Cutting costs by utilizing Alternative Dispute Resolution instead of Courts
As an operational entity, no institution is immune from legal issues. From employee spats, land ownership/property disputes, student affairs issues, and so on; one way to reduce the institution’s legal fees is to implement a form of alternative dispute resolution, instead of turning to the courts.
Alternative Dispute Resolution (ADR), is more commonly know as mediation or arbitration. Although there are a number ways to reduce costs through these measures, ADR allows both parties to remove their dispute from the public eyes. The reason for such is ADR are private party disputes, compared to the court system, which is a public forum opened to all. With this type of benefit, businesses are turning to ADR to help reduce their legal costs and maintain privacy issues.
There are a number of entities that operate ADR alternatives, as well as, private professionals such as judges, lawyers, corporate business retirees, and professors who act in these capacities. Their purpose is not to take one side or the other, but to help resolve the issue at hand. In some cases, there is more than one person assisting in the decision.
To better understand ADR, I have posted some topic items below from Judicial Arbitration and Mediation Services, Inc. (JAMS). JAMS is one of the largest providers of ADR services to public and private entities. JAMS’ actions help institutions save money and keep issues private in nature.
“Mediation: If internal preventative measures fail, another technique to avoid litigation is mediation. An impartial third party confidentially helps disputants negotiate a mutually satisfactory resolution. Mediation clauses can be included in vendor contracts, executive compensation agreements, personnel policies and even customer bills of rights. Mediation is especially useful in exploring creative ways to achieve beneficial results (including preserving future business opportunities and developing improved quality control methods) and in avoiding the win/lose bilateralism of adjudication. Mediation fees are often split between parties but can be assumed by one side. To ensure the mediator’s impartiality, the fee should be channeled through an administrative entity so the mediator is unaware of payment arrangements”
“Arbitration: Arbitration – confidential adjudication before a neutral arbitrator chosen by the parties – is another effective alternative to the public drama of the courtroom. An arbitrator should be hired for special expertise in impartial fact-finding, legal analysis and decision-making. Arbitration clauses can be included in purchase orders, leases, license agreements, construction contracts and insurance policies. Parties can agree to special procedures such as videoconference testimony by distant witnesses, relaxed evidentiary rules and a schedule that isn’t subject to unforeseen interruption by other judicial priorities. Parties can even control the potential risk of an award by negotiating minimum and maximum amounts that are not disclosed to the arbitrator. Agreements to arbitrate are enforceable in court. Because of its flexibility and privacy, arbitration now occurs more frequently in complex, high-stakes cases when speed and simplicity may not be primary goals. As a result, the cost of commercial arbitration is increasing. Careful prearbitration planning by corporate counsel is critical to control litigation costs. Specifically, arbitration agreements should define as many of the arbitration parameters – including discovery, scheduling and appeal procedures – as practical. Counsel who invest time negotiating these subjects before arbitration will minimize costly disputes during the process”
“Discovery and Scheduling: Unlike traditional litigation, which is guided by statutory procedural rules, arbitration clauses can limit the number and length of depositions, interrogatories or document requests, as well as the scope of expert testimony. Parties can even substitute other discovery methods, including meetings between key executives to directly discuss disputed issues. Consider letting the parties’ expert witnesses testify in the presence of each other, with time to comment on the opponent’s testimony”
“Arbitration allows flexible scheduling. Parties can agree to work late one day to finish an expert’s testimony, use video conferencing for a remote witness, or interrupt one witness to accommodate another. Unlike most jurors, arbitrators are experienced factfinders who can be trusted to overlook the order of presentation and stay focused on the separate evidence offered by each party”
“Single Arbitrator v. Panel: Arbitrated disputes can be decided either by a single arbitrator or by a panel of arbitrators. Generally, if a commercial dispute can be tried in less than two weeks, involves fewer than 10 witnesses and requires just one area of specialized expertise, a single arbitrator can handle the matter. On the other hand, a panel of three impartial decision-makers is preferred when the factual complexity, legal novelty or public significance may challenge the memory, acumen or courage of a lone arbitrator. The breadth of expertise and expanded ability to attend to details can justify the cost of a panel. Alternatively, to supplement a single arbitrator’s expertise, the parties can authorize the single arbitrator to consult an impartial expert approved by all parties”
