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An HR Glossary for HR Terms

Glossary of Human Resources Management and Employee Benefit Terms

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Alternative Dispute Resolution (ADR)

What Is Alternative Dispute Resolution (ADR)?

Alternative dispute resolution (ADR) is a means of settling a dispute, conflict, or claim without courtroom litigation. Instead, the parties involved agree to use an ADR process such as mediation or arbitration. 

Alternative dispute resolution has gained broad acceptance by the public and the legal profession. In the United States, anyone who doesn’t want to go to court over a civil (non-criminal) matter is free to choose ADR. When a lawsuit is pending, in some cases courts encourage or require the litigants to use ADR to help settle disputes more amicably and reduce the court system’s heavy caseload.

Which Disputes Can Be Settled by Alternative Dispute Resolution?

ADR processes are commonly used in a wide variety of civil disputes between individuals and/or organizations. These disputes may involve such topics as: 

  • Family and divorce

  • Housing

  • Neighborhood

  • Environment

  • Employment

  • Business

  • Consumer issues

  • Personal injury

Some countries also use alternative dispute resolution in certain criminal matters, such as juvenile crime. 

What Are the Benefits of Alternative Dispute Resolution?

Depending on the particulars of the dispute and the type of alternative dispute resolution used, ADR may offer a number of potential benefits compared to lawsuits: 

  • Less costly 

  • Less time-consuming and fewer delays

  • Less formal and more flexible than court proceedings

  • Less need for an attorney in some simple disputes

  • Less adversarial, helping to preserve relationships between opposing parties

  • Greater privacy than court records allow

  • Greater control over the outcome and the ability to create “win-win” solutions that satisfy both parties

Which Types of Alternative Dispute Resolution Are Most Common?

There are several types of alternative dispute resolution, and different U.S. states have different laws about which types they permit. The rules also vary in different countries around the world. Here are five of the most common ADR types:

Negotiation

Negotiation is perhaps the simplest and most straightforward type of alternative dispute resolution. The disputing parties meet with one another to identify concerns, explore options, and seek a solution they can agree on. No one else acts as a neutral third party to help them negotiate.

Mediation

In mediation, the parties still work to settle the dispute themselves, but an impartial person called a mediator hears both parties out, helps them discuss the dispute, and then helps them decide what to do. The mediator does not control the outcome. Mediation is often recommended when there is a relationship that both parties want to preserve, such as between family members or business partners.

Arbitration

Arbitration is used when disputing parties agree to have someone else decide the outcome. A neutral person called an arbitrator listens to arguments from both sides, considers evidence, and then issues their decision. There are two kinds of arbitration. In binding arbitration, the arbitrator’s decision is final. In nonbinding arbitration, the parties can pursue a court trial if they do not agree with the arbitrator’s decision.

Neutral Evaluation

Think of neutral evaluation as seeking an expert’s opinion. In this form of ADR, each party makes their case to a neutral evaluator who is usually an authority on the topic of the dispute. The evaluator then provides an opinion about the merits of the arguments and evidence and different ways the dispute might be resolved. The evaluator’s opinion isn’t binding. The opinion is used by the parties to help them negotiate a satisfactory agreement.

Settlement Conferences

In settlement conferences, the disagreeing parties and their lawyers meet with an impartial person who is either a judge or a settlement officer to discuss settlement options. The judge or settlement officer doesn’t decide the outcome but helps both parties evaluate the case and negotiate a settlement. A settlement conference may either be voluntarily chosen by disagreeing parties who are not in litigation, or it may sometimes be mandated by a court before a trial begins.

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