There are few things managers dread more than litigation. Even petty cases have a way of damaging relationships, tarnishing reputations, and eating up enormous sums of money, time, and talent. Most managers know that lawsuits are steadily increasing. Smart managers know that they are also increasingly avoidable. There are now many alternatives to litigation that can nip lawsuits in the bud, resolve long-standing disputes, and even produce win-win solutions to old and bitter fights that would otherwise only leave both sides damaged.
U.S. corporations pay more than $20 billion a year to litigation attorneysâan alarming fact that distracts our attention from other and often more important business costs of litigating our disputes. Lawyersâ fees and other direct costs get the most attention because theyâre easy to measure. But the indirect business costs of litigation, the cost of diverting key personnel from productive activities, for example, or the cost of destroying a profitable relationship with a former business ally, are perhaps equally important. From the companyâs perspective, they may be more important.
The high cost of resolving disputes has several causes, but the most important is the mind-set established and nurtured by the adversary system. The essence of this system is that lawyers for opposing parties have the responsibility to present every piece of evidence and make every legal argument that might possibly benefit their clients. Pretrial discovery and other litigation procedures are designed to leave no stone unturned in the search for relevant evidence. By training, temperament, professional duty, and frequently by client expectation, attorneys tend to exploit these procedures to the fullest and to persevere as long as any hope remains. In fact, each lawyer has an obligation to be as zealous an advocate as possible, evenâsometimes especiallyâto the detriment of discovering the truth and of resolving conflicts to the satisfaction of both parties.
The idea behind the adversary system is that the truth will emerge when opposing sides present their cases as aggressively as possible. Even though this ideal is not always realized, the principle is probably sound. The problem with the adversary method in civil cases is not theoretical but practical. First, it is not the most effective way to resolve some kinds of disputes. Second, it can be made more effective for most kinds of disputes by borrowing certain of the nonadversarial features of other forms of dispute resolution. Third, from both the societal and the individual perspective, we may no longer be able to afford it in its undiluted form.
Alternatives to traditional litigation have been around for many years, but Alternative Dispute Resolution (ADR) as a formal technique and an accepted business practice emerged in the 1970s.
The ADR Mind-Set
Judge Dorothy Nelson of the U.S. Court of Appeals in San Francisco traveled to Israel several years ago to study the laws of divorce as administered by different religious groups. In Jerusalem she attended a court hearing conducted by three Greek Orthodox priests in long black robes and long white beards. Court was conducted in a Quonset hut with paint peeling from the walls, furnished only with a plain wooden table and chairs. A wife was suing her husband for divorce. As her lawyer rose to his feet holding a handful of papers from which to plead her case, he was waved gently aside by the presiding priest, who turned to the wife and asked her to tell her own story.
She explained that for five years of marriage she had shared a house with her mother-in-law. The older woman, too old to climb stairs, occupied the ground floor, and the wife lived upstairs. Since there was only one entrance to the house, she had to enter through her mother-in-lawâs living quarters to get to her own, and her mother-in-law continually questioned her about her activities and offered unsolicited advice. She loved her husband, she said, but the situation was intolerable.
The wife sat down and the presiding priest, waving aside the husbandâs lawyer as he had the wifeâs, asked to hear the husbandâs side of the case. The husband said that he loved his wife but also his mother. As a Christian he felt responsibility for both, but he was a poor man and could not afford two households.
The three priests retired by stepping into the dusty street outside and returned five minutes later with their judgment. The husband was to purchase a ladder. When the wife wanted to avoid her mother-in-law, she could climb the ladder directly to her second-floor window.
Judge Nelson says that as she watched husband and wife leave the Quonset hut hand in hand, she could only wonder what might have happened to this couple under an adversary system, with its orders to show cause, its lengthy hearings, and its high attorney fees.
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