Making Peace

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Forms of ADR vary widely, from simple negotiated settlements to complex binding arbitrations that fall just short of an actual trial. Disputing parties may agree to whatever means of settling disputes they prefer, but here are the most common forms:

Negotiation: In the simplest form of ADR, the two parties (or their lawyers) talk out their differences and agree on a settlement. Skilled negotiators can forge creative, win-win solutions.

Mediation: When two parties want to work out their own solution but need a little help, they can hire a neutral third party trained in listening, asking questions, and helping people decide what to do. The goal is to produce a written agreement that both parties sign to settle the dispute. Usually the parties share the cost.

Arbitration: An arbitrator hears a case much like a judge does, then issues a decision. Unlike the court system, though, the parties have control over who will hear their case. Often it's an expert in the appropriate field who is deemed neutral by both parties. In nonbinding arbitration, the arbitrator issues a recommendation that the parties may accept or reject. In binding arbitration, the arbitrator's decision is legally binding and very difficult to appeal.

Mini-trial: Less common, the mini-trial gives both parties a sense of how their case would play out in court. For instance, if two business owners have a contract dispute, they might agree to watch while their lawyers argue the case as they would in court, with a limited number of key witnesses. The process takes a few hours. The experience has been that the CEOs then sit down and settle the case," Corbett says. "After hearing the strengths and weaknesses of their case, they're not as ensconced in their own positions."

Summary jury trial: In this option, the parties bring in a jury of citizens to hear a shortened trial and make a nonbinding decision. This gives the parties a sense of how a real jury would decide the case so they're better prepared to settle it. In both the summary jury trial and the mini-trial, the lawyers have to go through the process of discovery, with its document searches and depositions. Still, control of the decision is in the hands of the parties.

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This article was originally published in the August 1997 print edition of Entrepreneur with the headline: Making Peace.

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