THE ROLE OF ALTERNATIVE DISPUTE RESOLUTION
By Gregory R. Crochet
I. Discussion of ADR Processes Generally
A. What is ADR? A lternative Dispute Resolution ("ADR") refers to any method other than
lit igation for resolving disputes. It is often called "Appropriate Dispute Resolution"
because it is intended to use the best alternative to litigation that is availab le fo r a
1. Litigation is a relatively expensive and time intensive form of conflict resolution
controlled by nonparties viewed as insiders.
2. Forms of dispute resolution that are alternatives to lit igation are ADR.
3. Not so far along the continuum as litigation.
B. Why is ADR g aining popularity? The percentage of cases never getting to a jury trial is
now about 98.5%, accord ing to a new Depart ment of Justice study. Of 762,000 U.S. state
court tort, contract and real property cases studied, only 12,000 o f them went to jury
trials. And on average, plaint iffs won 52% of cases. The average time fro m filing of the
complaint to the jury verdict was 2.5 years. Th is suggests that in the unlikely event the
case ever gets to a jury, the odds of win ing are about the same as losing (50%).
The med ian awa rd is $52,000, and in only 8% of cases tried did a party receive mo re than
$1 million, usually in medical malpractice cases against a hospital. Contrary to public
perception, punitive damages were awarded in only 6% of cases and just a few were
product liability cases. Defendants won counterclaims in 1.2% of cases tried, and rarely
were punitive damages awarded for counterclaims. See U.S. Department of Justice,
Office of Justice Programs, Bureau of Justice Statistics, Special Report, "Civil Jury
Cases and Verdicts in Large Counties" (July 1995) (the "DOJ Study").
C. Adjudicatory ADR Procedures. Third party neutral makes and imposes a decision.
1. Arbitrati on. In arb itration an arb itrator or panel of arb itrators renders a decision
after hearing an abbreviated version of the evidence. In non-binding arbitrat ion,
either party may demand a trial within a specified period. The essential
difference between mediation and arbitrat ion is that arbitration is a form of
dispute adjudication, whereas mediat ion is not. 1
a. Legal basis for arbitrat ion
i. The Federal Arb itration Act, 9 U.S.C. § 1, et seq. ("FAA"). If
the matter at issue involves transactions in interstate
commerce, it is subject to the FAA. See Smith v. Pay-Fone
Systems, Inc ., 627 F. Supp. 121, 123, (N.D. Ga. 1985)
("Plaintiff's reliance on Georg ia law is misplaced . . . [due to
the] well-settled rule that state law is inapplicable in cases
falling with in the coverage of the [Federal Arbitrat ion] Act.");
Tampa Motel Management Company v. Stratton of Florida,
Inc., 186 Ga. App. 135, 138, 366 S.E.2d 804, 807 (1988)
("state arbitration law, due to preemption by the federal
arbitration code when interstate commerce is involved, will
never be applicable where one party is not fro m Georgia").
The FAA "creates a body of federal substantive law" which
governs arbitration agreements covered by their terms. Moses
H. Cone Memorial Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 25, n.32 (1983). Georg ia law must yield to the
FAA if the arbitration agreement co mes within its provisions.
Paine, Webber, Jackson & Curtis, Inc. v. McNeal,
143 Ga. App. 579, 579-80, 239 S.E.2d 401, 403 (1977).
The strong national policy favoring arbitration has been
emphasized repeatedly by the United States Supreme Court.
See, e.g., Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20, 24 (1991) (the FAA's "purpose was . . . to place
arbitration agreements on the same footing as other contracts
. . . [§§ 3 and 4] man ifest a 'liberal federal policy favoring
ii. The Georgia Arb itration Code, O.C.G.A. § 9-9-1,
et seq. ("GAA"). The validity of pred ispute arbitration
agreements is specifically declared in the GAA, and pending
lit igation may be stayed in favor of arb itration. See
O.C.G.A. § 9-9-3. There are special statutory schemes for
arbitration of construction contract disputes (O.C.G.A. § 9-9-
80, et seq.) and medical malpractice claims (O.C.G.A. § 9-9-
60 et seq.).
