Litigation refers to a legal, a judicial contest or a law enforcement preceding that normally takes place in a court in order to determine the outcome of the case on either party. What are the risks that businesses and other organizations encounter when dealing with traditional litigation? The business risks to either lose or gain at the end of the court proceeding. Lose of Time- The process of handling traditional litigation in relation to businesses and organizations normally forms a crucial scenario as it affects the firm’s entire performance either positively or negatively. While undertaking on the traditional litigation, the business/organization spends much of its time in handling the relevant case in legal institutions. Time is a key factor that ensures efficiency and effectiveness in the functioning of any given firm. Delays caused by attendance to the litigation by the firm’s management may lead to lower production in the organizations activities (Carroll, 2005). Confidentiality- The organizations relationship with its customer through the Customer Relation management (CRM) is vital in maintaining trust and confidentiality in its services and products. The traditional litigations ruins the customer relationship with the firm as the level of confidentiality reduces with the increase in the number of litigation cases reported in relation to its functioning. This eventually affects the output realised by the firm as the sales volumes may reduce with time. Publicity- The image of a firm to the outside world forms a fundamental strength that maintains and boosts the functioning of a firm’s activities in its market as it determines its growth. In the case of such occurrences (litigation cases), the image of the organization is badly ruined as the public’s loses confidence in transacting business with them in the long run as they fear such incidences may also occur. Bankrupt- The firm is exposed to the danger of being closed down eventually if the litigations against it declare it bankrupt. In such case, a firm is closed down according to court orders. The closure renders its entire management jobless as the organization is closed indefinitely waiting for a final judgement by the court. â¢ Where might ADR be a more appropriate measure in order for business managers to reduce those risks? Alternative Dispute Resolution (ADR) is common way that is used in resolving multitude cases involving organizations as it has proven to be the most suitable mean of handling economic cases in business. All the staff related claims, client’s claims and contractual disputes are solved using ADR method in most companies. In the process of minimizing the above risks, the company engages in use of in-formal methods like ADR forms that comprises of: Negotiation, mediation and Arbitration (Carroll, 2005). Negotiation- This is a method where the involved parties come up together and agree to solve their dispute without using the legal organs (courts). The method is normally preferred as it as it does not recommend the presence of a third party person (neutral party). Mediation- The process involves the coming together of the involved parties to an agreement which is normally facilitated by a mediator who is a third party. He/she identifies the possible solutions to the bone of contention of the firm’s involved. The mediator has to remain neutral on either side in the final decision. Arbitration- The method is commonly used in cases where there is a written contact that binds their functioning. It may involve litigations that calls for favours on either side of the companies involved in the drafting of the contract under litigation. An independent arbitrator is normally selected to listen on both side and come up with a final decision that is normally not subject to appeal by any party. The main aim of using the above forms is to reduce on the costs incurred in undertaking on a trial in a legal institution. The process saves relatively high amounts on using such means compared to high expenses incurred while pursuing litigation cases in a court. The cases are easily resolved without undergoing the trial preparation expenses. The parties involved are normally left with control over their affairs as they come up with an ideal settlement for the case. By using such means, the parties are able to maintain their privacy, the customer confidentiality and the public image (Mullenix, 2008). â¢ Compare the traditional litigation system (such as suit, answer, discovery, trial, or jury) with the non-traditional forms of ADR, (such as mediation, arbitration, negotiation, minitrial, and so on). In the formal system of coming up with a solution where the legal system, the court is regarded as the final decision maker. Cases are handled basing on the written laws of the country, in case of a contract written among the parties, the court does not consider it legal compared to the informal system (Non-tradition) where the agreement is useful in coming up with a decision. The trial procedure in the litigation system normally takes a relatively longer time for the court to come up with a final ruling on the case. This is different to non-tradition where a case takes the shortest time possible to solve as the procedures involved are normally limited to few individuals i.e. the mediator and the involved parties (Weinst, 1995). The litigation system has the authority to sermon the attorney to carry out more investigation regarding the case which is normally costly to the