The ABC’s of ADR. A comprehensive guide to alternative dispute resolution

Introduction

Ways to settle
disputes other than through litigation have increasingly received attention.
Federal and State agencies have implemented alternative dispute resolution
programs.[i]
States contracted with community dispute resolution centers in their counties
to offer dispute resolution services to local communities.[ii]
Both federal and state statutes governing alternative dispute resolution have
been enacted.[iii]
Universities have designed training programs in negotiation and conflict
resolution.[iv]
And professionals have joined federal and state associations dedicated to
promoting the understanding and practice of dispute resolution.[v]

A conflict
resolution community evolved; its principal aim: to extend the spectrum of
mechanisms available for conflict resolution. Collectively, these techniques
have been given the acronym ADR—standing for alternative dispute resolution.
Terms, however, have not always been used in the same sense. Names of different
techniques jointly considered ADR have been employed to refer to substantially
different processes. This is particularly true for the term mediation. These
terms represent strictly distinct techniques of conflict resolution.

The purpose of
this article is to promote understanding the fundamentals of alternative
dispute resolution. Yet more important, it draws distinctions and describes
interrelations between ADR techniques. For understanding alternative dispute
resolution requires knowing the correlation of the mechanisms embraced rather
than merely their definition.

1 Alternative Dispute Resolution

Washington,
D.C. mediator and arbitrator Linda R. Singer described ADR as ranging
”somewhere between the polar alternatives of doing nothing or of escalating
conflict[, being] less formal and generally more private than ritualized court
battles[, and] permit[ting the disputants] to have more active participation in
and more control over the process of solving their own problems.”[vi] In short, ADR is characterized by
flexibility, informality, and control by the parties to a dispute.

The degree to
which these characteristics are present in the various ADR techniques depends
in part on the influence the third party has on the process and outcome. But
all the techniques share these goals: to allow voluntary participation by the
disputants in a fair process; to support the crafting of a creative and
mutually satisfactory resolution; to enhance the parties’ relationships; and to
enable the parties to maintain their dignity i.e., to save face.

Alternative
dispute resolution is distinguished from ”traditional”[vii]
methods of dealing with conflicts i.e., court litigation or administrative
adjudication. The latter processes do normally not
involve shared
decision-making. If at all, they only require solicitation and consideration of
public input before decisions are made. However, the above mentioned objectives can in part also be achieved by joining ADR
techniques with traditional procedures of problem-solving.[viii]

2 Distinctions and interrelations between ADR
techniques

Dispute resolution techniques can be grouped along
a spectrum with unassisted negotiation on one end and litigation at the other
(see Figure 1). Alternative dispute
resolution techniques are, pursuant to the Administrative Dispute Resolution
Act (ADRA) of 1996, ”procedure[s…] used to resolve issues in controversy,
including, but not limited to, conciliation, facilitation, mediation,
fact-finding, minitrials, arbitration, and use of ombuds, or any combination
thereof.”[ix]
Further methods are early neutral evaluation, negotiated rulemaking, and
various hybrid processes.


Unasssisted
Negotiation
——–Assisted Negotiation— Adjudication
FACILITATIVE PROCESSES
Conciliation
Facilitation
Mediation
(Ombuds Service,
Negotiated Rulemaking)
ADVISORY PROCESSES
Fact-Finding
Early Neutral Evaluation
Mini Trail
Summary Jury Trial
Non-Binding Arbitration
Binding Arbitration
Agency/Court Litigation



Figure 1

These mechanisms are all characterized by a third
party assisting the disputants in resolving a dispute. They are either assisted
negotiation or adjudication. In negotiation the third party may facilitate the
process or advise a particular solution. In adjudication s/he imposes a
solution.

The relative degree of power over the process and
outcome between the parties and the outsider varies, shifting from unassisted
negotiation to facilitative, advisory processes, or, at the other end,
adjudication. Along this line, the parties increasingly surrender control to
the mediator. Likewise, their strategy for dispute resolution differs. In
facilitated negotiation the range of possible solutions is extended before
agreement is sought. In adjudication and advisory negotiation the view is
rather narrowed. The parties focus on beneficial case presentations, and the
adjudicator on ”the one right” resolution. The process resembles litigation.

