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Alternative dispute resolution (ADR) is a legal term and category referring to several methods of resolving dispute that forego the need for a trial and the customary litigation process. These forms of resolving disputes can be used for legal disputes ranging from a married couple’s divorce to complex transactional disputes in business. Most often, however, ADR is used to resolve business disputes without the need for courtrooms, lengthy litigation and expensive trials.

Given the many practice areas and types of disagreements that can arise over legal matters in business, it perhaps is unsurprising that there is no “one size fits all” approach to ADR. Broadly, however, all forms of ADR are meant to provide sensible and cost-efficient solutions to legal issues that treat all parties’ legal rights and obligations fairly.

Alternative Dispute Resolution Methods

What follows is a closer look at the most common and effective methods of ADR, as well as a detailed analysis of the benefits and potential drawbacks of each method.

  1. Mediation
  2. Arbitration
  3. MED-ARB
  4. Early Neutral Evaluation
  5. Conciliation


The two most common forms of ADR are legal processes known as mediation and arbitration. In fact, the two are so common that they are frequently lumped together when ADR is discussed. However, mediation and arbitration are in fact two separate and distinct legal concepts.

For its part, mediation is a form of ADR that relies on an impartial party who helps the disputing parties find common ground and reach a resolution accepted by all parties. This impartial person is known as a “mediator”, who will help facilitate the discussions and guide the parties toward finding a mutually agreed upon outcome. However, crucial to the mediation process is that ultimate control and decision-making authority over deciding the dispute rests with the parties in disagreement.

As such, mediation is valuable when parties need an impartial person who can guide parties toward compromise when they are willing to seek common ground. For example, mediation is often valuable for parties who are divorcing amicably and without hostility in the area of family law. This general principle can be extended to mediation’s value in a business dispute.

Mediation example with color

If the business parties are relatively unattached emotionally and are capable of finding common ground, mediation is a great way to ensure fair communication while still providing the businesses with the power to ultimately decide the dispute themselves. If, however, one or both parties believes that the business engaged in bad faith or that a fair solution is impossible to reach, then arbitration may be a better path to pursue.


Unlike mediation, arbitration lets the neutral party decide the dispute’s outcome and ultimate resolution after hearing the evidence and arguments presented by all parties. This neutral party, known as an “arbitrator”, in some respects functions like a judge without the typical formality found at trial. As such, evidentiary standards and similar procedures tend to be relaxed, yet the arbitrator’s decision may not be challenged, depending on the type of arbitration the parties choose.

An arbitration process may ultimately be “binding” or “non-binding” in nature. Binding arbitration results in all parties waiving their legal right to a trial, effectively ensuring that the decision made by an arbitrator will conclusively decide and resolve the dispute. Non-binding arbitration differs in that parties who are unhappy with the arbitrator’s decision may then request a trial.

Arbitration Lady Justice

Arbitration is usually ideal for businesses that are cost-conscious. The idea of a trial and a legal decision being made is often preferable to parties that choose arbitration, yet the expense, formality and lengthy nature of a trial is not. However, arbitration is not advisable should parties wish to retain control of the dispute resolution. Parties wishing to retain control over the decision-making and agreement process should consider another form of ADR such as the aforementioned mediation process instead.


MED-ARB is effectively a blend of both mediation and arbitration, borrowing distinct elements of both ADR methods. MED-ARB relies on a neutral party, which shares the same general template as both mediation and ADR. This party begins the dispute resolution process by mediating the dispute first since mediation is a more collaborative, less restrictive form of resolving a legal dispute.

The hope in beginning the MED-ARB process with mediation first is, naturally, that the parties can ultimately decide on and agree to a fair settlement early in the dispute resolution. If both parties reach common ground and decide the matter on their own, then the MED-ARB process will conclude at the mediation stage since the dispute was effectively resolved.

Should mediation prove unsuccessful, then the neutral party will become an arbitrator, and the typical procedures of arbitration will apply. In this way, MED-ARB is best thought of as a contingency plan should mediation fail. Parties that choose MED-ARB to resolve a dispute should be hopeful that some or all of the legal issues at hand can be settled by the informalities of mediation, while still desiring a binding and final decision.

The practical effect of this process is that only the most difficult or strongly disagreed upon issues will be left for a neutral arbitrator to decide. This, in turn, reduces the complexity of the disagreement and the items to be decided by an arbitrator, free from the control of the parties themselves.

It is worth noting that MED-ARB can rely on one neutral party to serve as both mediator and arbitrator if desired, but the parties can also arrange for two different neutrals. In a “different neutral” scenario, one neutral party will serve as mediator, and then a second and entirely different party will serve as the neutral arbitrator.

Parties may wish to consider opting for the different neutral scenario, particularly if there are concerns that an arbitrator’s impartiality may have been affected by also overseeing the mediation process. Moreover, some parties may reasonably shy away from discussing legal issues in a way that could facilitate a successful mediation if the neutral party mediating will also arbitrate the matter should mediation prove unsuccessful. As such, it is often advisable to enter into MED-ARB with different parties serving the role of mediator and arbitrator, respectively.

