Dispute Resoloution And Its Growing Role In U.S. Business

Dispute Resoloution And Its Growing Role In U.S. Business

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Conflict is unavoidable. In the world in which we live, competition is a driving force that creates and destroys markets, allows businesses to flourish, and others to fall by the wayside, and grants consumers the ability to decide which entities in business will survive, and which will burn out, as their natural life cycle draws to a close. With competition being such a large part of what fuels the fire, progressing our modern business world; companies are bound to have disputes needing resolution. In the past, litigation was the only method in which companies were able to solve disputes. The process is a long and strenuous one to say the least, involving teams of lawyers, judges, panels of jurors, witnesses, and various relevant experts, all to come to a conclusion on a single dispute. This form of conflict resolution is one that pits the involved parties against each other as opponents, declaring a winner, and loser in each argument, often times, increasing the level of hostility between the involved parties. This is also an extremely demanding form of resolution from various standpoints, to various parties. Litigation imposes a significant financial burden, as well as an unreasonable time burden on not only the parties involved, but the government agency that is forced to hear these proceedings. Often times, a case can reach a verdict in which the debate is solved, yet the underlying issue causing the problem remains unaddressed, allowing for issues to continue to arise, and tie up further time and resources of the court, and the parties involved. Another problem faced by these types of hearings is the lack of consistency. A trial can be heard by two separate panels of jurors, and reach two opposite verdicts, all based on who the evidence was presented to. In a recent survey of judges in civil court proceedings, the judges were asked if they would have made the same ruling as the panel of jurors did. Despite the fact that the judges had heard the same testimony as the jurors, in fifty percent of the cases the judges said they would have made a different ruling (McCallum Jr.). All of these factors combined are indicative to the fact that it is time for a new form of dispute resolution. This change has brought about several new forms of ADR (Alternate Dispute Resolution) that people are becoming increasingly comfortable using, and more and more willing to agree upon.