2.1 Assisted negotiation

M.I.T.-Harvard Public Disputes Program director
Lawrence Susskind and Jeffrey Cruikshank recognize that ”in an ideal world […]
disputes would be settled by the parties themselves.”[x] But few conflicts concern only a small
number of issues and stakeholding parties. Furthermore, sufficient channels of
communication between the parties are rare. Thus most disputes do not meet the
preconditions for successful unassisted negotiation. This is especially true
for public disputes, which are highly complex and where the affected groups are
hard to identify and to represent.

In assisted negotiation an outsider to a dispute
brings the parties together and, to varying degrees, helps them to resolve
their disagreements. The decisions, however, remain in the hands of the parties
themselves. The outsider only assists the parties in negotiating an agreement.
At the very most s/he may recommend a particular settlement.

Assisted negotiation can be grouped into
facilitative and advisory processes. The former are characterized by the
parties’ effort to create solutions by themselves, whereas through, the latter
the disputants seek advice from outside.

2.1.1 Negotiation—Beyond bargaining over
positions

Whether assisted or unassisted, people negotiate
in very different ways. A long-established approach to negotiation considers it
a ”zero-sum”[xi] game,
assuming that one party’s gain is the other party’s loss. Harvard Law School
professors Fisher and Ury developed another method that they call ”principled
negotiation.”[xii] It is based on the premise that it is
possible to meet one’s own needs and those of others, and that conflict
provides such opportunities. Principled negotiation is characterized by the
parties effort to resolve a dispute by cooperating rather than by competing.
Four principles define the method:

Separate ”people problems” from substantial
issues.
Every comment contains, whether intended or not, factual and
emotional statements.[xiii]
Emotions become entangled with the objective issues of the conflict. This may
create prejudice and misunderstandings that permanently encumber the
problem-solving; hence the first principle: ”separate the people from the
problem.”[xiv] ”People
problems”[xv]—feelings of
frustration and anger, differences in perceptions, and difficulties in
communication—must be addressed, but separately from the substantive issues.
The parties do not have to like each other in order to settle substantial
issues. Nor does the fact that they have different objectives require that they
dislike each other. If the goal is to settle a dispute and to enhance the
relationship, the means to get there is to ”be hard on the problem and soft on
the people.”[xvi]

Transform positions into the underlying
interests.
The basis of disputes are conflicting interests, not positions.
Interests underlie the parties’ positions, often latently and unconsciously.
They are the parties’ tangible needs, desires, concerns, and fears. The object
of a negotiation is to satisfy the parties’ interests. The satisfaction of
interests can usually be accomplished by anyone of several positions (or
solutions). Because positional bargaining often leads to an impasse when the
positions are incompatible, the second and fundamental principle is to ”focus
on interests, not positions.”[xvii]
By uncovering the motivating interests behind opposed positions, the parties
can often find an alternative position which satisfies the interests of not
just one but all parties. In addition, the parties may find that not all of the
uncovered interests will be in conflict. Some interests may be shared while
others may be different but complementary. Both of them can serve as the basis
for an agreement. The parties’ interests have to become the subject of
negotiation. This is the key to mutual gains.

Generate multiple options for mutual gain
before deciding.
The parties often assume that settling a dispute is an
”either/or,” a winning or losing choice. They usually believe that they already
know the right answer. Their view is narrowed and creative thinking inhibited
by: premature judgement and criticism; rash closing of the exploration of
options, searching for the one right solution; assuming that one side can only
be satisfied at the expense of the other. Problem-solving lies in ”thinking
outside the box”, in developing creative ideas.[xviii]
Thus, the above mentioned constraints must be excluded from the creative
process of brainstorming options. In short: ”invent options for mutual gain”[xix]
before seeking to reach an agreement. It is all about expanding the pie before
dividing it. Though this may not always be possible, it can be done in a
surprisingly large proportion of disputes.[xx]

Use mutually agreed objective criteria. Negotiation
aims at reaching a fair and durable agreement, one that meets the legitimate
interests of each side to the greatest extent possible, and, at the same time
takes community interests into account. Hence the fourth principle: ”insist on
using objective criteria”[xxi]
as the basis of agreements. Objective criteria facilitate the negotiation
because they prevent the matter from becoming a contest of will. Also, either
party can defer to a fair solution. Objective criteria make the agreement more
likely to endure, decrease its vulnerability to attack and decrease the risk
that the agreement will be repudiated later by either party. Finally, objective
criteria provide the parties with standards that can be used later for assuring
the implementation of the agreement. Objective criteria can be based on, for example,
standards of fairness, efficiency, or scientific merit, precedent practice or
past experience. Objective criteria must be legitimate, practical, reciprocally
applicable, and independent of each side’s will.