In total, however, the level of flexibility provided by the MED-ARB process makes this form of dispute resolution arguably the most flexible ADR method available. Parties can effectively tweak the MED-ARB to reflect the dynamics of the case and legal disputes at issue, whereas traditional mediation or arbitration are more rigid and inflexible in nature.

Early Neutral Evaluation

While mediation and arbitration often get the outsized bulk of attention where ADR methods are concerned, the benefits of early neutral evaluation should not be overlooked. Early neutral evaluation is a process that typically begins early in the life of a case, hence the “early” nomenclature.

Broadly, this process means the case is referred to an attorney who is tasked with providing an unbiased, neutral and balanced legal evaluation of the dispute at issue. Parties to the case can also submit comments or meet with the expert to flesh out their side of the argument.

Once the parties provide their input, the expert can then identify the merits, strengths or weaknesses of each party’s legal argument, which serves to evaluate the likely outcome should the parties take the case to trial. This unbiased, neutral assessment can be used to help parties get a fair legal assessment of their case, which can be used to facilitate a settlement.

Note that this is a completely voluntary and non-binding ADR process on the parties with a legal dispute. No procedural rules or evidentiary standards dictate the process either, as the rules can be written by the parties themselves. Still, the evaluator involved will be an expert on the legal subject in question, meaning the parties can rely on the findings as a baseline or litmus test of sorts for negotiating a dispute resolution fairly. In effect, a neutral evaluation can in some respects be summarized as follows: both parties can receive a neutral third party’s objective analysis of the case without losing their control to reach a fair resolution without court involvement or the binding decision of an arbitrator.

If some of these benefits sound quite similar to the informalities inherent to the mediation process, your intuitions are correct. There are certainly key similarities in those regards. That said, there are also noteworthy differences that distinguish early neutral evaluation from mediation.

First, mediation is more collaborative, at least insofar as both parties hire a mediator together in an attempt to reach a mutually beneficial arrangement. By contrast, two separate neutral evaluators are hired during the neutral evaluation process. A judge will then instruct the parties on how the process works in the presence of their attorneys and evaluators. In this way, although informal, a neutral evaluation reflects court processes at trial and judge involvement to a far greater degree than mediation, where a judge is not involved until the court needs to finalize a mediation agreement.

Second, an evaluator begins the process in a neutral manner, but the neutrality can quickly dissipate if not vanish outright depending on the evaluator’s conclusions and legal finding. Compare this to a mediator, whose job is merely to help the parties communicate and come to an agreement together. In most cases, the evaluator will ultimately side more favorably with one legal argument over another.

To bypass the potential drawbacks of this aspect of neutral evaluation, the parties can ask the court to appoint two separate neutrals for their case. One will be appointed as a mediator, and the other party will then be appointed as an early neutral evaluator. Such an approach could provide the parties with the benefits of mediation neutrality while also benefiting from an evaluative analysis that identifies the strengths and weaknesses of the parties’ respective arguments.


Conciliation is another form of ADR that, in some key respects, bears similarities to mediation. It is a voluntary process that both parties agree to pursue before the process begins in earnest, at which point an independent party called a conciliator will be appointed.

The conciliator is tasked with discussing the issues at hand with both parties and will ultimately attempt to guide the parties to reach an agreement, but the parties usually meet with the conciliator separately.

The key distinction between conciliation and mediation, however, lies in the the actions a conciliator takes to resolve the dispute. Namely, a conciliator is expected to provide advice, solutions or recommendations via a non-binding settlement proposal. Put another way, it is often the role of the conciliator as the neutral party to help the parties reach an agreement based on the conciliator’s considerable experience and expertise. In this respect, a conciliator serves as a facilitator much like a mediator, albeit with the added responsibility of advising or recommending terms and proposals for resolving the dispute.

Recall that mediators remain impartial and neutral at all times. A conciliator, by contrast, may provide advice or recommendations that favors one side, but the decision to agree or not remains with the parties themselves.

There are key benefits to this approach as well, one of which is that the expertise of the conciliator can be relied upon when recommendations and solutions are made. The parties selected the conciliator, after all, which means the conciliator ought to have been selected based on experience, expertise and the disputes at issue. As such, the parties can reasonably rely on the fact that the conciliator’s impartial and independent recommendations are based on strong legal reasoning that can be used to reach an effective resolution.

Perhaps most importantly, conciliation can preserve business secrets since parties can agree to keep conciliation confidential. However, conciliation is not as effective as mediation, generally, when the dispute has reached a substantive nature. Conciliation is best when a dispute is addressed in the earlier stages, as opposed to the “later stage” intervention necessary via mediation or arbitration.

The exact form of ADR that is best for a business will vary greatly on the legal dispute, the ability of the parties to engage amicably and a myriad of similarly important factors. Even so, the various methods of ADR all can serve the purpose of providing an effective alternative to the typical downsides of the traditional litigation process.


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