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Trends in the Law Part III: Alternative Dispute Resolution

Trends in the Law Series Part III: This is the third installment of the “Trends in the Law” series. The topic is Alternative Dispute Resolution, its history and the advantages and disadvantages of using it. Next week’s blog will explore the growing controversy of mandatory ADR provisions in contracts, and discuss whether requiring ADR is a denial of due process.

WHAT IS ALTERNATIVE DISPUTE RESOLUTION?

Alternative Dispute Resolution, or ADR for short, has become firmly established in the American legal system. It is simply what it sounds like: a procedure for settling disputes without litigation. Because ADR does not involve litigation, it is typically less costly and more expeditious. In addition, the process can be informal and confidential. The three main forms of ADR are: mediation, conciliation and arbitration.

ADR has been around in various forms for centuries, but it was institutionalized in the late 19th century: in 1898 Congress authorized mediation for collective bargaining disputes. The Board of Mediation and Conciliation and the Federal Mediation and Conciliation Service (“FMCS”) were formed and both are still operative and active today. They carry out negotiations regarding employment, and are generally used to avoid strikes, labor unrest, and work disruption.

The Federal Arbitration Act of 1925 changed the legal landscape considerably. The two most revolutionary provisions of the FAA provided that: (1) agreements to arbitrate future disputes are legally valid and enforceable and only revocable as any other contract would be revocable; and (2) courts are authorized to enforce arbitration awards. This last provision in particular advanced the use of ADR, as did the formation of the American Arbitration Association one year later in 1926. The AAA is still active today. The Judicial Arbitration and Mediation Service formed in 1979, and provides law firms, businesses and individuals with access to judges willing to serve in ADR capacities.

In the 1980s, the federal district courts began to experiment with ADR; 30 years later more than one-third of all federal trial courts authorize multiple forms of ADR, and all federal courts authorize some form of ADR according to the Federal Judicial Center. The most commonly authorized form of ADR is mediation. The majority of federal district courts authorize some degree of required use of ADR, either by giving judges the authority to refer cases without party consent, or by mandating referral for some or all civil cases. For example, 58 district courts authorize required use of mediation, including 12 that mandate use for some or all civil cases.

PROS AND CONS OF ADR

As mentioned above, ADR can save parties money by eliminating litigation costs and reducing attorneys fees. ADR is also advantageous for its quick resolution of cases; cases are typically concluded in weeks or months rather than years. By decreasing the cost and time of resolving a case, ADR increases people’s access to the legal system since those who could not afford to litigate a claim (the monetary cost, the wait for the resolution, or both) can afford ADR. ADR is more cooperative and less adversarial than litigation, and has flexible remedies that promote settlement rates approaching 85%. For areas of the law where emotions can run high, such as domestic relations and probate, ADR forums such as mediation allow parties the opportunity to both vent grievances and have a say in fashioning their settlement.

ADR is not appropriate for all types of lawsuits, however; e.g. a matter of public interest may benefit from being litigated in open court. ADR is binding on parties, and parties give up their right to appeal except in limited circumstances. Therefore, parties must be very careful before submitting to binding arbitration. Another drawback to ADR is that some agreements reached through ADR may not be as easy to enforce as a court order, despite the authority conveyed on courts by the FAA. This problem can sometimes be addressed by the parties converting the agreement into a court order and submitting it to the court by consent.

ADR definitely has a place and a function in today’s over-burdened legal system. Judicial dockets that are already backlogged would be completely unmanageable without the ability to refer cases to ADR forums. However, the ubiquitous use of contractual provisions requiring ADR has come under scrutiny lately as many have deemed it a denial of people’s access to court. These contractual provisions may also be a way for corporations to avoid public disclosure of embarrassing lawsuits. As noted above, this will be the topic of next week’s blog.

CONTACT YOUR ATTORNEY

If you or someone you love has been injured, contact Dave Thomas at The Thomas Law Firm for a free consultation regarding your legal rights.

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