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By Tom McNichol Cover illustration by Kiersten Garrett
In business, lawsuits are a fact of life. And by their nature, lawsuits tend to be time-consuming and stressful, not to mention costly, for both the winning and losing parties.
These factors, all of which are exacerbated during a recession, are leading an increasing number of law firms in New Jersey to offer alternative dispute resolution or ADR, an informal dispute resolution process in which the parties meet with a neutral third party who helps them resolve the disagreement outside the courtroom.
“New Jersey has always been very active with alternative dispute resolution, and lately it’s being expanded even more,” says Stewart Pollock, a former New Jersey state Supreme Court judge who is currently of counsel for Riker, Danzig, Scherer, Hyland & Perretti LLP. “A lot of executives don’t want to be involved in litigation,” he explains. “They want to get back to whatever it is they do best.”
ADR techniques such as mediation go back hundreds of years, but they’ve seen their biggest growth over the past decade. Of the more than 600,000 cases filed annually in New Jersey’s civil courts, about two percent are resolved through trial. Most cases are resolved through some form of alternative dispute resolution. The growth of ADR in New Jersey has been fueled in part by businesses looking to keep legal costs under control.
“I hate to say it, but clients who aren’t that jazzed about ADR change their minds after receiving several months of lawyer bills,” says Eric Inglis, a partner with the Morristown law firm Schenck, Price, Smith & King LLP. “Any real business litigation is going to result in at least a five-figure legal bill right off the bat. Clients talk differently after they get one of those.”
ADR can take a variety of forms, including judicial settlement conferences, fact-finding missions, ombudsmen, and special masters. But by far the most common techniques are arbitration and mediation.
In arbitration, a neutral third-party arbitrator is chosen to hear the evidence and render a decision. Each side may be represented by an attorney or present the evidence themselves without legal formalities. After carefully considering all relevant information, the arbitrator issues a decision. Arbitration decisions are generally binding, but must be reviewed by a court. Appeals to decisions rendered through arbitration are granted only in rare cases.
Mediation takes a less adversarial approach. Unlike an arbitrator, who renders a legally-binding decision, a mediator acts as a facilitator, helping the opposing parties develop a solution themselves. Mediators assist the parties in finding common ground and focusing on the real issues of the dispute.
“In mediation, the fact [that] the parties have a level of control over the settlement is extremely important,” says John Bissell, a former New Jersey state and federal judge who is now a counsel specializing in ADR at Connell Foley LLP in the firm’s Roseland office. “That control may well help in making a resolution more lasting.”
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