What is ADR?

With the increase in litigation costs and court congestion, individuals and business entities are turning to alternative dispute resolution or "ADR" to resolve their disputes. While ADR denotes a variety of techniques to resolve disputes outside the courtroom, the following proceedings typically come within the rubric of "ADR": negotiation, mediation, neutral fact finding, early neutral evaluation, mini-trials, summary jury trials, arbitration and private judging. Although each of these ADR methods has its own characteristics, they generally enable the parties to:

1. Resolve their dispute in a confidential setting;
2. Establish deadlines and procedural rules governing the proceedings;
3. Select the presiding official or "neutral"
4. Contain litigation costs; and
5. Maintain on-going business and personal relationships.

ADR may not be appropriate in all settings, for example, where:

1. The parties want a jury trial;
2. The dispute turns on witness credibility;
3. Public resolution of a novel legal issue (e.g. legal precedent) is needed to discourage similar claims;
4. One wants to preserve full rights of appeal; or
5. The possibility of settlement is so slim that ADR may only achieve educating the other side about the weaknesses of one's case.

ADR Methods

Negotiations
	In the context of ADR, the term "negotiations" refers to negotiations to settle pending disputes. Negotiations are the most common form of ADR, and are, by definition, voluntary and non-binding. Negotiations are generally conducted by the parties and sometimes their attorneys as well. While negotiations generally do not involve intervention of third-party presiding officials, independent third-parties can aid settlement negotiations by helping participants focus not on the assignment of fault, but instead on what caused the dispute and how it can be remedied.
Mediation
	Mediation is a non-binding structured process in which the mediator helps the participants reach a negotiated settlement of their differences. The mediator may use various techniques to help the parties reach a settlement, but does not have the power to render a decision. In its traditional format, the mediator is careful not to interject his or her opinion on the merits of the dispute. Instead, the mediator acts as a facilitator in helping the participants themselves arrive at a solution. Although mediation is generally voluntary, it may be required in certain substantive cases. For example, recent legislation requires the Los Angeles Superior Court to refer all cases where the amount in controversy does not exceed $50,000 to mediation or arbitration. Similarly, disputes between schools and handicapped persons, certain labor disputes involving public entities and their employees, and child custody cases must be mediated. Mediation allows the parties to preserve their business relationship and provides the parties a neutral, non-adversarial forum for evaluating the strengths and weaknesses of their respective positions. Mediations are confidential and can afford a more creative resolution of problems because the parties control the process. Sometimes mediation is combined with other ADR techniques. For example, the parties can agree to "med-arb". Med-arb typically involves an agreement first to mediate a dispute and then to arbitrate the dispute before the same neutral who served as the mediator if the mediation is unsuccessful. Mediation, however, may not be advantageous where the parties are of substantially unequal bargaining strength because the stronger party may force a compromise on the weaker party. Where there is no genuine possibility of settlement, mediation may just educate one's "adversary" without resolving the dispute. Because of the confidentiality of mediation proceedings, mediation also may not be appropriate in test cases.
Neutral Fact Finding
	Where a dispute involves an issue requiring expertise, and that issue is a stumbling block to settlement, the parties may agree on a neutral third-party to decide that issue. The parties may make the neutral's decision binding or not. Neutral fact finding can also resolve disputes involving a business entity's internal affairs, like employment discrimination, where the company needs someone outside the company to investigate the charges. In these circumstances, the parties may agree that the fact finder's report is for settlement purposes only and therefore not admissible if litigation ensues.
Early Neutral Evaluation
	Early neutral evaluation is an ADR technique developed by the courts -- notably the United States District Courts for the Southern and Northern Districts of California -- to assist parties in settling their cases early on in the litigation. Generally, these programs require the parties to appear before an expert voluntary attorney selected by the court, and to provide written statements setting forth a description of the dispute and the legal and factual issues whose early resolution would reduce the scope of the suit or contribute to settlement negotiations. Sometimes, the parties are also required to identify discovery that would assist settlement discussions. Early neutral evaluation may be combined with other ADR techniques. For example, the District Court for the Southern District of California provides that where early neutral evaluation fails to settle certain cases, those cases must be referred to non-binding mediation or arbitration.
Mini-Trials
	To some extent, the term "mini-trial" is a misnomer because mini-trials are not trials. More accurately, they are a form of non-binding settlement proceeding developed to resolve disputes between business entities. In a mini-trial, each side presents its case to a panel comprising the parties' decision-makers with settlement authority. The goal of the mini-trial is to settle the dispute through negotiation by the parties' decision-makers. The parties may appoint a neutral with expertise in the substantive law at issue to advise the decision-makers. Generally, the parties also stipulate to staying pending litigation until the mini-trial is concluded. The mini-trial is confidential and typically is scheduled after an opportunity for limited discovery. The proceedings consist of each side's presentation of a summary of evidence and testimony that they would produce at trial and argument of counsel. At a minimum, mini-trials narrow issues, and if settlement is reached, they also reduce litigation costs. By involving the parties' decision-makers early on, mini-trials promote settlement and have the added advantage of preserving business relationships that would otherwise be weakened by traditional litigation. They also allow the dispute to be resolved by experts who have a stake in its expeditious resolution. Mini-trials, however, can be more expensive relative to other ADR techniques and thus may not be optimal where the "amount in controversy" is small. As with other settlement proceedings, mini-trials may not be effective where the parties have substantially different bargaining power or the dispute turns on the credibility of witnesses.