A strategy related to the method of principled
negotiation is clarifying the parties’ BATNA—best alternative to a
negotiated agreement.
[xxii]
Parties evaluating possible settlements should neither compare them to their
best nor their worst acceptable outcome, their bottom line. Instead,
propositions should be measured against the parties’ assessment of their
opportunities and risks in tracks alternative to negotiation. Unlike bottom
lines, estimating what the parties are likely to get through conventional
channels leaves them enough flexibility to explore imaginative solutions. It
also ensures that they have a realistic understanding of the conflict—with
respect to both agreements they should refuse, but also propositions it would
be in their interest to accept.

2.1.2 Facilitative processes

Parties in facilitative
processes can assign different degrees of procedural and substantial
responsibility to a helper. The third party’s procedural assistance is always
directive, but her/his role can vary from a rather passive to a rather active
form.

The principal mechanisms of facilitative
negotiation are conciliation, facilitation, and mediation. Ombuds service and
negotiated rulemaking are special forms of mediation. The outsider’s focus in
conciliation and facilitation is on the procedure, whereas a mediator’s intervention
goes beyond procedural issues. The parties working towards an agreement receive
substantial assistance designed to break impasses. However, a mediator who
predicts how a decisionmaker would settle the dispute ”ventures at some point
into a territory beyond mediation,”[xxiii]
and closer to advisory processes.

Conciliation
aims at establishing communication between the parties to a dispute. The
conciliator need not necessarily be impartial. S/he assists the parties in
clarifying misperceptions and handling strong emotions. The goal is to promote
openness between the parties in terms of taking the risk to begin a dialogue.
Unlike facilitation and mediation, conciliation usually connotes only
preliminary involvement by a third party. However, its goal is the same as with
other ADR techniques and it is therefore often used in conjunction with other
mechanisms as an initial convening stage.

Facilitation is
a negotiation process between the parties to a dispute in which the meetings
are assisted by a facilitator. Facilitators act as ”moderators in large
meetings.”[xxiv] Their aim
is to improve the flow of information and enhance mutual understanding. The
emphasis of the facilitator is on communication; s/he remains impartial about
the substantive issues under discussion. Facilitators are not expected to
volunteer their own ideas or to participate actively in finding a solution.
Their function is to lead the parties through the process of negotiation by
providing procedural directions. Unlike other ADR techniques facilitation does
usually not involve caucuses between the parties and the intermediary, except
for initial meetings to launch the proceeding.

Mediation
provides the parties in negotiation with both procedural and—though
limited—substantive assistance from a mediator. S/he primarily helps the
disputants to establish and maintain communication. Having no decision-making
authority, the mediator’s occasional substantive assistance is designed to
break impasses. Rather than advising the parties of a solution, mediators
encourage them to expand the range of available options for settlement.
Therefore a mediator may find it useful to preliminarily sustain the tension of
cognitive dissonance, and to refrain from heading for a premature harmony. S/he
seeks to help the parties understand each other’s inconsistent perceptions
without aiming at a ”cognitive Esperanto.”[xxv]

Unlike facilitation, mediation may employ caucuses
between the parties and the intermediary. One reason to caucus may be to
counter the ”reactive devaluation”[xxvi]
phenomenon, which sometimes arises as a barrier in negotiation. Reactive
devaluation is the depreciation of one party’s proposition by another party
simply because it originated with a perceived opponent. This reaction may be
avoided if the mediator raises the proposition through a caucus with each
party. If made by an impartial, the proposition may be rated less negatively.
However, some mediators prefer not to caucus because ”shuttle diplomacy” puts
more power in the hands of the mediator than they would like. Without caucuses
mediation is more party-driven, and the parties may develop a better sense of
the issues, each sides’ interests, and the process. Agreements as well as
relationships may be more likely to endure.

