ADR – Alternative

Dispute Resolution
A Client's Guide to the Language and Procedure

BAKKE❖NORMAN
LAW OFFICES ❖
❖Welcome

We are pleased you have considered Bakke Norman, S.C. to represent your

interests. This guide discusses alternative methods to resolving disputes. If

you are involved in a dispute situation and would like to avoid a lawsuit, or

if you wish to provide for future alternative dispute resolutions, we are

prepared to assist you.

BAKKE❖NORMAN
LAW OFFICES
ADR – Alternative Dispute Resolution

T here are almost 20 million lawsuits filed

every year. A very large percentage are settled
occurs early in the legal process and is designed
to avoid many common procedural steps and
before trial. But, while only a few suits are costs. Most court-ordered ADR occurs much
actually tried, the individuals and businesses later in the legal process, frequently after discov-
that are involved in litigation — even in a suit ery is completed and final trial preparation has
which eventually settles — know that the time, started. This last use of ADR is currently most
expense and emotional impact exact a costly common in Wisconsin, although the other exam-
price. ples are rapidly gaining acceptance nationwide.

ADR methods include binding arbitration,

❖ An Alternative nonbinding arbitration, mediation, summary

trial, moderated settlement conference and
To A Lawsuit a number of other creative procedures designed
to facilitate a fair and reasonable settlement.
Recently some courts and law firms have started
Any method may have several variations, as is
to put more emphasis on alternative methods to
discussed later. In almost every context, the
resolve disputes. The wide variety of alternative
parties can use any standard method that they
dispute resolution mechanisms are collectively
choose, or invent their own procedure designed
referred to as ADR. There are many potential
to meet their unique needs.
advantages to ADR including reduced costs,
faster resolutions, less emotional stress, the
ADR can be conducted with or without attorney
ability to construct solutions that are outside of
representation on either side. If participants are
the courts' authority and, in some cases, the
represented by attorneys, the ADR sessions can
opportunity to preserve personal or business
involve the attorneys or can be conducted by the
relationships that might be shattered by a trial.
parties without counsel present. ADR is not a
“one-size-fits-all” proposition. The method and
ADR occurs in many different contexts and
setting should be carefully selected to optimize
encompasses various specific methods. ADR
the chances of a successful resolution of all
may be mandated as the settlement option in a
disputed issues.
written contract — construction contracts and
securities brokers' agreements frequently contain
Cost savings by using ADR will depend on the
a mandatory arbitration clause. Even if there is
complexity of the case, the timing of the ADR
no contract requiring arbitration or other ADR
efforts and the method used. Savings are also
effort, ADR can be agreed to by the parties or
dependent on the successful conclusion of a
ordered by the court. Party-initiated ADR can
settlement. An early ADR resolution can save
happen at any time and can use any method and
months of attorney fees, preparation costs and
procedure the parties find helpful. There are two
emotional stress. Even if ADR is used just before
basic types of court-sponsored ADR. The first
trial, the saving of attorney fees and costs can the evidence and make an award. The award is
be substantial if a trial is avoided. Equally then binding on the parties and may be entered
important are the nonmonetary benefits that and enforced as a judgment by the court. There
can come from an opportunity to craft a settle- is very limited opportunity to appeal an arbitra-
ment of your own design. tion award.

It is important to note that cost savings are not Nonbinding arbitration is identical to binding
always realized. In some instances, the cost of arbitration except that the parties are not bound
the ADR procedure may equal or exceed the cost by the result and either party still has the option
of litigation. More importantly, if time and to proceed to court if either party does not
resources are expended on an ADR attempt that accept the arbitration award.
is ultimately unsuccessful, the ADR costs are
added to the litigation costs, thereby increasing, Arbitrators are usually selected on the basis
not decreasing, total costs. In order to maximize of their expertise in the area of dispute. For
the probability of cost savings, both parties example, an arbitration panel for a construction
should be genuinely interested in an early and contract dispute might include an engineer, a
fair resolution of the dispute, and the type of contractor and an attorney.
ADR, as well as the selection of the facilitator,
should be carefully chosen to fit the needs of In reality, arbitration is a modified form of trial
the situation. which does not use a traditional judge or jury;
therefore, the cost and time savings are usually
Typically the cost of the ADR process is shared not as significant as the savings provided by
equally by the parties, but that can be varied by other forms of ADR.
contract or by other agreement.
Parties can contract to limit or specify the
authority of the arbitrator. The possible contrac-

