through
communicating with the professionals and in respect of legal fees and costs.

It is also the practical knowledge and understanding of industry and commerce which assures the parties
to ADR processes that the people responsible for settling their dispute or assisting them to reach a
settlement understand their business and their concerns. It further assures them that the outcome will not
be based purely on legal technicalities but will take into account commercial practicalities and technical
details which lawyers may not fully comprehend.

LIMITATION OF ADR IN GENERAL

Generally ADR are usually faster, and cheaper than litigation.. they are also private and informal when
also compared to litigation and it gets both parties involved in the settlement process and the decisions
are not necessarily final. However ADR does not alway guarantee an agreed upon decision and with
arbitration the decision is final.10

----SEE DISADVANTAGES----

SUBJECT OF ADR
Typical ADR Processes :

A process is any procedure agreed to by the parties and the third party neutral by which the parties will
work to resolve their dispute. Figure 19-1 illustrates the spectrum of ADR processes. For further
discussion see SCAO’s Taxonomy of Alternative Dispute Resolution Processes. The most common ADR
procedures are as follows.

Convening (also called conflict assessment) involves the use of a neutral third party to help assess the
causes of the conflict, to identify the persons or entities that would be affected by the outcome of the
conflict, and to help these parties consider the best process (for example, mediation, consensus-building,
or a lawsuit) for them to deal with the conflict. The convener may also help get the parties ready for
participation in a dispute resolution process by providing educating the parties on the nature of the
selected process.

9
http://www.nadr.co.uk/background/contrast.php
10
http://wiki.answers.com/Q/What_are_the_disadvantages_and_advantages_of_Alternative_dispute_resolution#i
xzz204zUKU00
Facilitation or Consensus Building is a process used to help a group of people or parties have constructive
discussions about complex or potentially controversial issues. The facilitator helps the parties set ground
rules for these discussions, promotes effective communication, elicits creative options, and keeps the
group focused and on track. Facilitation can be used even where parties have not yet agreed to attempt to
resolve a conflict.

Mediation is a process in which a neutral third party (the mediator) assists disputants in reaching a
mutually satisfying settlement of their differences. Mediation is voluntary, informal, and confidential. The
mediator helps the disputants to communicate clearly, to listen carefully, and to consider creative ways for
reaching resolution. The mediator makes no judgments about the people or the conflict (unless requested
under the evaluative model), and issues no decision. Any agreement that is reached must satisfy all the
disputants. The Michigan Court Rules define mediation as a “process in which a neutral third party
facilitates communication between parties, assists in identifying issue, and helps explore solutions to
promote a mutually acceptable settlement.” MCR 2.411(A)(2). A mediator has no authoritative decision-
making power. Id.

In Michigan, the terms mediation and facilitation are often used interchangeably to describe what is
known generally elsewhere as mediation.

Case Evaluation is an ADR process created by MCR 2.403 in which a three-person panel hears
presentations by litigants and provides a written evaluation of the value of the case. If all of the parties
accept, a final judgment is entered on all claims asserted in the case in the amount of the evaluation. If
one or both parties reject, the rule provides for the imposition of sanctions in certain circumstances. The
evaluation is limited to a monetary amount, so it is not well suited to resolving disputes seeking any form
of injunctive or other equitable relief. Although case evaluation panels are usually assigned by the office
carrying out a circuit court’s case evaluation program, see generally MCR 2.404, in more complex
disputes the parties often stipulate to specific panel members who the disputants believe have expertise in
the subject matter involved in the dispute. This has the effect of giving the parties more confidence in the
case evaluation award when made. This deviation from usual procedure should be undertaken after
obtaining an appropriate court order.

Early Neutral Evaluation is an evaluative ADR process initiated early in a case, often at the direction of
the court, in which the third party, who has experience or expertise in the subject matter of the suit, meets
with the parties and may receive presentations, after which the neutral provides the parties with an
evaluation of the likelihood of success and likely ranges of damages. The expectation is that an early
evaluation from a knowledgeable, objective expert will prompt the parties to take a more realistic
approach to settling their dispute. There are many variations on this process, including use of the process
to simplify or focus issues. In some cases, the neutral may withhold the evaluation from the parties and
proceed to mediate the conflict, revealing the evaluation only if the mediation is unsuccessful.

