Alternative Disputes Resolution ADR Craig H. Unger, DBIA Santiago, CHILE --- April 20, 2006 NOTE: Over 90% of all US docketed court cases are eventually settled before or during trial 2006 1
ADR Winning/Losing vrs Preserving the Relationship ADR Techniques The Neutral a Third Party Binding vrs Non-binding Decisional vrs Non-decisional Facilitative vrs Evaluative Neutral 2006 2
Forms of ADR Arbitration Early Neutral Evaluation Mediation Mini-trials Dispute Review Boards (DRB) Partnering Arbitration Typically Binding Rent-a-Judge Reduced Litigation Costs Frequently Compromise Outcomes - Splitting the Baby Baseball Arbitration - Bottom Line (Win or Lose) 2006 3
Arbitration Advantages Expertise of the Decision Maker Finality of the Decision Privacy of the Proceedings Procedural Informality Reduced Costs Speed Early Neutral Evaluation (Similar to Non-binding Arbitration) Third Party Neutral Typically Pre-trial Investigate the Issue(s) Hear the Respective Positions Render a Non-binding Assessment 2006 4
How Early is early? ADR is best when performed before parties have established positions too rigid Early Neutral Agreement Promotes expeditious resolution before impasse Cost Sharing Hiring of the Neutral Exchange of Documents Statements of Positions Other Pertinent Matters 2006 5
Mediation Voluntary & Consensual Informal & Flexible Select Mediator Acceptable to Both Individual Sessions Joint Sessions Typically After Negotiation Impasse Evaluative vrs Facilitative Traditional Negotiation Lawyer Lawyer Owner Contractor 2006 6
Mediation Mediator Lawyer Lawyer Owner Contractor Mini-trials Mini-trial is not a Trial Information Exchange Typically 3 rd Party Abbreviated but Structured Proceeding Involves High Level Executives (usually not previously involved in the dispute with authority to settle) Typically Large/Complex Issues Speed and Privacy 2006 7
Dispute Review Boards GOAL --- Dispute Avoidance Typically Large Construction Projects Emphasis on Preserving Long-Term Relationships Early Non-binding Intermediate Step DRB s Typically Consists of 3 Neutrals Each Party Selects 1 Neutral Early in Project The 2 Neutrals Select the 3rd (Chairman) Dispute Review Boards Members Provided with Copy of Contract to include Plans & Specs Provided Progress Reports Visit Job-site on Periodical Basis Typically Meet on Quarterly Basis Senior Personnel from Both Parties Attend Render Assessments and/or Non-binding Decisions 2006 8
Partnering Job-site Dispute Avoidance Agreement Established in Effort to Transform Traditional Adversarial Relationship into more Collaborative Goal is to Establish Long-Term Business Relationship for Economic Advantages Partnering Agreements DO NOT Change the Contract Terms & Conditions Develop Common Goals & Commitment to Work Together Partnering Share Risks in Completing Project Through Teamwork & Joint Problem Solving Periodic Joint Workshops Develop Formal Charter with Vision/Goals Develop & Issue Resolution Procedures Involves a Change in Attitude 2006 9
Partnering Characteristics Cultural Change Barrier Removal Teamwork Non-adversarial Environment Mutual Goals Open Communications Responsive Attitude Joint Problem Solving Accepting Responsibility Accountability Team Commitment Dispute Resolution Ladder ADR Objectives Minimize Costs Speed Privacy Maintain Relationship(s) Precedent 2006 10
Roadblocks to Settlement Poor Communication Ego(s) Different Interests Cannot Agree on the Facts Cannot Agree on the Law(s) Confidence in Winner-Take-All ADR Results --- Who s Happy? Non-binding Early Neutral Clients Substantially Pleased Non-binding Disputes Review Board Clients Substantially Pleased Non-binding Mediation Clients Substantially Pleased Non-binding Minitrial Clients Generally Satisfied 2006 11
ADR Results --- Who s Unhappy? Court Unlikely to Satisfy Objectives Binding Arbitration Clients Objectives Somewhat Satisfied Thank You Questions or Comments? 2006 12