Advantages of ADR in Business
Business litigation can be long, expensive, public, and brutish. The adversary system of American jurisprudence compels lawyers to use every tactic available to destroy their opponent to advance their client’s case. Modern discovery tools help to ensure that neither side is ambushed at trial but leaving no stone unturned can be an expensive process. Despite recent efforts to limit discovery to what is reasonable and necessary in proportion to what is at stake, the discovery process remains the most time-consuming part of contemporary litigation. The current time standards for the disposition of civil cases in Texas encourage trial judges to dispose of a typical civil jury case in eighteen months.
Alternatives to litigation have many advantages and not just in civil divorce proceedings. While mediation and arbitration are common between married couples, businesses and employers can often resolve disputes quicker, cheaper, and privately. Whether you are looking for a third-party neutral or a seasoned advocate experienced with these alternatives, Reid Dennis Frick can help.
Types of Alternative Dispute Resolutions
The two most common types of litigation alternatives are mediation and arbitration. Less common ADR procedures include the settlement conference, summary jury trial, and moderated settlement conference. Although each of these alternatives shares the objective of resolving the parties’ dispute without the necessity of litigation, each has its own unique process with its own rules, techniques, and strategies. You need to choose a business lawyer familiar and experienced with the ADR procedure that best suits your dispute.
Mediation is the most common and familiar ADR procedure. It is a process in which a third-party—the mediator—attempts to facilitate communication between the parties in order to try to reach an agreement resolving their dispute. Historically, mediation is very successful in resolving most civil and family law cases. Most judges in Texas require parties in litigation to mediate their dispute before trial.
The mediator is not a substitute for a judge or jury and does not decide the merits of your case. The mediator may ask questions to highlight the strengths or weaknesses of each party’s position. Ultimately, however, a resolution of the matter depends entirely upon settlement terms reached between the parties themselves. If a settlement is reached, the attorneys will prepare an appropriate agreement or order to submit to the Court, and a full trial on the merits will be unnecessary
Mediation is a confidential process, and the mediator cannot be called to testify as a witness in your case. The mediator will report to the Court only that your case settled or did not settle and will not disclose the contents of any discussions or settlement proposals made during mediation. In addition, neither party may offer into evidence any discussions conducted at mediation. The confidentiality of the process is designed to encourage a frank and fair exchange of information to promote settlement.
John M. Frick is board-certified in civil trial law. An experienced trial lawyer, John’s expertise in civil litigation and appellate law enables him to quickly understand the core issues in disputed civil cases to facilitate a resolution between the parties. Mr. Frick is available to serve as a third-party neutral mediator and offers both half- and full-day mediation sessions at affordable rates.
Many of our attorneys have experience representing commercial parties and individuals in the mediation process. Mediation is often court-ordered in civil litigation and family law court cases; however, many contracts require mediation in lieu of or prior to commencing court action. Construction contracts and employment contracts often require the parties to mediate any disputes. Many business contracts similarly require the parties to use mediation first when issues arise between the parties. If you are a party to a contract that requires, or permits, you to participate in mediation and you need an experienced advocate in your corner, one of our attorneys likely can help you.
Arbitration is typically a substitute for judicial proceedings. In arbitration, each party and their attorney presents the position and evidence of the party before one or more impartial third-party arbitrators who render a specific award based upon what is presented. Once frowned upon as usurping the role of our courts, arbitration has become a commonplace, widely accepted alternate method of resolving many types of disputes. Many types of contracts, including employment agreements, construction contracts, commercial contracts, and business agreements, include arbitration clauses which require the parties to submit their disputes to arbitration in lieu of filing a lawsuit. Such clauses are almost universally enforced by our courts.
There are many variations of arbitration. Generally, the variation applicable to a particular dispute depends upon the agreement of the parties, often expressed in advance in the arbitration clause. Arbitration may be binding or non-binding. It may be before a single arbitrator or a panel of multiple arbitrators. It may be limited in scope to issues arising under a particular agreement, or it may broadly encompass all disputes between the parties. An arbitration award may be a reasoned award or a simple award. The parties may specify rules pertaining to the procedure or may adopt the rules of an organization like the American Arbitration Associations or JAMS.
Arbitration hearings are similar, but not identical, to court proceedings. Witnesses are called and examined. Exhibits are offered and introduced. Although the rules of evidence do not necessarily apply, objections to evidence can be made and sustained or overruled. Arguments based upon statutes and case law may be made but are not necessarily binding. While the parties can provide for appeals, the decision embodied in a binding arbitration award is almost always final and conclusive. In Texas, barring unusual circumstances, an arbitration award will be quickly confirmed and treated like the judgment of a court for purposes of enforcing the award.
Because most arbitration procedures limit the length of time and amount of prehearing discovery, arbitration is almost always quicker and less expensive than a lengthy court proceeding. Parties, however, need to understand that out-of-pocket filing and arbitration fees will be much higher upfront than court filing fees. The parties are, after all, paying the compensation of a highly-trained and experienced arbitrator to adjudicate their dispute rather than a judge whose compensation is borne by taxpayers. Ultimately, however, the limitations on discovery will save the party considerable attorney fees and costs.
Other Types of ADR
Other types of ADR are far less common than either mediation or arbitration. The rise of mediation has coincided with a decline in traditional settlement conferences. The absence of a third-party neutral to serve as a buffer in the communication process requires a different mindset and different techniques to achieve a successful settlement. Some younger attorneys have never attended a formal settlement conference but have attended numerous mediations. Our senior attorneys began practicing law before mediation was common and can successfully negotiate a settlement without a mediator’s presence.
A moderated settlement conference shares some aspects of both non-binding arbitration and mediation. In this type of ADR, the party’s present their position and evidence, and the moderator gives an advisory opinion on the merits to facilitate settlement negotiations between the parties. Some mediations naturally evolve into moderated settlement conferences, but few judges or parties choose to use this type of ADR in advance.
At one point, summary jury trials were promoted as valuable efficient ways to resolve certain types of cases in which key facts were in dispute. One of our attorneys, Mr. Frick, even served as a summary jury trial judge in a pilot program in Dallas County for soft-tissue personal injury cases. In this type of ADR, the parties present evidence just like in a trial to a jury that renders a non-binding verdict on the evidence. Hearing how an actual jury views certain key evidence can enlighten parties who may have unrealistically optimistic expectations.
“Litigation is like a gun fight; often both sides wind up bloody and one side ends up dead. There are alternatives to litigation.”
̶ John M. Frick