Mini and Summary Jury Trials involve advisory trial proceedings. In the first case, the dispute is
presented to a third-party neutral. A summary jury trial involves impaneling an advisory jury to whom the
parties make an abbreviated presentation of their cases. The neutral or the jury, as the case may be, then
deliberates and renders an advisory verdict. Where the credibility of key witness is central to a case, such
a trial may provide valuable guidance to counsel about the likely success of their case.

Arbitration is an adjudicatory process in which a person or panel, other than a judge, controls pretrial
procedures, takes evidence, and renders an award which is the equivalent of a verdict. To be enforceable
in a court the award must be entered as a judgment in a court of competent jurisdiction. MCL 600.5025
There are narrow grounds for appeal and the parties may agree that no appeal will be permitted. Although
some treatises discuss “non binding” arbitration, any nonbinding process is some form of mediation and
that the term “arbitration” is best used only for a binding process. Arbitration offers several advantages
over adjudication by a court. First, the parties can assert more control in defining the procedure. Second,
arbitrations are private although awards usually are entered as judgments by a court, making the terms of
the outcome public. The process generally is quicker than court proceedings and is intended to be, and
usually is, less expensive than litigation.

The American Arbitration Association (AAA) is a major arbitration service provider but there are many
other service providers. The parties are free to fashion their own approach to arbitration but, unlike other
ADR processes, the parties cannot withdraw from arbitration once it has been commenced. Because
arbitration is binding, the parties should be very familiar with the Michigan Arbitration Act and the
Federal Arbitration Act (discussed in § 19.19) before agreeing to arbitration. In addition, because AAA’s
arbitration rules are often incorporated into agreements whether or not the AAA is the arbitration services
provider, parties should be familiar with these procedures before agreeing to be bound by them.

Practitioners should review the arbitrator’s authority to compel discovery and attendance of witnesses
under any applicable statute and the procedures under which the arbitration is conducted. For example,
the arbitrator’s authority is broader under the Federal Arbitration Act and narrower under the AAA’s
procedures. The parties’ agreement to arbitrate may specify discovery obligations as a matter of contract.

If arbitration may be subject to international rules, particular care should be taken because these
procedures may be very different from the American norm.

Med-Arb is an ADR process in which the parties agree in advance to commence mediation but to continue
to binding arbitration of any issues not resolved by mediation. A different neutral generally is used for the
arbitration after the mediation is completed. This process offers the advantage of achieving a final
resolution if mediation does not fully settle all matters. It is not often used in environmental disputes.

Modes of ADR

The most common approaches in Michigan for environmental disputes are mediation (both evaluative
and facilitative models), third-party neutral fact finding, and facilitated rule or policy development.

Most two-party environmental disputes utilize mediation at some point, whether initiated by the parties
or ordered by the court. Participants usually include attorneys, party representatives and experts. Where
the facilitative model is employed, the third-party neutral is usually one individual. Where the parties seek
evaluative input, it is not uncommon to use a three-person panel. In some cases, the mediation follows the
facilitative model but if the parties do not reach an agreement, the neutral is asked to provide an
evaluation either as a general advisory number or in the form of an evaluation to be accepted or rejected
by the parties. In the latter case, the evaluator receives the acceptance or rejections from each party in
confidence. Only if both sides accept does the neutral disclose the parties’ responses. This way, if only one
party accepts, it does not lose any bargaining position by having its acceptance disclosed to the other side.

Because many environmental disputes deal with not just a specific sum certain but often involve
definition of the respective parties’ duties and liabilities after the settlement, neutrals in environmental
mediations may play a more active role than in more typical tort or contract disputes where the principal
dispute is usually money. For this same reason, environmental mediation may result in numerous
sessions conducted over a substantial time period.
ADR Techniques or Methods11

Binding arbitration involves the presentation of a dispute to an impartial or neutral individual (arbitrator)
or panel (arbitration panel) for issuance of a binding decision. Unless arranged otherwise, the parties
usually have the ability to decide who the individuals are that serve as arbitrators. In some cases, the
parties may retain a particular arbitrator (often from a list of arbitrators) to decide a number of cases or to
serve the parties for a specified length of time (this is common when a panel is involved). Parties often
select a different arbitrator for each new dispute. A common understanding by the parties in all cases,
however, is that they will be bound by the opinion of the decision maker rather than simply be obligated
to "consider" an opinion or recommendation. Under this method, the third party's decision generally has
the force of law but does not set a legal precedent. It is usually not reviewable by the courts.