b. arbitration may be voluntary, by contract or court ordered
c. arbitration may be bind ing or nonbinding/advisory
d. arbitrator applies both law and equity; therefore arbitrator not
necessarily bound by substantive law
e. parties may and should select an arbitrator(s) with subject matter
f. conducted before a single arbitrator or a panel, which is customarily
comprised of three arbitrators
g. generally less discovery than lit igation, although that is changing
h. highly limited appealability and judicial review
i. parties high degree of input
i. date, time, p lace of proceeding
ii. number and qualifications of arbitrator(s)
iii. selection of agenda, procedural rules, issues for arbit ration
iv. parameters of arbitrator; scope of authority/type of available
relief can be ordered
j. Closely akin to trad itional trial in that someone else makes the
decisions, but information and rules of ev idence not strictly applied and
process generally more flexib le
k. Generally confidential, but awards under some fo ru ms rules are public
informat ion (e.g., NASD)
2. Summary Jury Trial. The summary jury t rial is a nonbinding abbreviated trial
by mock juro rs chosen from the jury pool. A judge or mag istrate presides. The
resulting advisory jury verdict is intended to provide the starting point for
settlement negotiations, and principals with authority to settle the cas e usually
a. Nonbinding decision based on summary presentation of case is
rendered by mock jury and judge
b. Each party presents respective positions, either in form of argument,
testimony or both
c. Negotiation follows, which, if not productive of settlement, is fo llo wed
by a full trial
d. Typically court ordered
e. Rules of evidence may apply and trial may be bifurcated
3. Mini-Trials. The mini-trial is similar to the summary ju ry trial in that it is an
abbreviated trial presided over by a neutral or panel of top business/institutional
management, wh ich issues advisory opinion. Attorneys present their best case to
parties' representatives with authority to settle. Generally, no decision is
announced by the neutral. After the hearing, settlement negotiations begin,
perhaps calling on the neutral for an opinion as to how a court might decide the
a. Most limited in scope and application of all ADR processes
b. Parties are allowed to ask questions
c. Negotiation follows, which, if not productive of settlement, is fo llo wed
by a full trial
4. Nonadjudicatory ADR Procedures. Th ird party neutral neither makes nor
imposes a decision.
1. Mediation. Mediat ion is a process in which a neutral facilitates
settlement discussions between or among parties. The neutral has no
authority to make a decision or impose a settlement upon the parties.
The neutral attempts to focus the attention of the parties upon their
needs and interests rather than upon rights and positions. Although in
court-annexed or court-referred mediation programs the parties may be
ordered to attend a med iation session, any settlement is entirely
voluntarily. In the absence of settlement the parties lose none of their
rights to a jury trial. Trend is toward use of med iation or some other
a. Is negotiation with assistance of a neutral party who helps
parties agree on mutually acceptable solution
b. Unstructured and informal
c. Incorporates conciliat ion and facilitation
d. Neutral not empowered to make or issue binding decision
though may suggest terms of settlement
e. Dual role as catalyst and tester of reality
f. Only binding if agreement is reached, wh ich parties typically
reduce to writ ing
g. Parties maintain procedural control and dictate outcome
h. Structure of mediat ion, including opening statements, joint
sessions and caucus
2. Conciliati on/Neg otiation.
. Neutral encourages disputants to negotiate
a. Neutral has minimal control and is not directly involved in
b. Neutral works in advance of negotiations to improve
communicat ion and reduce hostilit ies
3. Hybri ds.
b. Hi-lo arbitrat ion
c. Private judging (provided for by statute in some states, e.g.,
Texas and Califo rnia)
d. Moderated settlement conference
e. Fact finding
II. ADR Applicati ons
A. Types of Cases Generally.
1. Domestic relations. Tradit ionally, one of the first types of cases referred to
ADR. Mediators require special training in most jurisdictions.
2. Securities Claims. There have been several United States Supreme Court
decisions over the past two decades which have exp ress ed support for arbitration
of securities claims. During the late 1980s, the Supreme Court specifically
endorsed in the securities context the enforceability of predispute arbitration
agreements in Shearson/American Express, Inc. v. McMahon, 482 U.S. 220
(1987) and Rodriguez de Quijas v. Shearson/Lehman Brothers, 845 F.2d 1296,
aff'd, 490 U.S. 477 (1988).