❖ Types Of ADR tual modifications are limited only by human

ingenuity. A typical example of these special
The common ADR forms are discussed below. rules is baseball arbitration, where the arbitrator
must select either the final offer of the owners
Arbitration or the final demand of the players and is not
Arbitration is familiar to most because it has permitted to compromise between them.
been used in the context of labor disputes and
construction contract disputes for years. The
Mediation
essence of arbitration is that a third party
Mediation is fundamentally different from
renders an opinion about how the dispute
arbitration. In arbitration, a third party decides
should be settled. The arbitration award can
how the case should be settled. Whereas, in
be binding or nonbinding, depending on the
mediation, the mediator has no authority to
contract or other agreement of the parties. In
settle the case and, under most circumstances,
binding arbitration, the parties select an arbitra-
will not let the parties know his or her personal
tor or panel of arbitrators who help design the
opinion about settlement. The mediator’s role is
arbitration process, conduct a hearing, evaluate
to guide and assist the parties to fashion their
own settlement, serving as a facilitator to help Focus Group
the parties reach the desired goal of a resolution A focus group is a panel of citizens selected in
of their conflict. a manner agreed by the parties. The group
receives the parties' presentations, deliberates,
Mediation has been mandated by the courts renders an advisory opinion about how the
for custody and visiting disputes of divorcing dispute should be resolved and discusses the
couples for many years. It is gaining momentum opinion with the parties.
now in other areas as well.
Mini-trial
If both parties are prepared to negotiate and A mini-trial is a process whereby the parties
compromise in good faith, mediation can be one make a presentation to a panel of neutral
of the least expensive and most effective ADR persons who consider the legal and factual
methods. In addition to the cost benefit of issues and attempt to negotiate a settlement.
mediation, there are many benefits that flow
from a creative solution crafted by the parties Summary Jury Trial
themselves. Understandably, parties are more A summary jury trial is conducted by a judge
likely to abide by an agreement that they helped and involves an abbreviated presentation by
negotiate and, frequently, their business or both sides to a small jury selected from the
personal relationship is left intact to allow county’s regular jury panel. The jury renders
future constructive dealings. an advisory verdict, which it then discusses
with the parties.
Direct Negotiation
Direct, face-to-face negotiation between the Other ADR Methods
parties, without the use of a third party, involves The parties and their attorneys can, by
the exchange of offers and counteroffers and a agreement, modify any of the above methods
mutual discussion of the strengths and weak- to provide either binding or advisory opinions.
nesses of each party’s position. This method The ADR method, procedure, role of the neutral
is usually most effective if the parties are repre- party, limits on the award and effect of the
sented by skilled and knowledgeable counsel, opinions can all be negotiated to fit a particular
and if both have an incentive to reach an agreed situation.
settlement.

❖ Selection of a Neutral
Early Neutral Evaluation
The concept of early neutral evaluation is
usually applied to suits which have already been
filed. It is a dispute resolution process in which
ADR Facilitator
The selection of an appropriate neutral party to
a neutral third party evaluates short written or
conduct ADR can be equally or more important
oral presentations of each side’s position and
than the specific type of ADR which is chosen.
then provides an initial appraisal of the merits of
The mediator, arbitrator or other neutral third
the case and suggestions for resolving the case.
party must have the parties' trust and must
conduct a proceeding which is perceived by the particular dispute. For instance, if the
all to be fair and unbiased. Although cost is dispute involves an issue regarding the strength
increased if more than one arbitrator or media- of concrete provided for a construction project,
tor is used, there are times when more than one an engineer may take less time to understand
is warranted to assure that there is a balance of the technical details, if those details are impor-
various interests represented by the neutrals. tant to understanding the issues.
Special mediation skills and training can be
essential, and specific expertise in the area of Experts in the Disputed Subject
the dispute can be a major plus in many circum- Depending on the issues, ADR facilitators
stances. can include engineers, contractors, surveyors,
psychologists, accountants or any other individ-
American Arbitration Association uals with special knowledge or experience in
The American Arbitration Association has been the subject of the dispute.
providing arbitration services for many years. It
has trained arbitrators and standard costs and
procedures to apply to a variety of disputes. It
has been used extensively by the construction ❖ Wisconsin Supreme
industry for years and many standard-form
architectural, engineering and construction
Court Rules
The Wisconsin Supreme Court has created
contracts contain a specific clause mandating section 802.12 of the Wisconsin Statutes which
arbitration under the rules of the American authorizes all trial courts to order parties in a
Arbitration Association. lawsuit to participate in an ADR alternative.
The court cannot order arbitration or summary
Private ADR Groups jury trial, but the parties may choose one of
There are many private businesses offering a those options by agreement. In divorce and
variety of mediation, arbitration or other ADR other family law cases, focus groups, mini-trials
services. These are frequently owned or staffed and summary jury trials are not available
by retired judges, attorneys or mental health alternatives.
professionals.
The new statute contains many specific rules
Respected Attorneys and limitations about the use and effect of
Most court-ordered ADR will use an various methods in different situations.
experienced and respected attorney as mediator
or arbitrator. The advantage of an attorney as
facilitator is that an attorney will have an
understanding of the need for proper procedure ❖ ADR Considerations
and an ability to structure both the process and
the result. The disadvantage of an attorney
For Your Contracts
The best time to consider ADR alternatives may
facilitator, as opposed to an expert in the be before any dispute arises. A mediation or
disputed field, is that more time may be neces- arbitration clause in your contract form can be
sary to educate the attorney to the specifics of an effective method to assure a prompt and
less-expensive resolution of future conflicts.
Although ADR is not a cure for every dispute, ❖ Notes
and a failed ADR attempt may increase rather
than control costs, there are many situations
where it is the best available alternative.

❖ Bakke Norman's
Role In ADR
The attorneys at Bakke Norman, S.C. support
and encourage the use of ADR in a wide variety
of situations. We are prepared to assist clients
in making an intelligent selection of the ADR
method to be used, and to help select an appro-
priate neutral individual or panel of individuals
to facilitate the settlement process. We also
will help design an ADR strategy and advise
on specific tactics to help facilitate an early
settlement whenever possible.

E1095
 BAKKEYNORMAN
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