involved person. The additional requirements during the pre-trial process increase the attorney’s fee which is contrasted with the ADR where either free or cheap mediation services are offered. The defendants are able to access the justice they need without incurring much expenditure through dispute resolution methods. The litigation system has a room that provides for a right to appeal to any case if the defendant feels that justice has not been guaranteed. This is not similar in non tradition where the decision is in the hand of the arbitrator unless there is a special provision in the ADR regulations (Gonen, 2003). The nature of the dispute- The nature of the dispute plays a key role in identifying the suitable way to abide by while solving a case by any given party. Cases that require crucial decision and have a greater interest by both parties normally require the final decision from a judge. Such cases are interpreted in terms of laws that guide similar disputes in the functioning of organizations in an economy. The merits of the case- The extent to which the intensity of dispute case matters a lot as the parties involved determines whether the case is worth being solved by the ADR or the litigation system. The merits of the case form the basis of considering its best way of solving it. Proportionality of the costs of mediation- The cost to be incurred in the process of solving the dispute forms the basis of making a decision on which method to take on. The value being claimed is normally measured in relation to the cost to be incurred in the whole process. Duration is another key factor that determines the appropriate form as most companies prefers ways of solving disputes with immediate effect as this does not affect their functioning. Alternative Dispute Resolution Act of 1998
Alternative dispute resolution, which encompasses a range of processes, has become both widely available and extensively used. In fact, in many states, most litigants must make a mandatory ADR stop along the road to the courtroom. In recent years, ADR, sometimes called “appropriate dispute resolution,” has become a standard feature of essentially every lawyer’s work. Building on earlier experimentation with ADR in federal courts, the federal Alternative Dispute Resolution Act of 1998 requires federal district courts to “devise and implement” procedures for using ADR in all civil cases. The act also requires all civil litigants to consider using an ADR process. (See the text of the act in the box on page 19.) State courts have also experimented with ADR for several decades, and all 50 states have implemented court rules providing for some use of ADR processes. Many of these jurisdictions go beyond merely offering the opportunity to use ADR to resolve conflicts, and, in some cases, actually require litigants to try mediation or some other form of ADR. Contemporary lawyers also encounter mandatory ADR requirements outside the context of court-annexed ADR. Commercial contracts, employment agreements, and real estate contracts commonly require the contracting parties to settle disputes through ADR rather than through formal litigation. Given the widespread use of ADR, law students entering the profession must have basic knowledge about ADR processes to provide competent representation under professional responsibility rules. But because information about ADR is not always included in the required law school curriculum, as a student, you may need to seek out opportunities to educate yourself. What is ADR? ADR processes have their roots in the dispute resolution systems of non-Western cultures, which often emphasize community healing rather than individual rights. In the United States, the field of labor law has employed ADR concepts for decades to foster workable employment relationships. And in the 1960s, some communities experimented with ADR in neighborhood justice centers to help solve problems within the local community. The recent growth of ADR has been prompted primarily by the shortcomings of the adversarial litigation system. In a 1984 address to the ABA, then–Supreme Court Chief Justice Warren Burger acknowledged that while trials are the only way to resolve some disputes, overall, our adversarial legal system is too costly, painful, destructive, and inefficient. Indeed, ADR processes are designed to reduce both cost and trauma to the parties, and to ease the overwhelming dockets most courts have faced in the past several decades. Aside from the practical concerns of cost and crowded dockets, many ADR proponents envision a transformative approach to resolving disputes. In their view, traditional litigation focuses too much on winning and not enough on problem solving. Further, courts can impose only certain prescribed solutions, mostly involving money. So when a court or jury decides a dispute, the outcome may or may not resolve the underlying issues. In contrast, ADR processes like mediation focus on exploring the parties’ “interests” and allow the parties themselves to craft solutions that advance those interests. Thus, ADR fosters flexible, individually tailored results that achieve joint gain for the parties, rather than a win-lose outcome. ADR advocates also argue that by providing a forum in which parties can tell their stories, ADR processes allow the parties to be “heard” during the dispute resolution process. Further, these processes emphasize cooperation and openness rather than conflict and secrecy, allowing the parties more control