In McMahon, the Court held that a predispute agreement to arbitrate a Securities
and Exchange Act of 1934 violat ion between a customer and a brokerage fir m
was enforceable. A year later, the Court in Rodriguez de Quijas, in a 5-4
decision, reversed its earlier interpretation of the anti-waiver provisions of the
Securities Act of 1933 and declared that the Act's language would not prohibit
the enforcement of predispute arbitration agreements.
3. Construction. For years construction contracts and subcontracts have contained
predispute arbitration clauses, usually specifying the American Arb itration
Association as the forum. AIA form documents include predispute arbitration
4. Labor/empl oyment clai ms. A mongst the types of disputes which are now
arbitrable based upon an enforceable predispute arbitration agreement are those
actions involving employ ment related disputes. The Supreme Court in Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), held that emp loyment
claims (e.g., an age discrimination claim under the ADEA) are subject to
arbitration based upon an arbitration agreement in the securities registration
application Form U-4 as well as under the FAA. Follo wing the Gilmer decision,
several state and federal courts have ruled in favor of co mpelling arb itration of
emp loyment related disputes if covered by the FAA. See, e.g., Fletcher v.
Kidder, Peabody & Co ., 619 N.E.2d 998, cert. denied, 114 S.Ct. 554 (1993);
Bender v. A.G. Edwards & Sons, Inc., 971 F.2d 698 (11th Cir. 1992). See also
Alford v. Dean Witter Reynolds, Inc., 939 F.2d 229 (5th Cir. 1991) (held that
Title VII claims can be subjected to compulsory arbitration).
Some courts, however, have refused to force discrimination claims into
arbitration if the emp loyee was found to be unaware of the specific rights being
forfeited. See, e.g., Prudential Ins. Co. of America v. Lai, 42 F.3d 1299
(9th Cir. 1994), cert. denied 116 S.Ct. 61 (October 2, 1995) (employees signing
U-4 could not have understood that they were agreeing to arbitrate sexual
discrimination suits). The rationale appears to be that the underlying public
policy of eliminat ing discrimination outweighs the public policy of pro moting
arbitration. The Lai case appears to contradict the decision in Gilmer, but is
consistent with the 1991 A mend ments to the Civil Rights Act of 1964, wh ich
specifically permit jury trials for alleged discrimination.
The enforceability of mandatory arbitrat ion clauses in employ ment contracts is
an open issue at this time. The t wo governmental bodies charged with
overseeing discrimination laws, the EEOC and the NLRB, have recently
challenged such contracts in court as a violation of an employees' civil rights.
The EEOC is also in the process of issuing a policy statement that would
prohibit all emp loyers fro m imposing mandatory arbitration in d iscrimination
cases. This position appears to be contrary to general contract law that presumes
signatories to an agreement have read and understand it. Private ADR firms are
continuing to hear employ ment cases even though plaintiffs' employ ment
lawyers are object ing. See Fulton County Daily Report, front page (Nov. 1,
5. Bodily injury/ property damage clai ms. Most cases that are filed and tried to a
jury are tort cases (79% according to the DOJ Study). Hence, most court
annexed ADR programs deal largely with these cases.
6. Voluntarily by parties. Parties are free to agree to arb itration even if not
included in a pred ispute agreement.
7. Included in contracts.
8. Ordered by courts.
9. Required by statute.
B. State Court Programs. Virtually every state now has legislation or court ru les
authorizing use of ADR in court cases.
