Chapter 1 Avoiding Costly Courtrooms

• Jurisdiction: United States

Chapter 1 Avoiding Costly Courtrooms

The increasingly clogged and unpredictable courtrooms of American life have been a driving force to find alternative ways to resolve disputes. These new initiatives began to produce palpable results in the corporate sector by the last couple of decades of the twentieth century. Consider:

• The FDIC adopted various forms of institutionalized Alternative Dispute Resolution (ADR) in 1991, producing savings in fees and costs that mushroomed from $325,000 in 1991 to $9.3 million two years later as a result of ADR. It also doubled its collection of revenues within two years.
• AT&T Global Information Solutions was able to close out 60% of its pending cases within a year of each case opening after instituting ADR measures. It also reduced suit filings significantly, and its outside legal costs plummeted by almost half.
• The Home Insurance Company, similarly to other insurers, instituted ADR in the early 1990s and in one year saved $6.3 million in litigation costs and reduced total employee time by some 4,960 months.

On the plaintiffs' side, ADR helped to level the playing field. No longer could corporations or insurers leverage the years and related emotional and financial costs that it might take in obtaining and collecting on a final judgment. No longer were plaintiffs doomed to a war of attrition in efforts to attain finality.

What soon became dramatically obvious was that, in contrast to the milk shake machines at your neighborhood McDonald's, ADR could be counted on to work—in a way that courtrooms no longer could.

When I speak of ADR, I am talking about much more than mediations. To better contrast the dynamics of a mediation, let us briefly explore other viable types of ADR.

Judicial Settlement Conference

This method was used long before other ADR methods became popular. Most of us have been there and done that. Either formally or informally, the judge presiding over your suit will require you to meet with him or with his magistrate in an effort to work things out short of trial. In the case of bench trials, it seems to this writer that a judge presiding over such a conference is walking an ethical tightrope in conducting such negotiations, as he may thereby become privy to matters that may never be presented as evidence should the conference fail and the matter proceed to trial. In contrast to mediations, the judge in this conference has formidable bullets in his holster. He may hint at an unfavorable ruling against...