over both the process and the outcome. As a result, they satisfy important psychological needs and achieve better-quality justice. Basic ADR processes Early discussions of ADR focused on the idea of the “multi-door courthouse,” where disputing parties would choose from a number of options, including litigation, for resolving their differences. Each dispute would be evaluated early on to determine which dispute resolution method was most appropriate. Relevant factors might include the relationship between the parties, the relative power of the parties, whether the dispute impacted the public or only private parties, and the appropriateness of monetary solutions versus other solutions. ADR offers basically three types of “doors” into the courthouse: facilitative, evaluative, and adjudicative. Within these categories, a process may be either binding or nonbinding, depending on the parties’ agreement or the particular rule or contract that brought them to the table. In a facilitative process, a neutral third party facilitates communication between the parties to help them arrive at a solution to their problem. Neutrals may not impose their own judgments on the parties or offer any substantive opinions, but instead work to bring the parties to consensus. The main facilitative process offered in ADR practice is mediation. To some extent, mediation is an extension of the negotiation process that lawyers commonly employ to settle cases but with a designated third-party neutral to facilitate. In facilitative mediation, mediators help the parties identify areas of concern, understand each other’s perspective, and create mutually acceptable solutions. In an evaluative process, a third-party neutral evaluates the case and offers a candid assessment of its strengths and weaknesses. This evaluation may occur within the context of evaluative mediation, where it will theoretically help the parties arrive at an agreement. Or, in the context of litigation, a third-party neutral’s evaluation can help narrow the dispute and shape the discovery process, possibly encouraging settlement. In this context, the process is called early neutral evaluation or neutral fact finding. Adjudicative processes result in evidence-based decisions made by third-party neutrals outside of court. While adjudicative ADR processes resemble in-court litigation, they can be quicker and cheaper than formal litigation. Also, to the extent they encourage settlement, they offer parties more control over the outcome than formal litigation. In arbitration, probably the best-known adjudicative ADR process, the parties present evidence and arguments to an impartial third party who makes a decision, much like a judge. Usually, the parties have voluntarily agreed to settle their dispute through arbitration and have agreed to be bound by the arbitrator’s decision. In a summary jury trial, an advisory judge presides over an advisory jury—usually consisting of six jurors—and issues a nonbinding opinion on liability, damages, or both. Similarly, in a mini-trial, counsel for the parties present an abbreviated “best case” to a panel consisting of representatives for each party, neutral third parties, or both, to define the issues and establish a basis for settlement negotiations. The neutral third party may also issue an advisory opinion on the merits of the case. In a moderated settlement conference, a neutral panel of three lawyers, usually legal experts on the particular issues involved, offers a nonbinding opinion about the case. The opinion shapes the issues and, in theory, encourages the parties to reach a settlement. Sometimes parties will elect a hybrid process that combines two or more of these options. For instance, in mediation-arbitration, the parties agree to mediate their dispute initially then to arbitrate any unresolved issues, using the same neutral for both. ADR: not only for civil litigation ADR processes are not limited to civil litigation. In the criminal arena, some jurisdictions have experimented with the idea of “restorative justice.” Restorative justice programs attempt to address the harm criminal behavior causes by involving both offenders and victims in the response. For instance, parties might participate in victim-offender mediation, during which the offender hears the victim’s story and has the opportunity to better understand the impact of the offense. A sentence might be imposed through a sentencing circle, during which members of a community discuss the impact of the crime, raise underlying issues, and promote healing. Or offenders might be ordered to make restitution particularly suited to their crimes, allowing them to remedy the damage caused by their actions. Administrative agency lawyers may engage in ADR through a negotiated rulemaking process. In negotiated rulemaking, government agencies engage in a collaborative process with a variety of stakeholders to formulate new agency rules. Congress authorized this process to encourage parties affected by agency rules to meet, communicate, and cooperate during the process. Critics of the existing adversarial rulemaking process argue that it encourages antagonism and litigation. In contrast—at least in theory—negotiated rulemaking results in more acceptable, substantively superior rules that the affected parties are less likely to resist. Some jurisdictions have even implemented appellate mediation programs, essentially taking the position that no case is over until it’s over. At first glance, it may seem