Illinois Law
Illinois ADR: Family Matters
ADR: Family Matters
Historically, lawyers were trained exclusively in the adversarial method. The adversarial system of jurisprudence is based on the concept that justice will emerge best if competing parties, represented by lawyers, present their admittedly biased version of a case to a judge or jury. The evidence is then subjected to the vital process of cross-examination in which each side has the opportunity to expose the flaws in an opponent's position. In fact, the system works quite well in some cases, particularly when cost and relationships between opponents is not a major concern. In many cases, however, the cost of litigation is prohibitive, the fighting and acrimony inherent in the process destroys relationships that otherwise could be preserved, and the complexity of litigation has caused overloaded court caseloads and major delays.
Sophisticated parties, particularly corporations that may experience a great deal of litigation, now realize the huge costs involved in the adversarial process. To reduce time, money, and exposure to a litigious atmosphere, people are looking for alternatives to the traditional approach. The purpose of this chapter is to help business decision makers understand the current status of alternatives to litigation. In the modern civil litigation environment, the knowledgeable decision maker can and must insist on using options that have the potential to reduce some of the present problems of litigation. The chapter addresses how to choose the type of alternative dispute resolution that will be most effective in a particular matter and will discuss the characteristics of an effective mediator, arbitrator, or other neutral party. There will be many exceptions to the general statements of this chapter, however, and readers should always make dispute resolution decisions only with the advice and counsel of their lawyers, whose enthusiastic participation is essential to the success of any alternative to traditional litigation.
What Is Alternative Dispute Resolution?
ADR clears cases through the system more rapidly, freeing judges to focus their expertise and energies on issues that are the most complex, significant or resistant to settlement. The faster cases move through the system due to settlement, the better the judicial system's reputation, because the parties resolve their own matters and reduce delays. ADR is a powerful tool for judges to use in managing their caseloads and ADR usually reduces the total costs for litigants. The most frequently used methods of ADR are mediation, arbitration, and mediation-arbitration. Additional types of ADR include neutral fact finding, mini-trials, and summary jury trials.
Arbitration
Most clients and lawyers have some familiarity with arbitration, which is simply a private trial in which a third party decides the outcome of a case after lawyers present evidence. In many cases, a panel of arbitrators is chosen to hear evidence. The arbitrator usually has expertise in the area of dispute, and is chosen by both sides, much like attorneys choose members of a jury. The parties stipulate in advance whether the decision of the arbitrator will be binding or nonbinding. If binding, the decision is enforceable in court in the same manner as any other contractual obligation. Appeal rights, however, typically are limited unless the party seeking to have the decision overturned can show conflict of interest, fraud, or dishonesty. A simple mistake of law or fact in arbitration typically is not enough to qualify for appeal.
Illinois has adopted the Uniform Arbitration Act, which declares valid and enforceable an agreement to arbitrate. If arbitration methods are not set forth in the contract, the Act regulates how the time and place of the hearing is determined, how the arbitrator will decide the matter, and how the award delivered. It also states that Illinois courts will enforce arbitration awards. Arbitration is most effective in cases involving factual conflicts that can be resolved by experts on a particular subject. For many, this is a distinct advantage to arbitration. Many people feel more comfortable knowing their dispute is settled by an expert who is knowledgeable in a particular field, rather than by a judge who is accustomed to handling a wide variety of diverse cases. There are many cases in which arbitration is appropriate if speed is desired and the parties are willing to risk living with a third party's decision. The securities and construction industries, for example, have utilized arbitration very successfully. There is, however, a strict requirement that arbitrators have a background in and knowledge of the business.
Because of the absence of appeal, the choice of arbitrators is crucial. Experience confirms the wisdom of using arbitrators who are knowledgeable about the subject of the dispute. In one case, complex engineering and cost accounting issues were arbitrated by a panel that included a senior partner in a law firm and a retired agribusiness executive. The panel simply did not have the experience to make a ruling without a lengthy and expensive educational process. This lack of experience increased the costs dramatically and the prevailing party received an award only after two years of hearings and $250,000 in legal fees. Having several million dollars at risk without possibility of appeal is a harrowing experience which most clients and lawyers want to avoid, and it defeats the basic purpose of ADR.
The decision to use arbitration often is determined by a careful assessment of risk and a mutual recognition that each party shares some of the responsibility for the dispute. It works well when the form of ADR is matched properly with the type of dispute. In addition, arbitration usually is conducted without much publicity. This can be a significant advantage if a dispute involves sensitive issues, such as trade secrets or future business plans, or if the parties prefer to remain out of the public eye.
Mediation
Mediation is different from arbitration in that instead of presenting cases in a courtroom, the parties settle the case themselves with the assistance of a neutral mediator. The mediation process is flexible and can be tailored to each individual situation. In a typical commercial dispute mediation, attorneys for the parties present a brief statement of the case before the mediator. This is an excellent opportunity for the parties to listen to each other's positions. The parties usually meet privately with the mediator after the initial case statements. This encourages candor and helps the mediator identify factual discrepancies and substantive issues. Usually, the mediator will shuttle between conference rooms, trying to identify the core issues and obtaining agreement on tangential issues. In this way, a mediator assesses the parties' positions and, after a few hours, can begin to help them propose various settlement options.
Creativity in settlement discussions is most likely when the decision makers participate directly in the process rather than sending proxies. They know and understand the elements of the dispute with an intimacy that only comes from living through the dispute. Lawyers, however, are essential because they can point out the legal risks of tentative settlement proposals and help the litigants focus their energy and creativity on solutions that meet their legal needs.
