History of Alternative Dispute Resolution

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Terms:


Putative Benefits:
Not to be confused with “punitive” damages, putative benefits are benefits generally believed to exist but not necessarily confirmed by hard data.


In ADR: Law and Practice, Juris Publishing, 2003, a very useful text (and one of the sources used for this chapter), Edward A. Dauer tracks arbitration as an alternative to litigation as least as far back as the ancient Greeks, Plato and Aristotle. (Dauer, 2-3). Dauer goes on to point out that references to arbitration are made “in biblical texts and in early reports of both law and business throughout the Anglo-American tradition.” (Dauer, 2-3, footnotes omitted). Is it any surprise, then, that as the U.S. court system has become increasingly complex, clogged, and costly, disputants have sought other means for settling their claims in a fair, timely, and relatively inexpensive manner?

EXAMPLE: Sasha owns an apartment in Anystate which she rents out to supplement her income as a bank manager. Included in the lease which her tenant signed, is a clause which requires both landlord and tenant to seek resolution through mediation before filing a suit for any damages under the lease. The cost of mediation is to be split between landlord and tenant, regardless of the outcome. In this way, there is at least the potential to resolve any differences between landlord and tenant in a speedy manner. After all, Sasha cannot simply show up to court any time she likes – she would have to take a day off from work, which is her primary source of income. This arrangement might also work to the benefit of the tenant, who would likely prefer that repairs be made in a timely manner than win a court case some months down the line, and live without a dishwasher in the meantime. 

The deep, ancient roots of alternative forms of dispute resolution may be fascinating to some, but are a bit beyond the scope of this course. Of greater relevance are the more recent historical trends which have led to an increase in the number of parties seeking solutions outside of the usual legal channels.

In addition to Dauer, Alternative Dispute Resolution in a Nutshell, 2d. Ed., West Group 2001, serves as a useful source of information. The causes for ADR’s increasing popularity, however, are not agreed upon by Nutshell and Dauer. Conventional wisdom holds, as does Nutshell, that actual increased delays and costs in the court system have given power to the ADR movement. According to Nutshell:

The legal community’s failure to [focus on a wide range of problem-solving approaches beyond litigation] may be part of the reason for so much congestion in the civil justice system. (Nutshell, p. 3 (emphasis added).)

Dauer, however, raises some question as to the actual increased efficiency of alternative forms of conflict resolution. He quite carefully points out that it is “the perception that increases in the rates of litigation have caused backlogs in the courts” which is responsible for the increased popularity of mediation and arbitration, and that there is some dispute among analysts as to whether “there is any ‘litigation explosion’ that needs to be addressed.” (Dauer 2-5, emphasis added, footnotes omitted.) 

Similarly, Dauer points out that the existence of cost savings “is often debated with some observers believing that nonbinding forms of ADR actually add to the total cost…[but the mere] perception of cost savings has been a strong force” in the increased use of ADR. (Dauer 2-6). 

Whether there is, as a factual matter, a time or cost savings involved in ADR is a determination which need not be made here. It should be noted, however, that the majority of those involved in the legal profession seem to believe that the benefits mentioned above are real. Even Dauer does not seem to suggest that there is no credence to these claims. Rather, he is simply careful to make note of those who cast doubt upon the data. Further, so long as individuals perceive the existence of these advantages, they will feel their cases best served by lawyers and legal assistants well prepared to take advantage of the putative benefits of ADR.

EXAMPLE: Cartman feels he has been wronged by Stan, and hires Kyle, a local attorney, to represent his interests. Cartman initially wants to sue, but he is afraid that the state courts will not be able to resolve this matter within the next few months. He is eager to recover money damages from Stan (he hopes for $10,000) and asks Kyle about filing suit and then offering to drop the suit if Stan agrees to binding arbitration. Whether the arbitration process will actually resolve the matter more quickly is not necessarily known at this point. Cartman’s belief, however, that he will secure satisfaction through arbitration more quickly than through the court system, fuels his drive to seek binding arbitration. 

Formal procedures for arbitration in the United States go back over 80 years. In 1925, Congress passed, and President Calvin Coolidge signed into law, the Federal Arbitration Act (the “FAA”), which still applies today, albeit in a much updated form. In 1955 the Uniform Arbitration Act (the “UAA”) was promulgated, which many states used as a model for their statutes. In 2000, the UAA was revised, and the new Revised Uniform Arbitration Act (the “RUAA) will hopefully increase predictability across state lines.

Mediation, too, put down its formal roots long ago. The Arbitration Act of 1888 (not to be confused with the later FAA) included provisions for mediation of labor disputes, and by 1913 there was established a “Board of Mediation and Conciliation.” A “National Mediation Board” was later created, and the famous Taft-Hartley Act, passed despite having been vetoed by President Truman, creating the Federal Mediation and Conciliation Service. Mediation in the U.S., however, was historically limited primarily to labor disputes.

Despite this rich history, it took until approximately 30 years ago for arbitration and mediation to become popular among U.S. disputants and to be applied across a wide range of disputes. The cause for this relatively recent rise brings us back to our discussion of perceived increasing costs and delays in the state and federal courts. Regardless of which side one comes down on in that debate, one thing is clear: arbitration and mediation are here to stay.

In 1985, fewer than half the states had in place, or were working toward instituting, mandatory arbitration programs. (Dauer 10-3). Today, nearly every state and federal district has some sort of program in place.

Not all court ADR programs entail mandatory arbitration. Some programs require that parties attempt to mediate, through a court selected mediator, before going to trial. Other programs make arbitration or mediation available, but not mandatory. There are as many ways to work this, as there are programs in place today, but the common goal is usually to help parties reach speedier, less costly, resolution of their conflict which reduces the wear-and-tear on the already-overwhelmed courts.

Critics of mandatory mediation and arbitration contend that the likelihood of success via forced dispute resolution is low, much like a parent’s demand that children “get along and play nice”.  They further contend that the imposition of an intermediate process like mediation results in increased, not diminished, costs for the parties.  Nevertheless, courts are requiring ADR with greater frequency, noting that even in highly contentious cases the ADR process often results in resolution of at least some of the issues to be litigated and gives all parties the opportunity to be confronted with the weaknesses in their own positions, thus resulting in more efficient trials.

The essential result is this: the traditional notion of suing over some claim, and having that claim settled by a judge and jury, is fast becoming the exception rather than the rule. Courts, insurance companies (as frequent parties to litigation), attorneys, and even the once-in-a-lifetime novice litigant, are all driving the demand for faster, cheaper options for resolving disputes without sacrificing fairness. However, whether the multitudinous court programs around the U.S. today have met these goals is something which has not been clearly and indisputably established.



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