unrealistic to expect a party who won in the district court to agree to mediation on appeal. But several factors encourage even prevailing parties to consider appellate mediation. About 30 percent of cases are overturned on appeal, so every appeal does carry some risk. Further, appeals are expensive, take time, and exacerbate what may already be significant litigation fatigue. Finally, appellate mediation offers the parties, once again, the opportunity to create a better solution than a court can provide. Delays in coming up with decision is another vital factor that at times makes the use of ADR more appropriate as it takes place with immediate effect compared to litigation system where a case may even take years for them to be solved (Weinst, 1995) . â¢ Include your recommended legal course of action for Quick Takes. Provide your rationale to support your decision. The choice of legal course of action depends much on many factors that need to be clearly highlighted before coming up with a proper decision on which to per-take on. Both the litigation system and ADR plays a key role in dispute solving and must both be consider in relation to the urgency and outcome of the case. The affirmative action should be based on the outcome of the claims both in the short and long run in relation to the parties involved.
Litigation is the traditional process, whereby both parties use the court system and procedures to resolve their dispute. The attorney will provide legal advice and represent the positions of the client in negotiations and court hearings. The parties communicate primarily through their attorneys, rather tha n directly with one another, regarding their positions, proposals and counterproposals on the issues in their family law matter. It may be necessary to have the court set the temporary terms and conditions regarding children or finances the parties are to follow during the pendency of the divorce action at a temporary hearing. This process may involve the use of formal legal procedures, known as "discovery," to secure financial and other relevant information with regard to your savings and checking accounts, stocks, bonds, insurance policies, as well as, the value of any pension, profit sharing or other retirement funds or any other assets or debts. Discovery may include the use of depositions (a formal taking of testimony before a court reporter) and the subpoenaing of monthly statements or other documents and material believed to be relevant to the issues. Further, each party may hire experts to support their positions. These experts may include psychologists, real estate appraisers, personal property appraisers, business valuation specialists, accountants, and others. If the parties dispute the legal custody or physical placement schedule of their children, the court will appoint a third attorney, called a Guardian ad Litem, to participate in the case as an advocate for the "best interests" of the children. Additionally in certain counties, an Evaluator will be appointed to deal with the social history of both parents and children and/or a home study will be conducted in addition to the appointment of a GAL. Ultimately, if agreements are not reached, parties, GAL, evaluator, and other witnesses testify before a judge who makes a ruling on each disputed issue. Most litigation divorces are eventually settled. However, even if settled, there may be substantial time, money and emotion spent in the conflict prior to the settlement, as GALs, evaluators, and home studies are additional hourly costs. The traditional litigation approach has certain deadlines for accomplishing the above mentioned tasks, but the court's schedules sometimes delays resolution for more than one year from filing. Often the final outcome is often unexpected as the courts are limited to how they can resolve issues. The outcome may not meet either party's needs. As a result, both parties often find that they are dissatisfied with the outcome and are likely to return to court after the divorce to change the outcome or resolve disputes. For some people, the traditional litigation approach is preferable because they do not believe they can work directly with their spouse to resolve the issues, there is a feeling of security involved with having one’s day in court and using the court methods and procedures to resolve the dispute. Business Risks of Traditional Litigation
Impact of Litigation on a Business
* Lawyers' fees alone can be substantial for a business engaged in an ongoing lawsuit, but businesses must also worry about the time spent preparing for a suit, the emotional toll of long-term litigation and the eventual risk to the business of a substantial monetary loss. In some cases, litigation may be necessary and a business may be happy to have defended its position and perhaps recovered funds to which it was entitled. But even being on the right side of a lawsuit does not guarantee victory, and sometimes a win can be quite expensive. Liability to Employees
* One litigation risk for most businesses comes from its own employees. Employees can sue their employers for a wide array of issues including discrimination, harassment and unpaid wages. Frequently this litigation risk comes into play once an employee has been terminated or otherwise no longer works for the business. A claim that an employee was fired improperly * can expose a business to citations and financial liability, as well as a bad reputation and the ongoing distraction of a legal case.