Mediation is non-binding because the mediator does not have the power to impose a resolution upon the parties. Rather, the role of the mediator or mediation panel is to help the parties reach their own resolution. Parties sometimes stipulate beforehand that any agreement reached will be enforceable as a contract. However, if the parties do not reach agreement between themselves, there is no agreement to enforce and the parties are free to use other methods to resolve their dispute.
Parties who use mediation successfully can learn valuable skills to help them address future conflicts more creatively. Mediated cases usually are settled in less time than litigated cases, achieving considerable cost and time savings. Even people who believe they could win a court case sometimes prefer to mediate rather than incur court costs and lawyers' fees, which could swallow a large part of any award received.
A significant benefit of mediation is that the litigants maintain confidentiality and control over the terms of settlement as well as the settlement process itself. This can be very important if the parties want to avoid a public airing of their disputes. With the exception of some disputes involving public interest, mediation is considered to be private and confidential. Pursuant to the Illinois Not-For-Profit Dispute Resolution Center Act, all communications and documents, including work notes made and used during mediation, are confidential and may not be used in a court of law should there be subsequent litigation.
The kind of person chosen as a mediator will vary, of course, depending on the dispute at hand and the personalities involved. A mediator should be a good listener and should be able to identify the issues that are truly important and fundamental. A good mediator will identify and articulate the fundamental underlying interests of the parties and will be creative in proposing solutions. A mediator also should be someone with sufficient experience to command the respect of the parties and their lawyers.
Mediation gives the parties a sense of involvement in the dispute resolution process, making compliance with the result more likely than in the case of an imposed solution. Even in cases in which the parties cannot reach an agreement, the process of mediation may better define the dispute and help each party understand how a judge or jury might react to the case in court. Agreement can be reached on some issues while the parties agree to seek an advisory or binding judgment on the issues that remain in dispute.
Mediation currently is used to resolve disputes in a wide variety of settings. Whether the dispute is between students, neighbors, family members, businesses, or parties to an accident, whether it involves a claim, governmental agencies, or nations, the mediation process is an effective tool for achieving solutions by mutual agreement rather than by court order.
Mediation-Arbitration
Often referred to as "med-arb," mediation-arbitration is a hybrid combination of mediation and arbitration. Typically, the parties agree in advance that if they are unable to resolve their dispute using mediation, they will seek arbitration and receive an advisory or binding judgment on all or part of the issues that remain in dispute. In these instances, the mediator will switch roles and, as the arbitrator, provide the judgment.
The mediation-arbitration process has advantages over using arbitration or mediation alone. There is greater incentive for parties to cooperate in the mediation stage of the process because they know if they are unable to come to an agreement voluntarily, they may have a solution imposed upon them in the arbitration stage. Also, mediation-arbitration can be less expensive, because having the same person perform both the mediator and the arbitrator functions saves time and money that otherwise would be spent re-educating a new arbitrator or taking a dispute to court.
Neutral Fact-Finding
Neutral fact-finding is an informal process in which an agreed-upon neutral third party is asked to investigate a dispute, usually one involving complex or technical issues. The third party analyzes the facts in the dispute and issues his or her findings in a non-binding report or recommendation. This process can be especially useful in handling allegations of gender or racial discrimination within a company, for a variety of reasons. Such cases often provoke strong emotions and internal division within a company. If both parties are employees of the same company, there may be conflicts of interest that would interfere with a supervisor's or manager's ability to conduct a fair and impartial investigation of an allegation. To avoid the appearance of unfairness, a company may turn to an outside neutral third party in hopes of reaching a settlement all employees will respect.
A variation of neutral fact-finding is Early Neutral Evaluation (ENE). Parties using ENE have their attorneys present the core of the dispute to a neutral evaluator in the presence of the parties. This occurs after the case is filed in court but before discovery of facts is conducted. The neutral evaluator then gives a candid assessment of the strengths and weaknesses of the case. If the parties cannot settle, the neutral evaluator helps narrow the dispute and suggests guidelines for managing discovery.
Mini-Trial
In a mini-trial, each party presents its position in trial-like fashion before a panel that includes selected representatives for both parties (such as managers or executives) and neutral third parties. Every panel has one neutral advisor. Mini-trials help to define the issues and develop a basis for realistic settlement negotiations. The representatives from the two sides provide an overview of their positions and arguments to the panel. As a result, each party becomes more knowledgeable about the other party's position. After hearing each side's presentation, the panel, including the advisor, meets to develop a compromise solution, as in the mediation process. The neutral advisor also may issue an advisory opinion regarding the merits of the case. The advisory opinion is not binding unless the parties agree beforehand that it will be binding and enter into a written settlement agreement. The primary benefit of a mini-trial is that both parties have an opportunity to develop solutions, because each side has representation and access to detailed information.
Summary Jury Trial
Summary jury trial is a court-managed process that takes place after a case has been filed but before it reaches trial. In a summary jury trial, each party presents its arguments to a six-person jury. Abbreviated opening and closing arguments, as well as an overview of arguments, are presented. Counsel are usually given one hour each for their presentations, and are limited to presenting information which would be admissible at trial. No testimony is taken from sworn witnesses, and proceedings generally are not recorded. Because the proceedings are non-binding, rules of evidence and procedure are more flexible than at a normal trial.
The jury renders an advisory, non-binding decision based on the information provided. The verdict in this setting serves to give counsel and their clients insight into their case, and may suggest a fair basis for settlement of the dispute. If the dispute is not resolved by counsel at or immediately following the summary jury trial proceeding, a pretrial conference is held before the court to discuss settlement.
A summary jury trial proceeding typically concludes in less than a day, but will on rare occasion extend beyond a full day. The proceedings may be presided over by a district court judge or by a magistrate assigned by the judge.
ADR Training and Education
Costs
ADR and the Settlement Process