What is DR?
DR is an alternative to the lengthy and costly pretrial discovery required in the court system and to the uncertainty and frustration of trial in the court system. Many commentators have suggested that DR should stand for “appropriate dispute resolution”. The principal advantage of DR is its inherent flexibility, giving the parties, their attorneys and/or claims handlers the ability to tailor the dispute resolution process to the circumstances of the case and the needs and preferences of the disputing parties.
In Massachusetts, the impact of DR began to be felt in the legal and insurance community in the late 1980’s. DR services are now available to parties from a wide variety of sources, including private ADR providers such as Massachusetts Dispute Resolution Services (MDRS) as well as some court connected programs. Whereas our firm (MDRS) is available immediately to parties when a dispute arises, court connected programs are generally available only after suit is initiated and certain pretrial discovery has been completed.
The spectrum of DR processes range from informal, non binding mediation to more formal, binding arbitration which resembles a trial and results in a binding and final written award by an impartial arbitrator. Unfortunately, much of the well known terminology of DR, such as mediation and arbitration, are often used interchangeably, even by attorneys and claims representatives, who may not be fully familiar with DR procedures, so we include below a glossary of terms used by DR practitioners.
ARBITRATION. In arbitration, a binding decision is made on a disputed matter by a neutral arbitrator or panel of arbitrators after a hearing is conducted which involves the presentation of evidence and arguments by the disputants. This process most closely resembles a trial in the courts. In most arbitrations however, the rules of evidence are relaxed and there is limited prehearing discovery. The award of the arbitrator, except in limited rare circumstances, is final and not subject to appeal.
MEDIATION. Mediation is a voluntary process in which a neutral mediator assists the parties in resolving their own dispute. The mediator has no authority to impose a settlement and the parties are under no obligation to reach agreement. The mediator may, but need not, suggest settlement terms. Mediation proceedings are private and confidential and the substance of the discussions in mediation is generally considered privileged. Approximately 90% of cases mediated with MDRS reach settlement.
CASE EVALUATION. Case evaluation is a process where the parties agree to present a summary of their case to a neutral evaluator for his or her opinion regarding the likely outcome if the case were adjudicated. The opinion of the evaluator is not binding on the parties. It’s value is to encourage subsequent settlement, and the neutral is generally a well experienced attorney or retired judge whose opinion is respected by both sides of the controversy.
CONCILIATION. In several court counties, both district courts and superior courts schedule cases for conciliation conferences before retired judges or members of the bar usually acting on a volunteer basis, to assist the parties in settling their case or to ready the case for trial. These sessions resemble mediations but are generally much shorter, usually between 30 to 45 minutes. The conciliation is often scheduled after the discovery period for depositions etc., is complete and shortly before trial is scheduled.
MED/ARB. Med/arb is a combination of mediation and arbitration, in which the parties agree in advance that they will mediate their case, but if the dispute is not resolved through mediation, they will proceed with a binding arbitration. The parties will agree in advance whether the mediator will serve also as the arbitrator if the dispute is not resolved through mediation. Although the use of the same neutral is more efficient, parties often want a different impartial neutral to serve as arbitrator, a person who was not privy to offers or demands made or other confidential discussions taking place at the mediation.
MINI-TRIAL or SUMMARY JURY TRIAL. Both of these processes can be either binding or non binding, depending upon the agreement of the parties. Both processes involve a summarized presentation of the evidence in a dispute to a panel composed of either experienced neutrals (mini-trial) or a lay jury (summary jury trial). Generally the evidence is presented in summary form by counsel for each party as it would be expected should the case go to trial, and arguments are made by both sides based on this evidence. If the process chosen is non binding, it resembles in effect a case evaluation, but with a panel of neutrals or jury being involved. Mini-trials and summary jury trials are generally only used for cases in which a lengthy trial is anticipated, and where the liability and/or damages issues are in dispute. More often than not, these processes are non binding and only informational, to assist in valuation of the claim or in designing a trial strategy.
HIGH-LOW ARBITRATION. This process is designed to minimize the risks of both parties in proceeding to binding arbitration, and is being used more and more by attorneys, individuals, businesses and insurance claims handlers. In advance of the hearing, the parties agree in writing to a minimum and maximum arbitration award. The decision of the arbitrator is binding but can be no less than nor more than the minimum and maximum limits. Generally the arbitrator is not made aware of the high and low limits chosen by the parties, so as not to be influenced by these limits in making his award. This process is used often when the parties have made some progress in their negotiations and wish not to abandon the progress made, but rather chose to have an impartial arbitrator resolve the differences remaining within set limits.
OTHER DR PROCESSES. The flexibility of DR processes has led to the development of numerous hybrids, combining many of the processes described above, including, for example, fact finding hearings, master’s hearings, settlement conferences, and “baseball” style arbitrations. The details of any such hybrid agreement should be carefully studied by the parties before entering into a written agreement.