Binding arbitration is a statutorily-mandated feature of Federal labor management agreements.

Consistent with statute, the parties to such agreements are free to negotiate the terms and conditions
under which arbitrators are used to resolve disputes, including the procedures for their selection. Some
agreements may provide for "permanent" arbitrators and some may provide for arbitration panels.

Conciliation involves building a positive relationship between the parties to a dispute. A third party or
conciliator (who may or may not be totally neutral to the interests of the parties) may be used by the
parties to help build such relationships.

A conciliator may assist parties by helping to establish communication, clarifying misperceptions, dealing
with strong emotions, and building the trust necessary for cooperative problem-solving. Some of the
techniques used by conciliators include providing for a neutral meeting place, carrying initial messages
between/among the parties, reality testing regarding perceptions or misperceptions, and affirming the
parties' abilities to work together. Since a general objective of conciliation is often to promote openness by
the parties (to take the risk to begin negotiations), this method allows parties to begin dialogues, get to
know each other better, build positive perceptions, and enhance trust. The conciliation method is often
used in conjunction with other methods such as facilitation or mediation.

Cooperative problem-solving is one of the most basic methods of dispute resolution. This informal
process usually does not use the services of a third party and typically takes place when the concerned
parties agree to resolve a question or issue of mutual concern. It is a positive effort by the parties to
collaborate rather than compete to resolve a dispute.

Cooperative problem-solving may be the procedure of first resort when the parties recognize that a
problem or dispute exists and that they may be affected negatively if the matter is not resolved. It is most
commonly used when a conflict is not highly polarized and prior to the parties forming "hard line"
positions. This method is a key element of labor-management cooperation programs.

Dispute panels use one or more neutral or impartial individuals who are available to the parties as a
means to clarify misperceptions, fill in information gaps, or resolve differences over data or facts. The
panel reviews conflicting data or facts and suggests ways for the parties to reconcile their differences.
These recommendations may be procedural in nature or they may involve specific substantive
recommendations, depending on the authority of the panel and the needs or desires of the parties.
Information analyses and suggestions made by the panel may be used by the parties in other processes
such as negotiations.

11
http://www.opm.gov/er/adrguide/section1-a.asp
This method is generally an informal process and the parties have considerable latitude about how the
panel is used. It is particularly useful in those organizations where the panel is non-threatening and has
established a reputation for helping parties work through and resolve their own disputes short of using
some formal dispute resolution process.

Early neutral evaluation uses a neutral or impartial third party to provide a non-binding evaluation,
sometimes in writing, which gives the parties to a dispute an objective perspective on the strengths and
weaknesses of their cases. Under this method, the parties will usually make informal presentations to the
neutral to highlight the parties' cases or positions. The process is used in a number of courts across the
country, including U.S. District Courts.

Early neutral evaluation is appropriate when the dispute involves technical or factual issues that lend
themselves to expert evaluation. It is also used when the parties disagree significantly about the value of
their cases and when the top decision makers of one or more of the parties could be better informed about
the real strengths and weaknesses of their cases. Finally, it is used when the parties are seeking an
alternative to the expensive and time-consuming process of following discovery procedures.

Facilitation involves the use of techniques to improve the flow of information in a meeting between
parties to a dispute. The techniques may also be applied to decision-making meetings where a specific
outcome is desired (e.g., resolution of a conflict or dispute). The term "facilitator" is often used
interchangeably with the term "mediator," but a facilitator does not typically become as involved in the
substantive issues as does a mediator. The facilitator focuses more on the process involved in resolving a
matter.

The facilitator generally works with all of the meeting's participants at once and provides procedural
directions as to how the group can move efficiently through the problem-solving steps of the meeting and
arrive at the jointly agreed upon goal. The facilitator may be a member of one of the parties to the dispute
or may be an external consultant. Facilitators focus on procedural assistance and remain impartial to the
topics or issues under discussion.

The method of facilitating is most appropriate when: (1) the intensity of the parties' emotions about the
issues in dispute are low to moderate; (2) the parties or issues are not extremely polarized; (3) the parties
have enough trust in each other that they can work together to develop a mutually acceptable solution; or
(4) the parties are in a common predicament and they need or will benefit from a jointly-acceptable
outcome.