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The benefits of mediation and arbitration are overwhelmingly evident and include cost savings, time savings, increased creativity in decisions, more agreeable outcomes, beneficial cooperation between parties, and an increased perception of justice.
One reason that ADR has become so important is the rapid increase in the amount of cases being filed to the government for resolution. In the past sixty years, the annual number of cases filed demanding a hearing have increased from about 35,000, to over 250,000, a seven fold increase, while the population has barely doubled. On the appellate level, the number of cases has expanded from 2,800, to 57,000 over the span of the past fifty years, an increase by a factor of twelve (Senger). The government simply does not have the time, nor does it have the resources to present all of these cases in front of a judge and jury. In order to ease the load felt by the court system, the government has began to implement ADR in order to eliminate much of the formality of a trial and pretrial litigation. The proof of the time savings is in the numbers. For example, in cases in civil court in which ADR is contrasted to standard litigation, the cases took an average of six less months to come to a resolution than in traditional hearings. It is also noted that the Justice Department estimated that using ADR saved an average of 89 work hours of attorney and staff time per case versus the normal 260 hours (Bentley). If ADR was to become more common place, the courts would have more room to resolve cases in which litigation has been deemed the appropriate solution, and the only way to resolve the dispute.
The amount of time saved by the parties involved has a direct correlation to the amount of money saved by the use of ADR. A case forced to adjudication can prove extremely costly for all parties involved, often times forced to pay for travel costs, transcripts, expert witness testimony, as well as attorney fees. These costs can stack up quickly, adding to thousands of dollars, in many cases to solve a dispute that has less than that at stake. Another cost is the opportunity cost forfeited by spending so much time in the court room. The longer a case stays in trial, the less a person is able to be working at their profession; ultimately exemplifying the old adage that time is money. The use of ADR often times prevents a case from needing formal adjudication, and an estimate by the Department of Justice indicates that cases solved prior to adjudication save an average of $10,700 in total cost (Bentley).
In a case using ADR, a resolution is not met until both parties involved agree upon the verdict. This is something that is greatly varying from standard litigation in the court room. In a tradition al court, the verdict handed down by the jury, or the judge is the final word, regardless of whether or not both parties’ troubles are appeased by the ruling. The right to dispute this is one that is lost at the time of agreeing to a trial before judge and jury. This comes in stark contrast to ADR where the parties involved can continue to discuss the issue until a solution has been reached, and deemed agreeable by both parties. To a business with a legitimate dispute, leaving the outcome up to a group of jurors can be a nerve racking experience due to the amount of unpredictability in rulings. A panel of jurors can be assembled from a widely varying demographic, with large fluctuations in background, and education, often times leading to unforeseen verdicts. To avoid this, mediation, and arbitration are much more specific to the arena in which the dispute arose. If a dispute about a construction projects boundaries are in dispute, the judge helping with the arbitration will most likely have a significant amount of experience in the field, and a firmer grasp of the laws and issues pertaining to it. This eliminates the potential of a group of jurors misconstruing the law and making a faulted judgment.
When a court hands down a ruling, it is limited in the areas in which it can penalize, and reward businesses. A court is restricted to placing a monetary value on the reward to be given to the plaintiff which creates other problems. When the plaintiff knows that they will only be compensated with money, the logical solution is to ask for as much as possible, leaving other, more fitting options out of the spectrum of feasible outcomes. To the contrary, ADR has the ability to think outside of the box, creating agreements that are much more beneficial to the parties involved than simple sums of money, and in certain cases actually proving advantageous to both parties involved. By allowing the companies to fashion an agreement in suitable terms for both, the people most affected by the verdict have significantly more of an influence in taking the appropriate course of action. By not forcing businesses to attack each other in the court room, attempting to squeeze the largest reward possible from each other, a less hostile way to resolve disputes is in action. Litigation forces the parties to take an object stance and prove that they are right, and attack the opposition’s stance, proving them wrong. This leads to a sense of hostility following trials that can stretch far into the future; negatively impacted the relationships businesses have with each other. When ADR is used to determine an outcome, the two opposing sides are forced to work collaboratively towards a mutually reasonable verdict, fostering a relationship that values communication, and cooperation that can span into the future, setting a tone for any future disputes that may arise. It is also evident that more than a ruling is reached when a mediation or arbitration is in effect. Often times a case is to solve a certain dispute that two parties have, however the problem underlying the case is not reached in the litigation, and allowed to continue to fester and create future hostility between the parties. In alternate dispute resolution, there is less formality than in traditional litigation, allowing a wider view of the problem at hand to be examined, often times leading to an agreement that will set a positive precedence for future disagreements between the parties.
Another advantage of ADR is the increased perception of fairness in justice. When a case is forced to litigation, there is usually a winner and a loser. One party is rewarded a sum of money to compensate for some sort of wrong doing, and the other party is left reeling, and bitter from the loss. In alternate dispute resolution, a verdict is not reached until both parties see fitting, cutting out the place for a winner and a loser, and instead creating the perception of partnering towards a certain outcome. This allows both parties to feel as if they came away from the issue with increased knowledge, and experience, and an overall feeling of satisfaction in the justice system (Senger).
The use of Alternate Dispute Resolution is becoming increasingly commonplace, and for good reason. The ability to generate more fitting verdicts for both parties, the lack of need for time and money draining formal litigation, and the increased perception of justice and satisfaction are just a few ways in which ADR has proved beneficial, and for these reasons will continue to receive more and more attention from all aspects of business and government. The Administrative Dispute Resolution Act of 1990 sums this up very well in its introduction to the act by saying:
“Administrative proceedings have become increasingly formal, costly, and lengthy resulting in unnecessary expenditures of time and in a decreased likelihood of achieving consensual resolution of disputes; . . . alternative means of dispute resolution have been used in the private sector for many years and, in appropriate circumstances, have yielded decisions that are faster, less expensive, and less con- tentious; . . . such alternative means can lead to more creative, efficient, and sensible outcomes; . . . Federal agencies may not only receive the benefit of techniques that were developed in the private sector, but may also take the lead in the further development and refinement of such techniques; and . . . the availability of a wide range of dispute resolution procedures, and an increased understanding of the most effective use of such procedures, will enhance the operation of the Government and better serve the public”
With ADR being embraced so firmly by the government, and businesses in the private sector it is easy to see how this will continue to grow, and benefit anyone with the need for help in resolving a dispute.

Works Cited

McCallum Jr., Robert D. Interagency Alternate Dispute Resolution. The Steering Department. 2004. 1-2. 24 July 2007 .

Wallford, Randall. "You Dont Have to Go to Court to Win." ResortLaw.Com. 2001. 24 July 2007 .

Bentley, Ross. "Taking the Battle Out of Dispute." Personnel Today (2007): 11. 24 July 2007 .

Senger, Jeffrey M. Federal Dispute Resolution. San Francisco: Jossey-Bass, 2004. 1-17.
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