25 February 2009
Alternative Dispute Resolution (ADR) is a process that allows conflicting parties to come to a solution outside of the legal system. Currently, America has the highest incident of litigation in the world. In 2002 alone there were sixteen million civil lawsuits filed. The practice of ADR can be a significant solution to lowering litigation levels in the States and provide conflict resolution outside of the legal system. In this paper, I argue that ADR will become an integral component of non litigating solutions to conflicting parties, and that this growth will be a result of education and governmental promotion and training. First, I will explain the basic types of ADR and how they are executed. I will then explore how the federal government assisted the growth of ADR through the enactment of 20th century statutes that promote the use of ADR. Third, I will look at how the U.S. Supreme Court ruled on the statutes and their constitutionality. Then I will analyze the current environment of ADR pedagogy in Law Schools and its affects in the advancement of ADR in both academic and professional settings. Finally, I will examine the current position of ADR and its possible role in the future.
A compelling factor of ADR is that it operates outside of the legal system. Being separate from the legal structure means there aren’t lengthy trials, expensive costs, plus ADR is non-adversarial; meaning, there isn’t a winner or loser as is the case in court. To give a general view of ADR in action I will use Laurie Coltri’s book Conflict Diagnosis and Alternative
Dispute Resolution where she provides the basic ADR techniques. The first ADR approach is what she calls “simple negotiation”. This is when the only parties in the negotiation are the disputants themselves. The participants in this case mutually decide the terms to resolve the conflict. This approach is common in the business world when conflicting interests are resolved through the process of negotiation. Simple negotiation allows for more flexibility and deference to the disputants in deciding their mutual beneficial outcome in comparison to what Coltri calls assisted or facilitated ADR. In agent or advocate-assisted negotiation an assistant or agent stands in the shoes of the disputants and negotiates a settlement. They are given instructions on acceptable settlements, but the disputants still retain the power to accept or reject an offer. This form of ADR can be very effective when the principal parties to the negotiation are emotionally involved; thus, the agent creates a buffer zone to negate extreme emotional decisions or interactions. Furthermore, in large businesses the principal negotiator may be unavailable, or there are several negotiations with different a party in different locations; agent assisted negotiation can facilitate multiple negotiations simultaneously. Coltri continues with mediation as the next level of ADR which is when a third party facilitates the negotiation. This third party is a neutral panel which assists the disputants in resolving their dispute. Mediation is the most well known and common form of ADR. Mediation is applied when the disputants can no longer come to an agreement and require a third party to facilitate the production of a mutually beneficial outcome. Another form of ADR is the nonbinding evaluation process where the disputants present their side to a third party. The third party then gives the disputants a nonbinding decision which can be utilized by the disputants in their negotiation. This form of ADR can be very effective to create a neutral structure of agreement that both sides can critique and apply. A non binding decision can be a positive solution to a negotiation which has reached a standstill. Having a neutral third party craft an agreement can be a new starting point for hindered negotiations. Arbitration is the final form of assisted negotiation. Arbitration is when the disputants contractually agree to the decision of the third party. The third party is called the arbitrator. Arbitration is commonly used in business contracts as well as employment practices. This provides an alternate route of dispute resolution outside of the courts. Furthermore, arbitration proceedings are kept confidential whereas court records are public information. Arbitration can be desired for confidentiality reasons alone. Coltri mentions that these differing forms can be combined to create hybrid styles of negotiation. Through these explanations of the differing forms of ADR, we can see that the farther we move away from simple negotiation, the less control the disputants have in their negotiation. Thus, the unique situations present in a business or diplomatic dispute require differing forms of ADR.