1. Background of ADR i n Georgia. The Joint Co mmission on Alternative
Dispute Resolution (the "Joint Co mmission"), created by order of the Geo rgia
Supreme Court and appointed jointly by the Georg ia Supreme Court and the
State Bar of Georgia, began in September of 1990 to study court-annexed ADR
programs. The Jo int Co mmission presented to the Georgia Supreme Court
recommendations for the incorporation of ADR programs into the courts on a
statewide basis. The Supreme Court adopted the recommendations and passed
the Georg ia ADR Ru les, which apply to court-annexed or court-referred
programs. The Georgia Office of Dispute Resolution serves as staff for the
Georgia Co mmission on Dispute Resolution (the successor to the Joint
Co mmission). It reg isters neutrals throughout the state, provides tech nical
assistance to courts, and provides training for neutrals who will be serving in
court programs. While every trial court in Georgia is authorized to fund and
establish an ADR p rogram, no court is required to do so. As discussed below,
many of the courts in metro Atlanta have instituted ADR processes.
2. Georgia Alternati ve Dispute Resoluti on Rules. Blueprint for the
establishment of and procedures for ADR programs in state courts throughout
0. Georgia Supreme Court Order (effect ive April 15, 1993)
1. Unifo rm Ru les for Dispute Resolution Programs. Appendix A of the
Georgia A DR Rules sets forth specific ru les for court programs using
ADR p rocesses and has been adopted by the judicial councils of the
various state courts. However, the Fu lton County Superior, State,
Probate, Magistrate and Juvenile Courts have recently adopted and
approved separate ADR Program Rules (Published March 1, 1995) that
authorize any case to be referred to ADR by motion or consent of the
parties or sua sponte by the court.
2. Requirements for Qualification and Training of Neutrals. Appendix B
of the Georgia A DR Rules sets forth the qualifications for neutrals
serving in Georgia court programs. The Georg ia Co mmission on
Dispute Resolution (the successor to the Joint Commission) has
established these qualifications, and many local A DR programs now
require a neutral to be registered with the state.
3. Court Annexed ADR Programs in Metro Atlanta.
0. Fulton County has an arbitration program for State and Superior Court
cases. Mediators from the Justice Center of Atlanta mediate cases fro m
the Fulton County Juvenile, Magistrate, Probate, State and Superior
. Fulton County ADR Program Ru les - new ADR program
includes mediat ion, arb itration and neutral case evaluation,
with most cases currently handled by the Justice Center of
Atlanta, Inc. under contract. But Atlanta Bar Association
recently provided judges with roster of other neutrals.
i. Superior Court Local Rule 1000 - nonbinding, abbreviated
arbitration to wh ich certain cases are automatically referred;
can use as basis for binding arbitrat ion.
ii. State Court Local Ru le 30 - same arbitration process, but
appeal for trial filed with Clerk of Court not Administrator's
1. Cobb County has a very extensive Superior Court med iation program,
which handles virtually all contested civil and domestic cases. The
Magistrate Court and the Juvenile Court of Cobb County also have pro
bono, mediation programs.
2. DeKalb County commenced a mandated mult i-door ADR program in
January 1994. State Court civil cases in which an answer and ju ry
demand are filed and Superior Court civ il cases in which an answer is
filed are auto matically referred to the DeKalb Resolution Center for
screening. Follo wing an intake conference, parties must choose
arbitration, mediation, early case evaluation, or litigation. The Juvenile
Court of Dekalb County has a med iation program.
C. Federal District Courts. The Civ il Justice Reform Act of 1990 mandated that federal
courts develop a plan for reducing costs and delay in cases. As a result, there are a myriad
of ADR programs in federal district courts across the country. See Donna Stienstra and
Elizabeth Plapinger Study, ADR in the Federal District Courts, Federal Judicial Center
and CPR Institute for Dispute Resolution (October 1995).
1. U.S. District Court, Northern District of Georgia. Has authorized a
mandatory, nonbinding arbitration program, but is await ing approval and
funding. Co mmittee of d istrict court judges and members of the bar has been set
up to consider broad ADR program, which has met and is considering a formal
plan. In the meantime, individual judges are using mediation and arbit ration on a
2. U.S. District Court, Mi ddle District of Georgia. Has an established
3. U.S. District Court, S outhern District of Georgia. Like the Northern District
has no formal ADR program, but does require attorneys to certify having
discussed ADR options with clients.
D. Eleventh Circuit Court of Appeals . Has established an comprehensive Appellate
Conference Program using mediation fo r appellate cases.