Summary Jury Trial
	A summary jury trial is an ADR technique under court auspices aimed at promoting settlement. It has been called the jury equivalent of a mini-trial in that it involves the presentation, before a six or eight member mock jury, of counsel's opening and closing statements, as well as a narrative of each side's evidence. Typically, there is no live testimony. After brief instruction from the presiding judge or magistrate, the jury returns an advisory verdict. There after, the presiding judge or magistrate will meet with the parties and their counsel to attempt to forge a settlement. Summary jury trials are particularly well-suited to a dispute in which one anticipates a long trial and the parties have widely differing perceptions of the merits of their respective cases, such that settlement discussions have not been fruitful. The mock jury's advisory opinion can provide an independent preview of how the evidence and argument will be weighed so that the parties can better evaluate settlement. Whether courts can require parties to participate in a summary jury trial, however, has been seriously questioned in several federal appellate and district courts in response to objections from counsel who would rather proceed to trial than settle the case. A summary jury trial may distort the settlement process if the narrative statements of evidence are not accurate or the jury discounts the importance of arriving at a fair appraisal of the case because its opinion is only advisory.
Arbitration
	Arbitration is perhaps the most well- known ADR technique and generally denotes submission of a dispute to a third-party for binding or non-binding resolution after a hearing in which each side presents evidence and argument of counsel. In this way, arbitration differs from mediation and other structured settlement techniques, which are far less adversarial. Arbitration can be voluntary or mandatory as, for example, in a fee dispute between an attorney and his client where the client requests arbitration. In voluntary arbitration such as where the parties contractually agree to arbitrate disputes arising under a contract, the parties are able to define the procedures that will govern the arbitral proceedings, including what, if any, discovery will be allowed or whether traditional evidentiary rules will apply to the arbitral proceedings. If the par ties fail to define the procedures governing the arbitration, the procedures set forth in any applicable arbitration statute govern. Typically, an arbitrator is not bound to follow substantive law, but may also employ concepts of equity and justice, business practice and whatever technical expertise he or she brings to the process. If confirmed by the court, an arbitration award is enforceable like any court judgment, but unlike a judgment rendered by a court, appeal from an arbitral award is generally not available for errors of law. Arbitration can have distinct advantages. It allows the parties to select the decision-maker(s) as well as the procedural rules governing resolution of their dispute. Unlike many other ADR techniques, credibility of witnesses can be adjudicated. The proceedings occur at a place and at times mutually convenient to the parties and are not subject to delays imposed by a trial court's crowded docket. In addition, arbitrations are typically confidential. Arbitration may also have disadvantages. Some argue that arbitrators tend to "split the baby'' in trying to give something to all parties. Discovery is generally limited, which may disadvantage a party needing compulsory process to obtain information to support his case. Arbitration will not be desirable if one wants a jury trial. Finally, as noted above, arbitral awards are usually not appealable except for fraud, corruption and defects aimed at the process that rendered the award as opposed to the substance of the award.
Private Judging
	Broadly described, private judging refers to adjudication of all or part of a case by a judge selected by, and paid by, the parties. Where litigation is already pending, the parties can have a temporary judge appointed under Article VI, 21 of the California Constitution. Parties to a contract may provide that future disputes arising under the contract be resolved by a private judge, in which case the private judge would be a general referee appointed under California Code of Civil Procedure, 638. In either case, the parties may also define the procedures governing the proceedings before the private judge, and control the time and place of the proceedings. In contrast to any other presiding official in an ADR proceeding, a temporary judge has full judicial power, including the contempt power. If the parties so desire, the temporary judge may also preside over a jury trial. In further contrast to other ADR techniques, a judgment rendered by a temporary judge enjoys the same right of appeal as afforded to judgments rendered by sitting judges. Private judging has the obvious advantage of bypassing crowded civil dockets so that the parties can have their dispute heard quickly and at times that are convenient to them. The proceedings are generally confidential, although California has recently required that certain proceedings before a private judge be open to the public. Private judging allows the parties to have their dispute heard by a judge with the requisite expertise and time to resolve the dispute expeditiously without having to forego their right of appeal. In addition, the parties can modify procedural and evidentiary rules that would normally govern proceedings before a sitting judge and thereby reduce litigation costs. Private judging may not be advantageous, however, in a test case or case involving an important issue of public policy.