All successful businesses operate in a collaborative manner with their customers, vendors, and employees, utilizing contracts to establish and document all parties’ obligations and rights. However, despite mutually agreed-upon terms, and the best intentions of all parties, conflicts, and disputes will sometimes occur. Similarly, conflicts and disputes arise between individuals – even in a family or domestic situation.
Historically, when direct negotiations failed to resolve disputes, people turned to the court for a judge or jury to decide with a legally binding solution to the conflict. However, the litigation process inevitably resulted in delays, legal costs, and uncertainty as to which party’s argument would prevail. Trials are an inherently adversarial process and often result in what is known as a “zero-sum result,” meaning there is only a winner and loser, nothing in between. Is there a better way?
In this article, we will briefly summarize the different types of alternative dispute resolution (“ADR”) methodologies and how they have evolved in different jurisdictions. Most importantly, however, we will describe how to best use this collaborative process to achieve the goals and protection of the participant’s interests, while resolving disputes that inevitably arise in business and personal relationships.
The courts in Maryland, the District of Columbia, and Virginia recognized in the 1980s that civil dockets were becoming over-crowded with pending cases. They lacked the resources to manage the backlog of civil lawsuits docketed on the respective calendars. In a concentrated effort, both state and federal courts began developing systems to relieve overburdened courts, using ADR methods.
In the early to mid-1980s, the D.C. Superior Court parties and counsel would appear for the first scheduled trial date only to find that their case had to be continued because there were no available judges to hear the case. Criminal cases, which have a constitutional requirement of a speedy trial, took priority over civil cases. Civil trial delays frustrated all parties concerned; they were costly, time-consuming, and generally wasteful. In response to the growing civil trial bottleneck, the D.C. Superior Court began the administration of the Office of Multi-Door Dispute resolution, making mediation mandatory for all civil cases filed. The existing rules of civil procedure were amended to provide that “[a]t the Initial Scheduling Conference, the court will include in the Order date and method of Alternative Dispute Resolution. The Order will set out a time period in which mediation or other alternative dispute resolution proceedings will be held.” The ADR alternative worked. It resolved the over-burdened civil case dockets. Although there are no guarantees that ADR will resolve all conflicts, cases not resolved through initial ADR efforts are often settled before trial, proceeding to trial only if the conflict remained unresolved by ADR efforts.
The Maryland District and Circuit Courts also began a well-organized program of ADR. Chief Judge Robert M. Bell of the Maryland Court of Appeals created and chaired the Maryland ADR Commission which collaborated with over 700 stakeholders to develop a strategic plan for advancing mediation and other conflict resolution processes statewide. The work of the ADR Commission led to the development of a court-related agency, the Maryland Mediation and Conflict Resolution Office (MARCO). In fiscal year 2017, the Maryland trial courts handled 1,888,813 case filings and 2,030,634 case closings. Although the exact number of case filings settled as a result of ADR is not known, there is little doubt that the organized system of ADR has created an effective and collaborative alternative to conflict resolution through the court’s trial system.
In Virginia, in a comment to the Virginia Rules of Professional Conduct, Scope or Representation, it is stated, “[t]he client has ultimate authority to determine the purposes to be served by legal representation, within the limits imposed by the law and the lawyer’s professional obligations. Within those limits, a client also has a right to consult with the lawyer about the means to be used in pursuing those objectives. In that context, a lawyer shall advise the client about the advantages, disadvantages, and availability of dispute resolution process that might be appropriate in pursuing these objectives.” It is clear by the Comment that clients should be given the opportunity to consider whether the best method of resolving their conflict might be some form of ADR.
Considering that a legally filed suit may result in court-ordered ADR, it makes sense to consider the use of this process before initiating a lawsuit with the courts. Preemptively choosing this alternative before filing a case with the court will likely reduce case expense, result in earlier resolution and give the parties more control in achieving their interest and goals through case resolution.
The District Court of Maryland website does a good job of summarizing the advantages of ADR, compared to taking the case through litigation. For example, in trial proceedings are conducted in a public courtroom, versus when using the ADR process, proceedings are generally conducted in a private setting. Also during trials, the court decisions are subject to an appeal which can result in delays, while the ADR process both parties agree upon terms at the time of conclusion.
There are many types of ADR processes, each suited to the different types and complexity of disputes. The most common type is mediation and is often employed early in the conflict resolution process, avoiding the costs usually associated with trial-based conflict resolution. In this process, an impartial mediator meets with both sides to discuss and determine what their interests are, what they hope to achieve and then creates a plan that best achieves each parties’ interests and goals. In most mediations, the parties reach their own voluntary agreement through mediator-facilitated discussions. Mediation agreements are generally non-binding unless all parties agree that the results of the mediation process conclude the matter. Enforcement of mediation agreements as binding is best accomplished through a written and endorsed summary of the mediation plan.
Another ADR method is known as a settlement conference. Settlement conferences are often used later in the conflict resolution process, after at least some of the case facts and witnesses are determined. In this process, a trained and experienced settlement conference attorney or facilitator plays a more active role in establishing the boundaries of potential agreements. This process of a more facilitator-directed agreement is generally used in conflicts where the legal risks and uncertain outcomes associated with resolution through the trial process are judged by both parties to be too high. However, again, the process is not binding unless the parties reach a voluntary agreement that is set forth in writing.
Arbitration is another form of ADR. Arbitration is a trial-like process, in that parties must prepare and present their case with support materials to a third party for conflict resolution. Both sides submit their statements and produce written documents in support of their position at an informal hearing before the mutually agreed upon arbitrator. Compared to a court trial, the rules of evidence for arbitration submissions are more relaxed. For example, the hearsay rule for trials prohibits admission of many types of statements made by parties outside of the court, while the arbitration process usually allows such statements to be admitted. At the end of the hearing, the arbitrator makes a ruling, either verbally or in writing, which generally ends the dispute without an option to appeal. The majority of courts will enforce the terms of an arbitration ruling, without hearing the case all over again.
ADR procedures are built based on collaborative principles that avoid the pitfalls of the alternative adversarial process of trials, and the value of confidentiality inherent to the ADR process cannot be overstated. And not often mentioned, but nonetheless critically important, is the fact that trial judges are assigned, not selected. There is no opportunity for input from any of the participating parties, leaving to chance whatever predispositions may impact court decisions. Alternatively, selection of qualified and experienced ADR facilitators can materially affect both the process and outcome of civil dispute resolutions.
In summary, all businesses should consider having a dispute resolution clause in their agreements with vendors, employees or other types of written contracts; similarly, all individuals should consider ADR as a means to resolve domestic or family strife. When disputes arise, the process of resolving the disputes through ADR will cost less, be resolved sooner than through trial process, and ADR provides all parties more say and participation in both the process and outcome.
For questions about this article or any alternative dispute resolution question, please contact an attorney in our Mediation and Arbitration practice group.