Factfinding is the use of an impartial expert (or group) selected by the parties, an agency, or by an
individual with the authority to appoint a factfinder in order to determine what the "facts" are in a
dispute. The rationale behind the efficacy of factfinding is the expectation that the opinion of a trusted
and impartial neutral will carry weight with the parties. Factfinding was originally used in the attempt to
resolve labor disputes, but variations of the procedure have been applied to a wide variety of problems in
other areas as well.

Factfinders generally are not permitted to resolve or decide policy issues. The factfinder may be
authorized only to investigate or evaluate the matter presented and file a report establishing the facts in
the matter. In some cases, he or she may be authorized to issue either a situation assessment or a specific
non-binding procedural or substantive recommendation as to how a dispute might be resolved. In cases
where such recommendations are not accepted, the data (or facts) will have been collected and organized
in a fashion that will facilitate further negotiations or be available for use in later adversarial procedures.
Interest-based problem-solving is a technique that creates effective solutions while improving the
relationship between the parties. The process separates the person from the problem, explores all
interests to define issues clearly, brainstorms possibilities and opportunities, and uses some mutually
agreed upon standard to reach a solution. Trust in the process is a common theme in successful interest-
based problem-solving.

Interest-based problem-solving is often used in collective bargaining between labor and management in
place of traditional, position-based bargaining. However, as a technique, it can be effectively applied in
many contexts where two or more parties are seeking to reach agreement.

Mediated arbitration, commonly known as "med-arb," is a variation of the arbitration procedure in which
an impartial or neutral third party is authorized by the disputing parties to mediate their dispute until
such time as they reach an impasse. As part of the process, when impasse is reached, the third party is
authorized by the parties to issue a binding opinion on the cause of the impasse or the remaining issue(s)
in dispute.

In some cases, med-arb utilizes two outside parties--one to mediate the dispute and another to arbitrate
any remaining issues after the mediation process is completed. This is done to address some parties'
concerns that the process, if handled by one third party, mixes and confuses procedural assistance (a
characteristic of mediation) with binding decision making (a characteristic of arbitration). The concern is
that parties might be less likely to disclose necessary information for a settlement or are more likely to
present extreme arguments during the mediation stage if they know that the same third party will
ultimately make a decision on the dispute.

Mediated arbitration is useful in narrowing issues more quickly than under arbitration alone and helps
parties focus their resources on the truly difficult issues involved in a dispute in a more efficient and
effective manner.

Mediation is the intervention into a dispute or negotiation of an acceptable, impartial and neutral third
party who has no decision-making authority. The objective of this intervention is to assist the parties in
voluntarily reaching an acceptable resolution of issues in dispute. Mediation is useful in highly-polarized
disputes where the parties have either been unable to initiate a productive dialogue, or where the parties
have been talking and have reached a seemingly insurmountable impasse.

A mediator, like a facilitator, makes primarily procedural suggestions regarding how parties can reach
agreement. Occasionally, a mediator maysuggest some substantive options as a means of encouraging the
parties to expand the range of possible resolutions under consideration. A mediator often works with the
parties individually, in caucuses, to explore acceptable resolution options or to develop proposals that
might move the parties closer to resolution.

Mediators differ in their degree of directiveness or control while assisting disputing parties. Some
mediators set the stage for bargaining, make minimal procedural suggestions, and intervene in the
negotiations only to avoid or overcome a deadlock. Other mediators are much more involved in forging
the details of a resolution. Regardless of how directive the mediator is, the mediator performs the role of
catalyst that enables the parties to initiate progress toward their own resolution of issues in dispute.

Minitrials involve a structured settlement process in which each side to a dispute presents abbreviated
summaries of its cases before the major decision makers for the parties who have authority to settle the
dispute. The summaries contain explicit data about the legal basis and the merits of a case. The rationale
behind a minitrial is that if the decision makers are fully informed as to the merits of their cases and that
of the opposing parties, they will be better prepared to successfully engage in settlement discussions. The
process generally follows more relaxed rules for discovery and case presentation than might be found in
the court or other proceeding and usually the parties agree on specific limited periods of time for
presentations and arguments.