Arbitration in diplomacy and business has been in use for centuries. In America, the founding fathers used arbitration as a successful means for resolving disputes, as did businessmen, trade unions, and entrepreneurs. However, it wasn’t until the early 20th century that the federal government enacted legislation concentrated on arbitration. The Federal Arbitration Act (FAA) of 1925 solidified the countries interest in arbitration. The FAA provided that the results of arbitration are legally enforceable and the same in nature as a contract. Furthermore, the act closed the court to disputants that denied the arbitration outcome, authorized the court to enforce arbitration awards, and allowed the court to appoint arbitrators and expedite arbitration proceedings (Barret: 81). This law is still in use today and has expanded from its narrow scope in the early 20th century to now being applicable to all states. The federal government passed the Administrative Dispute Resolution Act of 1996 which outlines the federal government’s policy on ADR. It covers the authority of the arbitrator, enforcement of awards, definitions, confidentiality, judicial review, and the proceedings of arbitration. This statute affirmed that all governmental agencies must have an ADR policy with which to solve inter-governmental disputes. This is done in order to “enhance the operation of the Government and better serve the public” (USDOJ). The next significant piece of legislation enacted to promote ADR is the Alternative Dispute Resolution Act of 1998. This act allows any district court authorization to enforce an ADR process arising in any “appropriate” civil dispute. If a judge reasons that a case should be decided by an arbitrator, then the disputants must follow the court order and resolve the conflict by way of ADR. The development of the government’s interest in promoting ADR is significant in the performance of national ADR practices. Furthermore, it validates the effectiveness in both dispute resolution and lowering the litigation rate in the courts.
The highest Court in the land has involved itself in the process of ADR. The Supreme Court precedent evolved with the FAA from 1925 onward. The first major decision of the Supreme Court concerning arbitration is Wilko v. Swan (1953). In this case, a securities broker and a buyer came into dispute over their transaction. In the contract they signed there was a section which required arbitration if a dispute arose. However, the buyer sued arguing the Securities Act of 1933 conferred upon him an unwavering right to sue. The Supreme Court sided with the buyer and stated that arbitrators “[function] without explanation of their reasons and without a complete record of their proceedings, the arbitrators’ conception of the legal meaning of such statutory requirements as “burden of proof,” “reasonable care” or “material fact” cannot be examined” (Haydock: 150). In other words, the Supreme Court believed arbitrators were not educated enough in the legal underpinnings and complexities of statutory interpretation, and thus were not an effective remedy in this case. Moreover, “While an arbitrator might, at some level, be governed by law, the arbitration itself was not a process obliged to enforce federal law” (Resnik: 223). Thus, the arbitrator could be an unelected lawmaker whom answers to no one, or is an influence on public policy which stands repugnant to federal law and regulation. This precedent invalidated the use of arbitration if a statute was involved. A disputant could argue that a certain piece of legislation guarantees the right to sue and that the arbitration clause in the contract does not apply. This hole in the arbitration system was exploited by disputants who felt their court case was unbeatable and would thus achieve a better outcome through the court system. Roger Haydock posits in his article, Arbitration and Judicial Civil Justice: An American Historical Review and a Proposal for a Private/Arbitral and Public/Judicial Partnership, that it took the Supreme Court forty years to chip away at the precedent set in Wilko. Eventually, “The Supreme Court upheld arbitration agreements between businesses and customers, employers and employees, and corporations and individuals” (Haydock: 169), thereby reaffirming the federal government’s commitment to arbitration. The support of the Supreme Court is crucial in the development and practice of ADR. Lower courts usually follow the precedent set by the Court, and the ruling in Wilko effectively diminished the capacity of ADR.
In the past few decades ADR has grown from a small contingent of practitioners to so much more. Lela Love, a professor at Cordozo School of law, posits that the growth of ADR is stimulated not only because of its effectiveness, but due to the application of ADR training in law schools. She mentions several specific details that have occurred in the past twenty years -over 140 law schools began teaching ADR techniques; over 500 law professors identify themselves teaching ADR at law schools; certificates and specialized degrees in ADR are now available across the nation; new teaching methodologies are constantly being developed; all of these show remarkable growth in this new sector (Love: 600). This sparked interest in training law students is exemplary of the possible future ramifications of lower litigation suits and a move towards non-adversarial process of dispute resolution. If the law students are being trained in ADR, perhaps the effect will free the congested court system.
