Alternative Dispute Resolution, or ADR, is a catch-all term for a wide range of alternatives to litigation. Different varieties of ADR have different advantages and disadvantages and might or might not be available to you at different times during a dispute. What follows is a general description of each process. Be aware that there are variations on each of these methods of dispute resolution. If you have further questions, consult your attorney, an ADR-administering agency, or a trusted mediator or arbitrator.
Negotiation
Direct negotiation between the parties to a dispute is a common first step in raising and resolving disputes. This might be as simple as calling a customer service line to request a replacement or refund. As business relationships, with customers and with other businesses increasingly originate through online interactions with little or no human conversation, negotiation is sometimes skipped. Skipping to other dispute resolution methods can be expensive and can delay or prevent resolution of a problem, but is sometimes unavoidable, for example, if a customer cannot find contact information to raise a problem with an online transaction.
| Advantages | Disadvantages |
| Inexpensive | Need other party’s cooperation/willingness to negotiate |
| Frequently effective | Possibility of stalemate |
| Preserves the relationship | |
| You remain in control—you can accept or refuse any proposed outcome | |
| Flexible solutions—you are not limited to contractual or legal remedies | |
| Informal, meaning you do not have to know and follow fixed rules | |
| Can be pursued at any time |
Mediation
Mediation is an informal, voluntary process where a neutral third party helps the parties negotiate a resolution. Mediation can be ordered by a court (in which case attendance might be obligatory, although how you choose to participate is still voluntary), required as a dispute resolution step in a contract, or agreed to as part of a negotiation between the parties after a dispute arises. Unless you are required to use a certified mediator as part of a court order or contract, the mediator might be a lawyer, a non-lawyer trained in mediation, or someone both parties trust who has no legal or mediation training (but might be trained or skilled in another field).
| Advantages | Disadvantages |
| Relatively inexpensive (typically more expensive than negotiation, less expensive than arbitration or litigation) | Unless ordered by court or required by contract, need other party’s cooperation/willingness to mediate |
| Frequently effective | Possibility of stalemate (“impasse”) |
| Preserves the relationship | Some cases require multiple sessions to fully resolve |
| You remain in control—you can accept or refuse any proposed outcome | |
| Flexible solutions—you are not limited to contractual or legal remedies | |
| Informal, meaning you do not have to know and follow fixed rules; ground rules set by the mediator tend to be simple and intuitive (e.g., no interrupting) | |
| Can be pursued at any time |
Arbitration
Arbitration is a method of dispute resolution where a neutral third party reviews presentations by all parties to the dispute and issues an award resolving the dispute. Arbitration might be required by contract or can be agreed to by the parties after a dispute arises. The parties can choose an arbitrator who has relevant experience or knowledge, and who might be a lawyer, accountant, engineer, or other specialist. The process is sometimes described as “litigation-lite” because the process typically more resembles a court proceeding than mediation or negotiation. However, the arbitration process itself is flexible, subject to any restrictions imposed by the contract, the parties, any applicable rules, and applicable laws.
| Advantages | Disadvantages |
| Expense varies based on the procedures agreed to, but is generally more expensive than mediation and less expensive than litigation | Unless required by contract, need other party’s cooperation/willingness to arbitrate |
| The arbitration award will answer the questions raised—no risk of impasse | Once submitted to arbitration, unless the parties mutually agree to withdraw you lose control over the outcome—the arbitrator will make a decision that is usually binding |
| Unlike litigation, arbitration can be conducted confidentially, with no public records | Some questions cannot be submitted to arbitration, by contract or by applicable law |
| Relatively informal—the arbitration is often guided by rules, but the rules are often less detailed and less rigid than court rules | Flexible rules can feel unpredictable—the parties are placing a lot of trust in the judgment and skill of the arbitrator to shape and enforce flexible rules fairly and efficiently |
| Resolution is often reached faster than in litigation, and grounds for overturning an arbitration award are very limited (that is, once you have an answer in the form of an award, it is likely a final answer) | Appeals are typically not available, even for significant errors |
| Arbitration can be used concurrently with negotiation or mediation, but is typically used instead of (rather than concurrent with) litigation | Arbitration is an adversarial process that may negatively impact parallel negotiation or mediation and any on-going relationship |
Litigation
Litigation is the default method for resolving many disputes. Alternative Dispute Resolution is considered alternative with respect to litigation. Unlike negotiation or mediation, which can be used for any sort of disagreement, and arbitration, which requires only an agreement to submit a dispute to arbitration, litigation is generally reserved for certain kinds of harm for which the law provides a remedy. In some situations, there may be no legal remedy for either party in a dispute. Disputes that involve a legally recognized kind and cause of harm can be submitted to a court with jurisdiction. Courts generally are allowed to hear, or “have jurisdiction over” cases based on where or how the dispute arose, and the value of the alleged harm. The legal arguments and evidence of the harm and how it was caused are presented according to rules-based procedures. A case can be lost or dismissed for filing in the wrong court (e.g., filing in county court when your claim should have been filed in small claims court) or failure to follow the procedures correctly. If this sounds complicated, it certainly can be. Most people try to hire an attorney or find assistance from a legal aid organization to pursue litigation. Court filing costs (not including an attorney, if you hire one) are usually less than what it would cost to hire an arbitrator and sometimes less than what it would cost to hire a mediator for multiple sessions. However, courts tend to be busy. The process of presenting and deciding a court case can take months or years, the costs of attorneys and experts can add up, and the dispute might not be fully resolved if some of the problems involved do not have a legal remedy. Court decisions are generally appealable, which means that you can ask another court to review a decision you think is wrong, and also means that a final answer could be delayed while the original decision is reconsidered.
| Advantages | Disadvantages |
| Can generally “hale” someone into court even if they do not want to be there—you do not need the other party’s consent to file a court case | Costs of attorneys, experts, and the “discovery” process, where parties exchange information, can be extraordinary, often 5-figures for relatively simple cases |
| The court will decide whether to grant a legal remedy requested—no risk of impasse with respect to legal claims | Once submitted to a court, you lose control over the outcome—the court will make a decision |
| Public, transparent | Sensitive or confidential information might have to be made public to litigate a dispute |
| Formal—fixed, detailed rules apply to all litigants | Layers of rules (rules of procedure, rules of evidence, local court rules) can feel overwhelming—the parties are placing a lot of trust in the judgment and skill of their attorneys to navigate the court process as efficiently as possible |
| An erroneous decision can be appealed | Appeals can extend the time to get a final answer |
| Litigation can be used concurrently with negotiation or mediation, but is typically used instead of (rather than concurrent with) arbitration | Litigation is an adversarial process that may negatively impact parallel negotiation or mediation and any on-going relationship |
Looking at Options Beyond Litigation?
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With our intellectual property law firm, you get the benefit of both mediation and AIA trial experience. If you wish to explore voluntary settlement, you will have an advocate who knows how to use the fluidity of mediation effectively.
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