“Partisan Panel: Party-representative a/k/a "partisan" panels can be effective when the panelists are not arbitrators but party executives. True party representatives such as chief financial officers or product managers can provide value not only to the analysis of the case, but also to the design of a resolution, producing a commercially sensible remedy. In cases involving ongoing business relations, participation of executives as arbitrators can promote a vision past the immediate dispute to more profitable future opportunities”
“Appeals Panels: Companies can specify an appeal procedure in arbitration clauses. Three-member appellate arbitration panels can review the decision of a single arbitrator. The arbitration agreement should define the standard of review, the briefing schedule and decision deadline. The appellate panel can be less expensive than a panel at trial and provide a comforting safety net to litigants who are concerned about the finality of a single arbitrator’s decision”
“The Upshot: For in-house lawyers looking for swift and cost-effective means to end conflicts, alternative dispute resolution offers distinct advantages over traditional litigation. Counsels control of the process from the outset will ensure that cost-savings is one advantage”
“Arbitration: Arbitration – confidential adjudication before a neutral arbitrator chosen by the parties – is another effective alternative to the public drama of the courtroom. An arbitrator should be hired for special expertise in impartial fact-finding, legal analysis and decision-making. Arbitration clauses can be included in purchase orders, leases, license agreements, construction contracts and insurance policies. Parties can agree to special procedures such as videoconference testimony by distant witnesses, relaxed evidentiary rules and a schedule that isn’t subject to unforeseen interruption by other judicial priorities. Parties can even control the potential risk of an award by negotiating minimum and maximum amounts that are not disclosed to the arbitrator. Agreements to arbitrate are enforceable in court. Because of its flexibility and privacy, arbitration now occurs more frequently in complex, high-stakes cases when speed and simplicity may not be primary goals. As a result, the cost of commercial arbitration is increasing. Careful prearbitration planning by corporate counsel is critical to control litigation costs. Specifically, arbitration agreements should define as many of the arbitration parameters – including discovery, scheduling and appeal procedures – as practical. Counsel who invest time negotiating these subjects before arbitration will minimize costly disputes during the process”
“Discovery and Scheduling: Unlike traditional litigation, which is guided by statutory procedural rules, arbitration clauses can limit the number and length of depositions, interrogatories or document requests, as well as the scope of expert testimony. Parties can even substitute other discovery methods, including meetings between key executives to directly discuss disputed issues. Consider letting the parties’ expert witnesses testify in the presence of each other, with time to comment on the opponent’s testimony”
“Arbitration allows flexible scheduling. Parties can agree to work late one day to finish an expert’s testimony, use video conferencing for a remote witness, or interrupt one witness to accommodate another. Unlike most jurors, arbitrators are experienced factfinders who can be trusted to overlook the order of presentation and stay focused on the separate evidence offered by each party”
“Single Arbitrator v. Panel: Arbitrated disputes can be decided either by a single arbitrator or by a panel of arbitrators. Generally, if a commercial dispute can be tried in less than two weeks, involves fewer than 10 witnesses and requires just one area of specialized expertise, a single arbitrator can handle the matter. On the other hand, a panel of three impartial decision-makers is preferred when the factual complexity, legal novelty or public significance may challenge the memory, acumen or courage of a lone arbitrator. The breadth of expertise and expanded ability to attend to details can justify the cost of a panel. Alternatively, to supplement a single arbitrator’s expertise, the parties can authorize the single arbitrator to consult an impartial expert approved by all parties”
“Partisan Panel: Party-representative a/k/a "partisan" panels can be effective when the panelists are not arbitrators but party executives. True party representatives such as chief financial officers or product managers can provide value not only to the analysis of the case, but also to the design of a resolution, producing a commercially sensible remedy. In cases involving ongoing business relations, participation of executives as arbitrators can promote a vision past the immediate dispute to more profitable future opportunities”
“Appeals Panels: Companies can specify an appeal procedure in arbitration clauses. Three-member appellate arbitration panels can review the decision of a single arbitrator. The arbitration agreement should define the standard of review, the briefing schedule and decision deadline. The appellate panel can be less expensive than a panel at trial and provide a comforting safety net to litigants who are concerned about the finality of a single arbitrator’s decision”
“The Upshot: For in-house lawyers looking for swift and cost-effective means to end conflicts, alternative dispute resolution offers distinct advantages over traditional litigation. Counsels control of the process from the outset will ensure that cost-savings is one advantage”
Walsh, M. (2005). ADR avoids court, saves money. Judicial Arbitration and Mediation Services. Retrieved from, http://www.jamsadr.com/news/xpqPublicationDetail.aspx?xpST=PubDetail&pub=524