Whether the benefits of caucuses outweigh their
disadvantages must be evaluated in a given dispute. In any case, there are
other tools which keep all the parties at the table. Because they enhance
understanding and uncover destructive behavior, ”active listening”[xxvii]
and paraphrasing could be effectively applied to oppose reactive devaluation.

Ombuds service uses individuals,
ombudspersons (or ombudsmen), to handle complaints and disputes through
mediation. If settlement efforts fail the ombudsperson attempts to recommend an
appropriate resolution. Negotiated
rulemaking
, or regulatory
negotiation (reg-neg)
, uses techniques of multiparty mediation to deal with
large disputes over public policy. Representatives of stakeholder groups from
industry, consumer and environmental organizations, and government agencies
involved work with a mediator to negotiate government regulations. If they
reach consensus, the agency can use the outcome as basis for a proposed rule.
The latter will still be subject to public review and all other steps in the
formal rulemaking proceeding.

2.1.3 Advisory
processes

Parties in a negotiation that want to assign
higher substantive responsibility to a third party can engage in advisory
dispute resolution processes. They can adopt this path if they feel more
comfortable with proceedings that still allow them to work together at a table
but are less party-driven. Or they can come to such processes if they have
reached an impasse in facilitated negotiation but, due to their estimation of
their BATNAs (see above), doubt that they could do better away from the table.
They are in effect choosing an alternative to going to court where the case is
likely to be resolved on a ”winner-takes-all basis”[xxviii]
and each party risks losing everything.

The third party in an advisory process must have
greater substantive expertise and bears more responsibility for devising
possible solutions. Because of the nonbinding character of the recommendations,
the parties may reenter negotiations, agree to adopt the recommended solution,
or go to court. The advisory process is considered a form of assisted
negotiation—even though it more closely resembles rather litigation.

Advisory processes range within a continuum. The
process can promote initial clarification or assessment of some factual or
legal issues. Alternatively, it can address the entire dispute and focus on an
immediate settlement. In the former case, the parties consult impartial
experts. In the latter case, where a settlement recommendation is requested,
the process may involve principles, a jury, or an arbitrator. The different
processes can be applied subsequently in the order given below, depending on
the needs of the parties and the stage of the dispute resolution.

2.1.3.1 Initial Assessments

Fact-finding
allows parties or decision-makers entering into a dispute resolution process to
obtain neutral findings of fact. A fact-finder, an impartial expert, usually
only investigates the matter presented and subsequently files a report which
establishes the facts in the matter. If requested by parties or decision-maker,
fact-finding can also result in a situation assessment or even a nonbinding
recommendation by the third party as to how to resolve the dispute.[xxix]

Neutral evaluation, or early neutral
evaluation
since it typically takes place early in the process of conflict
resolution, is designed to provide the parties with a neutral interpretation of
facts. It is preceded by the fact-finding. Neutral evaluation involves the
disputants’ brief presentation of evidence and arguments to a neutral, who is often
a lawyer knowledgeable in the substantive area. The latter to predicts the
probable range of outcomes, issuing a nonbinding assessment. This provides the
parties with an objective view of their respective positions, i.e., the real
strengths and weaknesses of their case, and on how a court might decide the
dispute.[xxx]

2.1.3.2 Settlement recommendations

Minitrial is a settlement process in which
the parties to a dispute present informal summaries of their view of critical
issues to top management representatives of each side. Being authorized to
settle, the latter subsequently attempt to negotiate a settlement face-to-face.
This stage is chaired by an impartial advisor, who—comparable to a
facilitator—is responsible for explaining and maintaining an orderly process of
case presentation. In addition, s/he provides a range of settlement
possibilities in order to help the parties to focus on realistic outcomes
without the filter of their lawyers’ opposed assessment. If the parties fail to
reach an agreement the advisor may intervene more substantially, e.g. by
mediating further negotiations. More often, however, s/he will recommend a
particular settlement, based upon an analysis of the strengths and weaknesses
of each party’s position and predicting the outcome of possible litigation.[xxxi]

Summary jury trial
intends to predict the verdict of a trial in a process which, unlike minitrial,
resembles a civil trial. It includes abbreviated hearings before a summary jury
that consists of jurors from the regular jury pool. The jury subsequently
renders an advisory, nonbinding verdict and frequently explains the verdict to
the disputants and responds to their questions.[xxxii]
Designed to discourage protracted trials, a summary jury trial might provide
enough indication of a realistic outcome to encourage a settlement.[xxxiii]