* Business contracts are another frequent source of litigation. Businesses may dispute the nature of a particular contract, or may be sued for deciding not to follow through with a contractual obligation. Any time a large contract is signed, a business should have it carefully reviewed by an attorney and should be prepared for possible issues relating to the agreement. For example, after a contract for the supply of microchips is signed, a company may be sued for not providing microchips of sufficient quality or with the expected components. Intellectual Property
* As technology has advanced and more business is transacted on the Internet, intellectual property has become a more frequent source of litigation. If a business invents a product that another business feels is too similar to one of its own products, a patent lawsuit may be filed. Such lawsuits are common between drug companies, including between manufacturers of name-brand and generic drugs. Additionally, Internet publishers or music sites may face lawsuits from publishers who believe their content is being used without permission.
Disadvantages Of Traditional Litigation System
* Under a traditional litigation system, the discovery process is frequently abused by one or both of the parties. A recalcitrant party can file numerous objections to discovery requests the resolution of which ultimately requires intervention by the court. In addition, numerous motions can be made by either party prior to trial. These are some of the reasons why the litigation process often can be protracted, costly and vexatious. Alternatives To Traditional Litigation System
* Given the expense and time-consuming nature of litigation, many parties elect to settle disputes by utilizing Alternative Dispute Resolution techniques such as arbitration and mediation. Arbitration can provide parties to a dispute with a more streamlined and expeditious resolution of their controversy. Although Arbitrators must remain neutral, they are not bound by the formal rules of evidence and rarely allow the filing of endless procedural motions so common in a traditional litigation system. Mediation is a process where the mediator, by using his conflict-resolution skills, actively encourages the parties to reach a compromise or mutually satisfactory settlement without recourse to the court system. Role of Juries
* A plaintiff must prove his case by a preponderance of the evidence. During a trial, the jury functions as the finder of fact. The jury assesses the credibility of witnesses and makes a determination of whether the plaintiff has met his burden of proof. Alternative Dispute Resolution Services
If you are involved in a conflict, you may initially try to solve the problem directly with the other party. If you are unsuccessful, you may hire an attorney and take legal action. However, there are alternatives to court action, which may be less costly and time consuming and allow greater control over the outcome. Alternative Dispute Resolution (ADR) offers a variety of methods to resolve problems through settlement. In ADR, the focus is on achieving a mutually satisfactory solution. Why request ADR services from the Commission?
ADR has several advantages:
* Impartiality: CADRS staff serve as an independent, neutral third party in the process * Convenience: ADR can be used whenever a dispute arises
* Confidentiality: Third party neutrals are bound by confidentiality requirements * Efficiency: ADR typically is less costly and time consuming than traditional means of resolving a conflict * Choice: The parties design and retain control over the process and the outcome * Cost: There are no fees for CADRS services or facilities when ADR activities take place at FMC offices When using the Commission's ADR services, parties may resolve their disputes in a quicker, less costly manner. These processes are less formal, less adversarial, and can lead to creative, practical solutions. Also, parties control the outcome and avoid the unpredictability of an adjudicative decision. Parties are generally more satisfied with a resolution through mediation and other forms of assisted negotiation, and there is little to lose. If ADR does not result in a resolution, the parties still may litigate their dispute. All communication with CADRS staff during ADR processes is confidential, unless otherwise agreed. The ADR processes are not part of the Commission’s decisional processes. CADRS does not conduct investigations and confidential information disclosed during ADR will not be provided to other Commission departments for enforcement or other purposes. The goal of CADRS is to assist parties to resolve disputes in a mutually satisfactory fashion.
