Alternative Dispute Resolution (ADR) Settlements

Most parties to a civil case settle their dispute before it reaches a trial. Some parties negotiate a settlement on their own. Sometimes, negotiation will not lead to a satisfactory settlement. In that case, the parties may need the assistance of legal professionals and neutral third parties.

If the parties to a civil case cannot reach a settlement agreement on their own, they can engage in one of several different methods of alternative dispute resolution (ADR). The most common methods of ADR include arbitration and mediation.

There are several benefits to settling a case, including the following:

• It provides an amicable resolution to the dispute that the parties agree with, and the parties do not have to spend more money on attorney fees and court costs.
• Most forms of ADR are collaborative rather than confrontational, like a trial
• It may preserve or improve the parties' relationship, if they intend to continue working together
• It offers finality and can save parties from undergoing further stress that a full-blown court proceeding may bring

This article provides information about several ADR methods and why parties might choose one versus the others in a civil case. It also provides information about whether the settlement negotiations bind the parties if they do not settle.

Forms of Alternative Dispute Resolution

As noted above, two common methods of ADR in a civil case are mediation and arbitration. Other common ADR methods include the following:

• Settlement conferences
• Neutral evaluations and factfinding
• Minitrials
• Summary jury trials

Although the dispute resolution process differs between these methods, all these forms of ADR provide an alternative to litigating a dispute. Assuming parties enter the ADR process in good faith, they provide informal and effective dispute resolution methods.

Mediation

Mediation, perhaps the most common type of ADR, involves using a neutral third party called a mediator who tries to help the parties reach an amicable resolution to their dispute. Mediators are often practicing or retired attorneys who understand the dispute's subject matter and applicable laws.

The mediation process is informal and inexpensive compared to the costs of litigation. When the parties agree to mediate their case, they each provide their version of the facts to the mediator. They will also highlight the strengths and weaknesses of their case and the amount of money or type of relief they believe the opposing party owes them.

On the day of mediation, the parties often agree to meet somewhere and sit in separate rooms. Other mediations occur over the phone between parties' attorneys. 

Mediation is a series of conversations between the mediator and the parties. The mediator moves between rooms and discusses the case with each side alone. They ask the parties questions to better understand the legal dispute, and they bring settlement offers from one party to another.

The mediator may spend multiple hours trying to help the disputing parties resolve their dispute. During mediation, they will attempt to ensure the parties understand the other side's interests and arguments. They will also try to help a party understand their risks should they not reach a settlement agreement during mediation.

Mediation negotiations do not bind the parties. Parties can end the mediation and continue litigating the case as though it never occurred.

Your state may offer a directory of mediators and community mediation resources. If you hire an attorney for your case, they may know mediators for your specific type of dispute.

FindLaw's article What is Mediation? offers a closer look at mediation.

Arbitration

Compared to filing a lawsuit, arbitration is a more streamlined option to resolve a legal dispute. A neutral decision-maker called an arbitrator hears arguments and evidence from both parties, similar to the litigation process. Unlike the court system, arbitration may involve less formal rules of evidence and procedure.

Depending on the parties' agreement regarding arbitration, the arbitrator's decision may bind the parties. For example, the parties may have agreed to submit any dispute to binding or non-binding arbitration. If they entered into a binding arbitration agreement, the result of arbitration is a binding decision.

Arbitrations take many different forms. Sometimes, a single arbitrator decides the pending issues. Other times, a panel of arbitrators renders a decision. In most cases, the parties can decide how the arbitration will proceed.

FindLaw's article What is Arbitration? offers more information about the arbitration process.

Settlement Conferences

Many courts schedule a settlement conference in civil cases. The parties and a trial court judge attend a settlement conference before a trial occurs. The parties attempt to resolve their case before going through the time and expense of a trial. The judge may help facilitate the negotiations.

While in most instances the parties and their attorneys must attend the settlement conference, sometimes the court may require just a party's attorney to be present. If the court allows it, the non-attending party must grant their attorney full settlement authority and be available during the conference.

Neutral Evaluations

An early neutral evaluation (ENE) involves a neutral third party called an evaluator who listens to both sides of the case. The parties present their arguments, defenses, and evidence to the evaluator, who gives an opinion on how the parties could resolve the dispute.

The evaluator's opinion does not bind the parties. The parties often use it as a starting point in their settlement negotiations.

ENEs are good options when the dispute involves a technical or industry-specific issue that a subject matter expert understands. The evaluator often possesses expertise, skills, and extensive knowledge regarding the dispute's subject matter. For example, in a case involving an alleged structural defect, the parties may choose an evaluator with a background in engineering and law.

Minitrials

Despite its name, the minitrial is not an actual trial. Instead, it is more akin to a confrontational settlement conference. No judge or member of the judiciary presides over the minitrial, and any opinion resulting from the minitrial does not bind the parties.

All parties to a case must agree to the minitrial. Each party selects a representative or manager from their side to attend the minitrial. The representative or manager must have the authority to settle the dispute. The parties may also decide to have a neutral third party act as a trier of fact and issue an advisory opinion. They have no power to adjudicate the case.

Before the minitrial begins, the parties, their attorneys, representatives, and neutral parties may meet to discuss how the minitrial will proceed. The agreement they reach guides the parties as they prepare for the minitrial. 

For example, the agreement could specify how much time each party will have to present their case and discovery rules before the minitrial. This not only provides the minitrial with structure but also allows for flexibility.

At the minitrial, the parties present their cases to the representatives and neutral third party as though it were a real trial. Because the formal rules of procedure and evidence do not govern the trial, it is somewhat informal. The minitrial is confidential, and the parties can agree not to use any statements made during it in a later court proceeding.

Once the minitrial concludes, the representatives may discuss the case and attempt to resolve it. They may also ask the neutral third party to give their opinion of the case given the facts and applicable law.

Minitrials are optional, voluntary, and non-binding for the parties. They allow parties to understand the opposing side's arguments better and provide valuable information before settlement negotiations.

Summary Jury Trials

A summary jury trial is a nonbinding trial before a judge and jury, unless the parties agree beforehand to a binding summary jury trial. Parties decide to participate in a summary jury trial to see how the jurors will respond to their arguments and defenses.

Because the summary jury trial allows parties to see how a jury would decide a case, it may foster settlement negotiations. In theory, losing at the summary jury trial level shows a party that taking the case to a full trial may not benefit them.

If one party is adamant about taking the case to trial but loses in the summary jury trial, they may reconsider their stance. This might make negotiation possible.

Questions? Contact an Attorney

If you file a civil case or receive notice of a lawsuit filed against you, contact a civil litigation attorney. They can help you navigate the procedural rules of litigation and settlement negotiations. If negotiations between you and the opposing party go nowhere, your attorney can help you decide whether to pursue a form of ADR and which one best suits your case.