Although ADR programs have been in existence for many years, given the recent green light by the Supreme Court regarding the use of arbitration, its application is being reassessed and applied by a number of entities in an effort to control the overwhelming cost of litigation, both in terms of the process and the outcome. And while, at one time, I was not a strong advocate of an internal ADR program, I now believe that they are a better way of handling disputes of many kinds versus using the court system.
Pros For Using Arbitration
The pros have been around for a long time in terms of why arbitration is found to be a favorable forum including the speed of the process, the privacy of the process, and the cost of the process. Those are usually the primary drivers for utilizing arbitration over the standard litigation process. What has become even more important, due to the recent rash of class actions, is the ability to restrict arbitrations to be single-claim processing versus class or collective actions. While the NLRB may think otherwise, the Courts of Appeal have now made it clear that they do not embrace the Board’s position regarding the unlawful nature of a class-action waiver in arbitration agreements. For certain companies who are more subject to class-action litigation, be it wage and hour or product claims or security breaches, this restriction on using a class methodology can be of tremendous assistance in limiting the costs associated with class type claims.
Cons Regarding Arbitration
The biggest con, from my perspective, has been the inability to utilize, in most cases, a summary judgment process in an arbitration setting. AAA and other resources have now made that more of a possibility, be it still an awkward one for the ADR process compared to normal litigation within the court system. On the other hand, given the current state of employment law in Missouri summary judgment is not likely, if not impossible, in the state courts, where the bulk of the litigation in employment matters takes place. So if your focus is to eliminate employment litigation, this is less of a concern at this point. The other major drawback to arbitration is that it is extremely difficult to have any sort of appellate review of an arbitration decision, given the standard of review established regarding such matters. On the other hand, the Eighth Circuit Court of Appeals is a fairly conservative court, so there is some value in maintaining claims within the federal judiciary system.
As in every situation, all the facts have to be weighed to fit the individual needs of every entity who is assessing the pros and cons of using an ADR process in lieu of the standard court proceedings. There are certainly reasons on both sides to utilize either process, it is just simply a matter of weighing the options and selecting a process. Obviously seeking counsel with experience in this area is key in making any such determination.