What is Alternative Dispute Resolution?

Familiarize yourself with mediation, arbitration, and a hybrid approach using alternative dispute resolution.

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alternative dispute resolution

So, you’re stuck in a serious dispute, but you’re desperate to avoid the hassle and expense of a court case. You’ve heard about alternative dispute resolution but are not sure what it entails.

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What is alternative dispute resolution? Alternative dispute resolution, or ADR, is a process in which a neutral third party—a mediator or arbitrator—helps parties who are embroiled in a dispute come to an agreement. Mediation and arbitration (see also Arbitration vs Mediation and the Conflict Resolution Process in Alternative Dispute Resolution (ADR)) are types of alternative dispute resolution because they offer an alternative to litigation.

In this article, we describe the two basic types of alternative dispute resolution in addition to introducing a mediation-arbitration hybrid that may be beneficial in resolving certain disputes.

What is mediation?

In mediation, a neutral third party tries to help disputants come to a consensus on their own. Rather than imposing a solution, a professional mediator seeks to assist the conflicting sides in exploring the interests underlying their positions. Working with parties together and sometimes separately, mediators try to help them hammer out a resolution that is sustainable, voluntary, and non-binding.

Mediators can help disputants break an impasse in the following ways, according to Harvard Law School professor emeritus Frank E. A. Sander:

1. Finding additional information that parties were unwilling to share with each other;
2. Overcoming parties’ resistance to communicating and reaching an agreement by presenting offers to both sides;
3. Contributing impartial, specialized expertise; and
4. Brainstorming options to find a resolution that satisfies both parties.

Mediators can be largely facilitative, engaging primarily in shuttle diplomacy and keeping their own views hidden. Other mediators are more evaluative, offering their own knowledge and opinions to guide parties toward agreement. “The most skilled mediators blend the two techniques according to the nature of the problem and the stage of the mediation,” writes Sanders in an article in the Negotiation Briefings newsletter.

What is arbitration?

In arbitration, the other primary form of alternative dispute resolution, a neutral third party serves as a judge who is responsible for resolving the dispute. The arbitrator listens as each side argues its case and presents relevant evidence, then renders a binding decision.

Disputants can negotiate virtually any aspect of the arbitration guidelines, including whether lawyers will be present and which standards of evidence to use. Arbitrators hand down decisions that are usually confidential, that is binding, and that cannot be appealed. Arbitration tends to be more expensive than mediation but less expensive than litigation.

Disputants can give the arbitrator the authority to determine who will win the case and what the award, if any, will be. The following are three specifics types of arbitration that are available to disputants, as described by Sander:

1. Hi-lo arbitration. In hi-lo arbitration, parties attempt to reduce the risk of making extreme decisions by agreeing ahead of time on the upper and lower limits of any monetary award that the arbitrator will grant. This strategy limits the risk to parties who are worried about giving total control over the outcome to an arbitrator.

2. Final-offer, or baseball, arbitration. In final-offer arbitration, which is often referred to as baseball arbitration because of its use in Major League Baseball contract disputes, both parties present a last, best offer to the arbitrator, who must choose one of the two offers. Because final-offer arbitration typically seems risky, it often gives parties incentives to negotiate a reasonable resolution. As a consequence, it increases disputants’ participation in a negotiation while still ensuring a decision will be reached if they are unable to agree. This type of arbitration is often used in labor negotiations for police officers and firefighters because communities cannot tolerate the risk of a strike arising from an impasse with such essential employees—an argument that some make about professional baseball players as well.

3. Tripartite arbitration. In tripartite arbitration, there are three arbitrators, one named by each party and one chosen by both of them. Tripartite arbitration is useful in highly complex cases where the parties want advice from three individuals with differing expertise (such as a lawyer, a businessperson, and a scientist). It is also used in cases in which the parties lack full confidence in a neutral arbitrator and prefer an arbitrator who will forcefully represent their interests.

What is med-arb?

An often-overlooked alternative dispute resolution process is med-arb, a mediation-arbitration hybrid. In med-arb, disputants hire a neutral mediator. If she is unable to resolve the dispute through mediation, she puts on her arbitration hat and renders a decision, explains Sander.

While this blended process ensures that parties will reach a resolution, it brings with it a certain level of risk. Disputants may be reluctant to be candid with a mediator who could later use the information they share against them in the arbitration phase of the process. They may be able to avoid this objection by having different individuals filled the mediation and arbitration roles, though this solution comes requires additional time and cost.

In sum, mediation, arbitration, and med-arb offer compelling alternatives to litigation the next time you are embroiled in a conflict that seems impossible to resolve on your own.

What are your thoughts on alternative dispute resolution? Leave us a comment.

Related Article: Arbitration vs Mediation: Team-building, ADR, and Using Negotiation Examples from Real Life

Alternative Dispute Resolution (ADR) and Negotiations: Negotiating for the Right Mediator

Examples of Alternative Dispute Resolution (ADR): How Mediation Works

Dispute Resolution

Claim your FREE copy: Dispute Resolution

Discover how to improve your dispute resolution skills in this free report, Dispute Resolution: Working Together Toward Conflict Resolution on the Job and at Home, from Harvard Law School.

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