The Power of Alternative Dispute Resolution: Exploring Mediation, Arbitration, and Other ADR Methods
Alternative Dispute Resolution
The worst has happened. You have received a demand letter saying you owe someone money. Or, vice versa, you need to send someone a demand letter because you have not been paid. Either way, you’re starting down the road to litigation: an expensive, risky, and time-consuming path.
One way to potentially avoid litigation is to participate in Alternative Dispute Resolution (ADR). ADR has grown significantly. A recent survey found that over 98% of Fortune 1000 companies had used ADR in the past three years. And every state has enacted ADR statutes to provide an alternative to traditional litigation. So, what is ADR? What are its benefits? And what resources are in place to help you?
What is ADR?
Alternative Dispute Resolution (ADR) refers to different methods people can resolve disputes without a trial. These processes are generally confidential, less formal, and less stressful than traditional court proceedings. The most common methods are mediation and arbitration.
Mediation
Mediation is a negotiation facilitated by a neutral third party. The mediator does not impose a decision, but helps the parties come to an amicable resolution. Mediation leaves control of the outcome with the parties; there is no resolution in mediation unless both parties agree. It provides the parties the ability to be more creative with solutions than if the case is heard by a judge. It takes place in a private setting, instead of an open courtroom where other people hear about the case. It is usually less expensive and often offers a faster resolution than litigation, but parties are free to stop the mediation at any time.
Mediation may be particularly useful when parties have a relationship they want to preserve. So, when family members, neighbors, or business partners have a dispute, mediation may be the ADR process to use. Mediation is also effective when emotions are getting in the way of resolution. An effective mediator can hear the parties out and help them communicate with each other in an effective and nondestructive manner.
Arbitration
Arbitration is a private process whereby parties work with a neutral third party, who will hear both party’s arguments and then make a final decision on the merits, using agreed-upon rules governing how the process will work. It is a less formal proceeding than a court trial and is often conducted in a lawyer's office or conference room. The arbitrator listens to the evidence presented by both sides, applies the relevant law to the facts, and issues an "arbitration award" or a decision about whether the claim has been established and whether any money, damages or property is awarded. Arbitration awards are generally appealable, meaning a party may reject the award and try their luck in litigation. The process is generally quicker than going to court and having a trial in front of a judge or jury.
Arbitration is best for cases where the parties want another person to decide the outcome of their dispute for them but would like to avoid the formality, time, and expense of a trial. It may also be appropriate for complex matters where the parties want a decision-maker who has training or experience in the subject matter of the dispute.
Why Choose ADR?
Mediation and arbitration share many advantages over litigation. Participants often cite six reasons why they prefer ADR:
1. Flexibility and control. Parties can set terms in their ADR proceeding to govern how the process will work. This includes establishing rules regarding how to find evidence, time limitations, and pre-scheduling hearings to accommodate their needs.
2. Speed. According to the American Arbitration Association, on average, U.S. District Court cases took 12-16 months longer to get to trial than cases using arbitration. Mediation can take as little as a few hours, though they often occur over several days.
3. Low cost. Less time spent to resolve a dispute means lower costs for attorneys’ fees.
4. No confusing court procedures. Typically, the longest and most expensive part of litigation is gathering evidence to be used in trial. This process is considerably simplified in arbitration, and completely absent in mediation. Issues are handled through phone calls rather than multiple hearings, subpoenas, depositions, interrogatories and the like. Furthermore, important evidence will almost always be heard in ADR since there are no confusing court rules to keep it out.
5. Privacy and confidentiality. ADR is private with only designated parties in attendance and the proceedings are strictly confidential. In contrast, litigation is open to the public.
6. Arbitrator/Mediator selection. Parties can choose an arbitrator or a mediator with subject matter expertise as opposed to being assigned a judge randomly. This is particularly important in complex cases requiring specialized knowledge.
What Resources Does Oregon Have for ADR?
ADR is fundamentally a private endeavor. That means anyone can hire a mediator or a qualified arbitrator without involving Oregon courts. A non-exclusive list of approved ADR practitioners can be found here, at the Oregon Department of Justice website. Oregon also provides several resources for those who want to utilize ADR practices, including mandated arbitration, court-connected mediation, and various community justice programs.
Arbitration
Under ORS 36.40, some counties in Oregon have court-annexed arbitration programs for certain types of civil cases where the amount in controversy does not exceed $50,000. In this scenario, the court sends the parties a list of proposed arbitrators. A list of arbitrators, provided by Multnomah County Circuit Court, can be found here. Arbitrators on this list must be a member of the Oregon State Bar, have practiced law for a minimum of five years, and have applied to be an arbitrator with the state. The court will assign an arbitrator if the parties cannot agree on one. The arbitrator then takes over the case and sets the time, date, and place of the arbitration hearing. The hearing must be scheduled no later than 49 days after the arbitrator receives the case.
Mediation
Oregon circuit courts may provide court-connected mediation for cases under $50,000. Court-connected mediation works similarly to arbitration where the court recommends a list of mediators to the parties. Each circuit court establishes its own rules for the compensation of mediators in court-connected mediation. For example, one Oregon circuit court has the following policy: the mediator is paid $75 per hour, not to exceed four hours, and the parties share the cost. Also, court-connected mediation may be available for domestic relation cases for child custody issues, eviction cases, and small claims. While court-connected mediation may be an affection option, it is important to note that it is not mandatory and each circuit court operates differently.
Another option is mediation through a state agency. The Workers’ Compensation Board provides free mediation services for labor disputes, personal injury, civil rights claims, and mental stress cases. The Employment Relations Board similarly provides mediation services to public employers and labor organizations. Its mediation program specializes in collective bargaining, grievance mediation, and unfair labor practices. The Oregon Department of Justice provides mediation services for environmental claims. And, the Oregon Consensus Program has experience mediating issues between businesses and the State of Oregon. Its specialty is land dispute issues, though it takes on a variety of cases.
Finally, Resolution Oregon — a network of Community Resolution Centers — hosts mediation programs in Resolution Centers for little to no cost across the state. These programs are usually in the following case types: small claims, landlord/tenant, domestic relations and civil.
Conclusion
Just because you believe the worst may happen, does not mean the worst will happen. Oregon provides multiple tools to resolve your case without the stress and cost of going to trial. Talk to an attorney to know all of your options before it’s too late.