Beyond the growth of ADR in the academic sector, the strategies of ADR use by attorneys plays a significant role in further developing this trend. Once out of law school, how does an attorney effectively initiate or utilize the ADR techniques learned in law school? According to Andrea Schneider, law professor at Marquette University, counseling is the single most important attribute an attorney can utilize in the execution of ADR. She finds ADR textbooks extremely lacking the client connection she finds to be so important. She argues, “When a client favors other goals [than money], the lawyer who fails to understand the client’s values can promote settlements that give the client an optimal financial return but are nonetheless inefficient because they fail to maximize the client’s expected utility” (Schneider: 117). An attorney can thus not fully understand the complexities of their client’s concerns and give advice that is not effective. If an attorney knows the process of ADR, but can’t apply it in the correct situations, what good is that knowledge? Thus, applying ADR techniques through improved education in client counseling is what Schneider is advocating. The development of client advocacy will in turn increase the use of ADR because individual’s interests will be better served.
In a recent study, 68% of lawyers stated their clients never asked for an ADR process. This mirrors the information above. A lawyer must become an advocate for the development and usage of ADR; this coupled with an improved sensitivity to the client’s interests can create an upsurge of non-litigious solutions. The study continues, when a lawyer explains ADR to their client a large majority of them agreed to take part in mediation (77%) and arbitration (64%) (Wissler: 204). The study clearly shows that ADR practices must be initiated by the attorney to efficiently help their clients through the process of ADR. Most courts recommend attorneys inform their clients of ADR practices, some even require attorneys to seek ADR for their clients prior to litigation (Wissler: 206). Wissler provides another interesting statistic: “In several surveys, the percentage of attorneys who reported having taken a course in mediation, ADR, or negotiation skills ranged from 4% to 55%” (Wissler: 209). This statistic provides us with a clue concerning the education of many of the lawyers in practice today. Only half of practicing attorneys, at best, have been trained in negotiation or ADR techniques. While the growth of ADR programs has increased, the majority of practicing lawyers are not educated in the use of ADR. Continuing legal courses focused on ADR could bridge the gap seen in the above statistics and provide a non-litigious framework for lawyers to use.
The future of ADR has many different facets that I’ll attempt to combine into one clear vision. First, according to Yale law professor Judith Resnik, the future of ADR must be promoted and applauded by the judiciary. She believes this would be a “demonstration from individuals with first-hand knowledge of the weakness of adjudication, its failures and limitations” (Resnik: 262). With such a highly litigious society as America, the astute advice of a judge may propel the legal profession and academia circles away from the adversarial approach to dispute resolution. However, there is a possible weakness in court sanctioned ADR practices. Judge Brazil from the District of Columbia puts forward that, “Neutrals in court-sponsored [ADR] programs are perceived by litigants, lawyers, and the public generally as agents of the court–representatives of the court. How they perform will affect directly the public’s feelings about the court” (Brazil: 24). This plays an important aspect of the court’s legitimacy. If the court’s legitimacy is diminished, the judiciary’s esteem also diminishes. Ultimately, the court’s sincere interest in promoting ADR will be essential for the growth of ADR in the future decades.
Another growing aspect of ADR is online dispute resolution (ODR). The internet is an excellent place for communication and connects people who would otherwise not be able to connect due to geography or other exigent circumstances. What has been developed thus far in ODR is specific software and websites which allow the disputants to connect and either negotiate or have a mediator present during the session. One success story is squaretrade.com which has completed over two million ODR’s since the year 2000 (Katsch: 428). ODR is thus a possible avenue for the continued growth of ADR. Another growth sector is the shift of simple misdemeanor crimes from court processes to ADR. This process has come to be known as victim offender mediation and has shown to be an excellent deterrent to offenders (Umbriet: 456). It allows the offender to hear and listen to the victim’s emotional response and understand that their actions have consequences beyond the charges. It also allows the victim to communicate their feelings to the offender and to work out a financial restitution plan if applicable. There are other interesting growing sectors in ADR, but it is the education of new lawyers applying ADR practices correctly and efficiently that will have the greatest impact in the future growth and efficacy of ADR.
ADR is a becoming an important addition to America’s highly litigious society. This is demonstrated through the support of the federal government in both congress and the judiciary, and the growing educational sectors focused on ADR training. Ultimately, the role of the lawyer will have the most influence in the growth of ADR. If the lawyers become trained advocates and practitioners of ADR, the use of non-litigious means for dispute resolution will disseminate the process to the public. The use of ADR in dispute resolutions can be more effective than court trials, but this necessary improvement rests upon the legal community to implement.