III. Why Consi der an ADR Process
A. Advantages of ADR.
1. Who is using ADR.
0. business people, particu larly insurance adjusters and human resources
managers, are looking for less expensive and faster ways to resolve
1. lawyers trying to serve clients better since clients are demanding more
efficient problem resolution.
2. courts with overcrowded dockets.
2. Arbitrati on. Fast adjudication.
0. No jury t rial
1. Panel/arbitrator will have substantive expertise
2. Confidential proceeding
3. Finality of judgments
4. Lower costs
5. Less delay
6. Discourages class action and other lit igation
7. Damage awards, if any, more likely to match alleged harm
8. Agreements fashioned to:
. Permit "self help"
i. Prevent awards of punitives
ii. Permit limited discovery and motion practice
iii. Permit provisional remedies
iv. Define scope of issues to include "relationships" to cover all
actions, class actions, etc.
3. Medi ation. An advancement and improvement in the settlement pro cess.
0. Very fast
2. Confidentiality. Two levels of confidentiality - the process itself and
caucuses. Federal courts favor protection of confidentiality. In an
intellectual property dispute, an attorney violated the confidentiality
provision of the district court's mediat ion program by disclosing to the
district court in a letter, among other things, the terms of settlement
offers including specific dollar amounts that were made during the
med iation process. An appropriate sanction for the violation was a fine
of $2,500, in light of the seriousness of the violation. Bernard v. Galen
Group, Inc. 901 F.Supp. 778 (S.D.N.Y. 1995).
3. Preserves relationships
4. Parties maintain control through joint problem solving
5. Parties make all decisions, nonbinding
6. Decisions made on basis of needs and interests of parties not on basis
of comp ro mise
7. Mediator with substantive expert ise
8. Very high resolution rate
9. Avoids/settles litigation
10. Allow Part ies Greater Degree o f Input and Control Than Litigation.
11. Moves Forward Time Dispute is Resolved.
12. Savings of Money.
13. Savings of Time, Particularly Employee Time.
14. Greater Procedural Control by Parties.
16. May Preserve a Relationship.
17. May Allow Better Utilization of Experts.
B. Indicators for ADR Usage. Attorney should analyze each dispute to determine the most
appropriate dispute resolution process for it. So me cases need to be litigated; for
example, the enforcement of constitutional rights, or the setting of precedent. Most
should never get beyond the negotiation or other dispute resolution stage. The key is to
understand the options and choose the right one early.
1. Future Rel ationshi p/Dealings Between the Parties.
2. Confi dentiality Desires.
3. Ti me and Expense Concerns.
4. Concerns Toward Engendering Future Litigation.
5. Large Volume of Cl aims.
6. Repetiti ve Types of Clai ms.
7. Lack of Novel Legal Issues.
8. No Desire to Set Precedent.
9. Convenience of Parties to Select Ti me, Pl ace and Manner of Dispute
Resolution i.e., Party Control.
10. Desire Opportunity to Telescope or Shorten Period of Ti me to Resolution.
11. Desire for Expert Decision Makers.
C. Pri vate ADR Provi ders. Private ADR providers are popping up like mushrooms after a
1. American Arbi tration Association. Oldest (established in 1926) and largest of
private ADR providers.
2. National Association of Securities Dealers, Inc. Self regulatory organization
that handles securities disputes involving members and/or investors; recently set
up a med iation procedure.
3. Resolutions Resources Corporation. Local group with extensive panels of
neutrals for all types of cases.
4. J.A.M.S./ Endispute. Staffed by former judges, who may not make good
5. The Justice Center of Atl anta, Inc. The Justice Center of Atlanta, Inc. receives
referrals fro m Fu lton Probate Court, Fulton Juvenile Court, Fulton Superior
Court, Fu lton State Court, Fulton Magistrate, Fulton Warrants, DeKalb So licitor,
DeKalb State Court, DeKalb Superior Court, DeKalb Magistrate Court, DeKalb
Warrants, City of Atlanta Municipal Court and Clayton Magistrate Court. Good
for certain types of cases.
6. Center for Public Resources. New York based ADR provider with sixteen
regional panels. Developed pledge now signed by more than 2,000 major
corporations agreeing to consider using ADR before suing other signers.
