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What is DR?
DR is an alternative to the lengthy and costly pre-trial discovery required in the court system and to the uncertainty and frustration of trial. Sometimes referred to as “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 DR process to the circumstances of the case as well as to the needs and preferences of the disputing parties. The goals of DR are to increase efficiency of process with more productive, non-adversarial methods to achieve case resolution.
In Massachusetts, the impact of DR began to be felt in the legal and insurance communities in the late 1980’s. DR services are now available to parties from a wide variety of sources, including private DR providers such as Massachusetts Dispute Resolution Services (MDRS) as well as some court-connected programs. Whereas our firm 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 widely from planned early dispute resolution to more formal, binding arbitration which resembles a trial. Unfortunately, much of the well known terminology of DR, such as mediation and arbitration, are often used interchangeably, even by attorneys and claims personnel, who may not be fully familiar with DR modalities. For your reference, following is 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 court system. In most arbitrations however, the rules of evidence are relaxed and there is limited pre-hearing discovery. Arbitration results in a binding and final written award. 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 95% 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 their opinion regarding the likely outcome if the case were adjudicated. The opinion of the evaluator is not binding on the parties. Its value is to encourage subsequent settlement, and the neutral is generally a well-experienced attorney or retired judge whose opinion is respected by those on both sides of the controversy.
CONCILIATION. In some court counties, the district, land, 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 in preparing the case for trial. These sessions resemble mediations but are generally much shorter, usually between 30-45 minutes. The conciliation is often scheduled after the discovery period for depositions, etc., is complete and shortly before the trial is scheduled to occur.
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 also agree in advance whether the mediator will become their arbitrator if the dispute remains unresolved after mediation. Although the use of the same neutral is more efficient, parties often want a different impartial neutral to serve as arbitrator, and instead desire a person who was not privy to offers or demands made, or other confidential discussions which would occur 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 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 increasingly chosen by attorneys, individuals, businesses, and insurance claims handlers. In advance of the hearing, the parties agree in writing to minimum and maximum award amounts. 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 determining the award. The decision of the arbitrator is binding but reverts to no less than, nor more than, the minimum and maximum limits previously set by the parties. This process is often used when the parties have made some progress in their negotiations and wish to retain this progress, and who then chose to have an impartial arbitrator completely resolve the differences remaining within their defined high-low limits.
OTHER DR PROCESSES. The flexibility of DR processes has led to the development of numerous hybrids, combining many of the processes described above and others. Some examples are fact-finding hearings, master’s hearings, settlement conferences, and “baseball” style arbitrations. The details of any such hybrid agreement should be carefully considered by the parties before entering into a written agreement.
We invite you to learn more about these and other DR processes by way of our (free) DR Users Guide, an internally-designed resource utilized by many of our clients to better understand and weigh modality options.