A third party who is often a former judge or individual versed in the relevant law is the individual who
oversees a minitrial. That individual is responsible for explaining and maintaining an orderly process of
case presentation and usually makes an advisory ruling regarding a settlement range, rather than offering
a specific solution for the parties to consider. The parties can use such an advisory opinion to narrow the
range of their discussions and to focus in on acceptable settlement options--settlement being the ultimate
objective of a minitrial.

The minitrial method is a particularly efficient and cost effective means for settling contract disputes and
can be used in other cases where some or all of the following characteristics are present: (1) it is important
to get facts and positions before high-level decision makers; (2) the parties are looking for a substantial
level of control over the resolution of the dispute; (3) some or all of the issues are of a technical nature;
and (4) a trial on the merits of the case would be very long and/or complex.

Negotiated rulemaking, commonly known as "reg-neg," brings together representatives of various interest
groups and a Federal agency to negotiate the text of a proposed rule. The method is used before a
proposed rule is published in the Federal Register under the Administrative Procedures Act (APA). The
first step is to set up a well-balanced group representing the regulated public, public interest groups, and
state and local governments, and join them with a representative of the Federal agency in a Federally
chartered advisory committee to negotiate the text of the rule. If the committee reaches consensus on the
rule, then the Federal agency can use this consensus as a basis for its proposed rule.

While reg-neg may result in agreement on composition of a particular rule an agency may wish to
propose, when the rule is proposed it is still subject to public review under the APA. This is the last step in
the process. Federal agency experience is that the process shortens considerably the amount of time and
reduces the resources needed to promulgate sensitive, complex, and far-reaching regulations--often
regulations mandated by statute.

Settlement conferences involve a pre-trial conference conducted by a settlement judge or referee and
attended by representatives for the opposing parties (and sometimes attended by the parties themselves)
in order to reach a mutually acceptable settlement of the matter in dispute. The method is used in the
judicial system and is a common practice in some jurisdictions. Courts that use this method may mandate
settlement conferences in certain circumstances.

The role of a settlement judge is similar to that of a mediator in that he or she assists the parties
procedurally in negotiating an agreement. Such judges play much stronger authoritative roles than
mediators, since they also provide the parties with specific substantive and legal information about what
the disposition of the case might be if it were to go to court. They also provide the parties with possible
settlement ranges that could be considered.

Non-binding arbitration involves presenting a dispute to an impartial or neutral individual (arbitrator) or

panel (arbitration panel) for issuance of an advisory or non-binding decision. This method is generally
one of the most common quasi-judicial means for resolving disputes and has been used for a long period
of time to resolve labor/management and commercial disputes. Under the process, the parties have input
into the selection process, giving them the ability to select an individual or panel with some expertise and
knowledge of the disputed issues, although this is not a prerequisite for an individual to function as an
arbitrator. Generally, the individuals chosen are those known to be impartial, objective, fair, and to have
the ability to evaluate and make judgments about data or facts. The opinions issued by the third party in
such cases are non-binding; however, parties do have the flexibility to determine, by mutual agreement,
that an opinion will be binding in a particular case.

Non-binding arbitration is appropriate for use when some or all of the following characteristics are
present in a dispute: (1) the parties are looking for a quick resolution to the dispute; (2) the parties prefer
a third party decision maker, but want to ensure they have a role in selecting the decision maker; and (3)
the parties would like more control over the decision making process than might be possible under more
formal adjudication of the dispute.

Ombudsmen are individuals who rely on a number of techniques to resolve disputes. These techniques
include counseling, mediating, conciliating, and factfinding. Usually, when an ombudsman receives a
complaint, he or she interviews parties, reviews files, and makesrecommendations to the disputants.
Typically, ombudsmen do not impose solutions. The power of the ombudsman lies in his or her ability to
persuade the parties involved to accept his or her recommendations. Generally, an individual not
accepting the proposed solution of the ombudsman is free to pursue a remedy in other forums for dispute
resolution.

Ombudsmen may be used to handle employee workplace complaints and disputes or complaints and
disputes from outside of the place of employment, such as those from customers or clients. Ombudsmen
are often able to identify and track systemic problems and suggest ways of dealing with those problems.

Partnering is used to improve a variety of working relationships, primarily between the Federal
Government and contractors, by seeking to prevent disputes before they occur