New York State Bar Association Journal

I think it's dangerous to speak in generalities. There are good ADR processes and bad. There are good arbiters and mediators. There are also bad ones. As lawyers, we should know that each case is very unique, based on the facts and circumstances. If we want to assume anything, we should assume that each case needs to be evaluated for ADR and litigation opportunities. Then, we must choose the route carefully and be willing to change course as necessary. This could mean choosing litigation. However, I suspect a very good mediator could help the parties avoid litigation.

That being said, I will agree that the court-mandated mediations I have experienced fell short of the ADR goals. I've actually attended some mediations in which the parties were not present--only there attorneys! This obviously limited the mediator's opportunities to discuss the parties' interests and create resolutions unavailable at trial. But it might not have been the mediator's fault. Attorneys would benefit from mediation training, so they come to the table with more than the same demands made during the pre-trial conferences. Likewise, retired judges serving as mediators must detach from the judgment process they have become intrenched in.

In short, the ADR process (like all processes) is only as good as the people and preparation that goes into it. Attorneys, talk to your clients about the issues underlying the disputes and be willing to bargain to resolve even those that don't increase the monetary value of the case. Mediators, demand that the parties attend the proceedings. And be open to the idea that some things have great value to parties even when they have little or no marketable value to the rest of us. Often, these are the things that are driving the need to litigate and that are left unresolved even after a verdict.

Unless the clauses structuring the ADR are carefully written to circumscribe and simplify the entire process, then ADR is not an effective alternative to litigation. That being said, a carefully drafted ADR clause can provide a quick, useful and inexpensive alternative. I prefer one arbitrator/mediator who is well versed on the issues to be heard.

Attention to drafting the arbitration clause can assure that arbitration is consistently more cost-effective than litigation. The problem is that the arbitration clause is often the orphan of the drafting and negotiation process in complex transactions and is thrown in as boilerplate. Careful drafting can assure limited and focused discovery, thereby reducing the single greatest cost of litigation. Careful drafting can encompass an understanding of the relative merits and costs of providers or self-administered arbitration. Careful provision for selection of the arbitrator(s) can take cost and ability to control the process into consideration. Finally, attention to hybrid or stepped processes involving negotiation, mediation, and/or arbitration/mediation can also assure an opportunity to resolve the matter in a way that the parties deem to be in their best interest.

I feel constrained to point out that at least for some parties, cost-effectiveness is not the primary criteria for chosing arbitration. In international transactions, enforceability is often the primary concern. There is no international treaty on the enforcement of U.S. judgments, but international arbitral awards are enforceable under the New York Convention in over 140 countires. Additionally, parties often choose arbitration for reasons of confidentiality or because they prefer to have a arbitrator with particular expertise rather than a randomly assigned judge hear the case.

That being said I completely agree with Laura Kaster that careful drafting by a knowledgeable arbitration specialist can cut down significanly on the cost of arbitration.