D. ADR Obligati ons.
0. Ethical Consideration 7-5.
Duty of the Lawyer to a Client
1. EC 7-5. A lawyer as advisor has a duty to advise the client as to various
forms of dispute resolution. When a matter is likely to involve
lit igation, a lawyer has a duty to inform the client of forms of d ispute
resolution which might constitute reasonable alternatives to litigation.
A lawyer as adviser furthers the interests of his client by giving his
professional opinion as to what he believes would likely be the ult imate
decision of the courts on the matter at hand and by informing his client
of the practical effect of such decision.
2. ADR CLE Requirement. Supreme Court Bar Rule 8-104(B) Reg (5)
requires every licensed attorney in Georgia to attend an ap proved three-
hour seminar in ADR prior to December 30, 1995, or, if thereafter
admitted, during the calendar year of ad mission or the follo wing year.
3. State Ethical Scheme. Georgia has adopted the Canons of Professional
Ethics of the A merican Bar Association as the Georg ia Code of
Professional Responsibility ("CPR"). See, e.g., Amoco Chemicals
Corp. v. MacArthur, 568 F. Supp. 42, 45, n.2 (N.D. Ga. 1983); Dodson
v. Floyd, 529 F. Supp. 1056, 1065-66, n.1
(N.D.&NBSP; Ga.&NBSP; 1981). The Georgia CPR can be found as
Part III o f The Rules and Regulat ions for the Organization and
Govern ment of the State Bar of Georgia, Georg ia Court Rules and
Procedure, State, pp. 859-951 (1995 ed.).2 The rules of the Georg ia
CPR have the effect of law. "Although only couched in aspirational
terms, these rules cannot be ignored if we are to maintain the integrity
and credibility of judicial process." Castell v. Kemp, 254 Ga. '556, 558,
331 S.E.2d 528, 530 (1985); citing Cambron v. Canal Ins. Co.,
246 Ga.&nvsp;147, 151, 269 S.E.2d 426 (1980).
2. Federal Rules. The A BA Model Code was originally adopted in 1969, and was
amended several times, with the last amend ments adopted in 1980. In August
1983, the A BA replaced the entire A BA Model Code with the ABA Model
Rules. The A BA Model Rules govern the conduct of attorneys in federal court.
Although some state ethics rules still follow the ABA Model Code, the majority
of states now base their ethics rules on the ABA Model Ru les. See ABA/BNA
Lawyers' Manual on Professional Conduct, page 01:101, et seq. (1992).
0. ABA Mode Code Canon 8. "A Lawyer Should Assist in Improving the
1. EC 8-1.
Changes in human affairs and imperfections in hu man institutions make
necessary constant efforts to maintain and imp rove our legal system. . .
. By reason of education and experience, lawyers are especially
qualified to recognize deficiencies in the legal system and to initiate
corrective measures therein. Thus they should participate in proposing
and supporting legislation and programs to improve the system, without
regard to the general interests or desires of clients or former clients.
The definitions in this Section are p rimarily taken fro m the Georg ia Alternative Dispute Resolution Rules,
Rule I, a copy of wh ich is attached hereto as Exh ibit A (" Georgia A DR Rules").
The Georg ia CPR is patterned after the ABA Model Code of Professional Responsibility ("ABA Model
Code"), the forerunner to the ABA Model Rules of Professional Conduct ("ABA Mode l Ru les"). The
Ethical Considerations (ECs) and Directory Rules (DRs) contained in the Georgia CPR are almost identical
to the ABA Model Code, but are both considered by the State Bar to be aspirational and directory in nature.
In Georgia, the ECs and DRs serve as guidelines for an attorney seeking the proper ethical course of
behavior to pursue in a particular instance and are not grounds for disciplinary action in Georg ia. The
grounds for disciplinary action in Georgia are found in Part IV o f the Bar Rules. Under Rule 4-102, the
Supreme Court adopted 69 Standards of Conduct, a violation of which may subject the offender to
disciplinary act ion. These Standards are substantially the same as the DRs found in Part III of the Bar
Rules, although not all DRs were adopted as Standards.