Nonbinding arbitration
is characterized by the disputants presenting their respective arguments to an
arbitrator, who subsequently issues a nonbinding decision. Alternatively, the
parties might ask for an advisory majority ruling from an arbitration panel.
Arbitrators must be impartial, objective, and fair. In addition, they have to
be knowledgeable i.e., able to understand not only the substantive issues but
also the legal issues and processes encompassing the dispute.[xxxiv]

2.2 Adjudication

Unlike these forms of assisted negotiation,
adjudication is a determinative process. A solution is no longer advised but
imposed on the disputants by an outsider. Adjudication can be performed by an
agency, a court in formal litigation, or an arbitrator.

While agency or court adjudication are traditional
ways of settling disputes, arbitration is considered an alternative dispute
resolution technique. In fact, it is probably the ADR mechanism to be governed
in the greatest details by law. State and federal statutes provide basic
templates for arbitration as well as for the procedure that gives an
arbitrator’s award the force and effect of a judgement after a trial in a
court.[xxxv]

Binding arbitration is a process in which
an impartial third party makes a judicially, binding determination of a dispute
pursuant to the parties’ presentation of their cases. The individual arbitrator
or the tribunal (arbitration panel) is appointed either directly by the
disputing parties, or by existing arbitration panel members, or by an external
party e.g., the court.

The proceeding typically includes an initiation
stage; the appointment of an arbitrator; a discussion of appropriate process
and timetable; one party’s statement of claim and the other’s response; a
listing by each party of relevant documents in their control (discovery), and
their inspection; a handing over of an agreed upon selection of documents to
the arbitrator; a hearing including oral statements, questioning of witnesses
and clarification of issues; submissions by each party of their evidence and
applicable laws to the arbitrator; and finally the arbitrator’s award rendering
the decision, reasons for it, and a summary of the proceeding.[xxxvi]

Arbitration may be mandatory or voluntary. In the
former case, a dispute is submitted to arbitration by applicable court rules,
or the terms of rules to which the parties have agreed in advance of any
dispute. For example, members of the National Association of Securities Dealers
are bound by its rules to arbitrate any dispute. In other cases, the parties
may have voluntarily agreed to arbitrate a dispute at a time before final
judgement in court. Alternatively, a submission agreement may be included in a
dispute resolution clause of a contract which the parties negotiated in advance
of any dispute.

2.3 Hybrid
processes

A given
conflict may require a hybrid process which combines several variants of
alternative dispute resolution techniques. In fact,
ADR
techniques—though distinguishable—are not mutually exclusive. Different mechanisms might prove useful at
different stages in conflict resolution. And
outsider or parties might
find it advantageous to move back and forth among them as problem-solving
progresses.

”Mediation/arbitration (med/arb)”[xxxvii]
is probably the most popular hybrid process. As opposed to straight
arbitration it is used by disputants who want a binding decision in case they
cannot reach an agreement. The parties agree from the start that if mediation
fails to settle a dispute the mediator or a different impartial outsider will
act as arbitrator i.e., be empowered to issue a binding decision on the
remaining issue(s) in dispute. The advantage of med/arb is that it helps the
parties to narrow issues rather quickly, and focus on those truly in dispute.

Whether the mediator is suitable to become the
arbitrator is controversial. Using the same person to mediate and arbitrate has
the advantage that the parties do not have to start over if they fail to
resolve their dispute in mediation. However, there are reasons for utilizing
two different persons. One is the concern that otherwise the process mixes and
confuses procedural assistance with binding decision-making. Another is that
the parties might hold back confidential information because they are not reassured
that it will be excluded from the arbitrator’s mind. In addition, the parties
might present extreme arguments during the mediation phase knowing that the
same person will eventually make a decision as an arbitrator.


Notes

[i] Cf.,
e.g.

Federal Energy Regulatory Commission, Dispute Resolution Service (last modified
August 15, 2001) ; Court-Annexed
and Court–Connected ADR Programs in New York State (visited Aug. 23, 2001)
.

[ii] Cf.,
e.g.
New York State Unified Court System Community Dispute Resolution
Centers Program (last update Aug. 1, 2001)
.