Types of ADR Services Offered
Ombudsmans Assistance: The most frequent ADR service requested is ombuds assistance. It is often the fastest way to solve a problem. CADRS professional staff help resolve disputes from a neutral, independent viewpoint. We will review the information that you provide, gather additional information, and may recommend solutions or discuss with the parties what other solutions may be useful to resolve the problem without further action. The parties then will determine whether to implement those resolutions. The process is participant-driven. CADRS does not force any party to take action. Ombuds assistance can be useful for resolving cargo shipment issues, household goods issues, or cruise passenger issues. Mediation: Complex cases and those seeking a larger resolution and more in-depth discussion of issues and problems may be suited for meditation. Mediation is a process in which an impartial neutral (the mediator) assists disputants in finding a mutually acceptable solution to their conflict. It is both voluntary and confidential. Mediation services may be provided before or after commencement of litigation or formal proceedings at the Commission. Mediation has a number of advantages over litigation. Mediation typically is less costly and less time consuming. The parties can eliminate the uncertainty of an adjudicative decision and control the outcome of the litigation by reaching an outcome agreed to by all parties. Arbitration: CADRS also offers arbitration services for those that wish a more traditional legal format without going to court. In an arbitration, the parties present their positions at a hearing before an arbitrator, whose role is similar to a judge in a court of law. The arbitration hearing is held in private. After presentation of the evidence and argument of the parties, the arbitrator renders a decision. The decision may be binding (meaning that the parties cannot later sue in court) or nonbinding, depending on the prior agreement of the parties.
Advantages and Disadvantages of Alternative Dispute Resolution There are many advantages, and some disadvantages, to using Alternative Dispute Resolution. Advantages include the fact that it usually takes far less time to reach a final resolution than if the matter were to go to trial. Usually (but not always), it costs significantly less money, as well. Furthermore, in the case of arbitration the parties have far more flexibility in choosing what rules will be applied to their dispute (they can choose to apply relevant industry standards, domestic law, the law of a foreign country, a unique set of rules used by the The parties can also have their dispute arbitrated or mediated by a person who is an expert in the relevant field. In an ordinary trial involving complicated and technical issues that are not understood by many people outside a relevant industry, a great deal of time has to be spent educating the judge and jury, just so they can make an informed decision. This large time investment often translates into a great deal of money being spent. Both sides might have to call expert witnesses, who may charge very large fees for their time. If an arbitrator has a background in the relevant field, however, far less time needs to be spent on this, and the parties can get to the actual issues of the case much sooner. There are some disadvantages, as well. Generally, arbitrators can only resolve disputes that involve money. They cannot issue orders requiring one party to do something, or refrain from doing something (also known as injunctions). They cannot change title to property, either. Also, some of the safeguards designed to protect parties in court may not be present in ADR. These might include the liberal discovery rules used in U.S. courts, which make it relatively easy to get evidence from the other party in a lawsuit. Also, there is very limited opportunity for judicial review of an arbitrator's decision. While a large arbitration service could, if it so chose, have some kind of process for internal appeals, the decision is usually final and binding, and can only be reviewed by a court in limited cases. This generally happens when the original arbitration agreement is found to be invalid. Because both parties must voluntarily agree to arbitration, if the consent of one party is obtained by fraud or force, it will not be enforced. Also, if the decision of the arbitrator is patently unfair, it will not be enforced. This is a difficult standard to meet. The fact that the arbitrator made a decision that the court would not have made is not, by itself, a basis to overturn the decision. A court might also overturn an arbitrator's decision if it decided issues that were not within the scope of the arbitration agreement. It is important to consider these advantages and disadvantages before agreeing to arbitration, or any other kind of alternative dispute resolution. Chances are, you have already agreed to arbitration in many situations, without even knowing it. Many lease agreements and employment contracts have mandatory arbitration provisions, and they will usually be enforced, as long as certain standards are met (generally, they must not deprive a person of a constitutional right, and they should be reciprocal).
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