[iii] Cf.,
e.g.
Alternative Dispute Resolution Act of 1998, 28 U.S.C. § 651-658 (1998); Alternative Dispute Resolution Act, 78 Utah
Code Chapter 31b (1994).

[iv] Cf.,
e.g.
The Program on Negotiation at Harvard Law School (visited Aug. 23,
2001) .

[v] Cf., e.g.
Association for Conflict Resolution (ACR) (visited Aug. 23, 2001)
; New York State Dispute Resolution Association
(NYSDRA) (visited Aug. 23, 2001) .

[vi] Linda
R. Singer, Settling Disputes. Conflict Resolution in Business, Families, and
the Legal System, 5 (2nd ed., Boulder, San Francisco, Oxford:
Westview Press, 1994).

[vii] E.g.,
id.
at 5.

[viii] Cf. Administrative
Dispute Resolution Act of 1996, 5 U.S.C.S. §
571 Congressional Findings (1998)
(suggesting agencies to examine alternative dispute resolution techniques in
connection with, e.g., formal adjudication, issuing licenses and permits, and
litigation).

[ix] Supra note
viii § 571
(3).

[x] Lawrence
Susskind, Jeffrey L. Cruikshank, Breaking the Impasse. Consensual Approaches to
Resolving Public Disputes, 136 (New York: Basic Books, 1987).

[xi] Supra note
x at 85.

[xii] Roger
Fisher, Bruce Patton, William Ury, Getting to yes. Negotiating an agreement
without giving in, 11 (2nd ed., London: Random House, 1992).

[xiii] See,
e.g. infra
note xxv at 175.

[xiv] Supra note
xii at 17.

[xv] Id.
at 22.

[xvi] Jonathan
Raab, Using Consensus Building To Improve Utility Regulation, 30 (Washington,
D.C., Berkley: ACEEE, 1994).

[xvii] Supra note
xii at 41.

[xviii] See
supra
note xxv at
149.

[xix] Supra note
xii at 58.

[xx] See
generally
Robert H. Mnookin, Scott R. Peppet, Andrew S. Tulumello, Beyond
Winning. Negotiating to create value in deals and disputes. (Cambridge,
Massachusetts, London, England: Belknap Press of Harvard University Press,
2000).

[xxi] Supra note
xii at 84.

[xxii] Supra note
xii at 101.

[xxiii] Supra
note vi at 25.

[xxiv] Supra note
vi at 24.

[xxv] Hans-Joachim Fietkau, Psychologie der
Mediation. Lernchancen, Gruppenprozesse und Überwindung von Denkblockaden in
Umweltkonflikten
, 21 (Berlin: Edition Sigma, 2000).

[xxvi] Robert H.
Mnookin, Why negotiations fail: An exploration of barriers to the resolution of
conflict, 8 Ohio State Journal on Dispute Resolution 1, 10 (1993).

[xxvii] Supra
note xxv at 168.

[xxviii] Supra
note x at 176.

[xxix] See
generally supra
note vi at 25.

[xxx] See
generally
Frank Sander, Stephen B. Goldberg, Fitting the Forum to the Fuss:
A User-friendly Guide to Selecting an ADR Procedure, 10 Negotiation Journal 49,
51 (1994).

[xxxi] See
generally id.
; supra notes vi
at 26; x at 177 et
seq
..

[xxxii] See
generally supra
notes xxx at 51; vi at 26.

[xxxiii] Cf.
Fed. R. Civ. P. 16 (allowing the
use of summary jury trial to facilitate a settlement).

[xxxiv] See
generally supra
note x
at 176 et seq..

[xxxv] Cf.,
e.g.
Uniform Arbitration Act (being adopted by many states, although some
have specific, individual rules for arbitration); N.Y.C.P.L.R. Article 75
Arbitration.

[xxxvi] See Leslie
Grant, What is Arbitration?, ¶ 12 (visited Aug. 9, 2001)
.

[xxxvii] Supra
note vi at 27.

                        author

Daniel Renken

Daniel Renken has co-mediated complex multi-party disputes, and co-trained parties to a dispute in negotiation and Alternative Dispute Resolution, in co-operation with the Administrative Law Judges at the State of New York Public Service Commission (Albany, NY). Mr. Renken is a double-major in Law and Environmental Science at Potsdam University… MORE >

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