Schools Lag in the Teaching of Adr: A Call for Reform

Article excerpt

A majority of professional managers receive a university education at a college of business. In order to discover the extent to which U.S. business schools are positioning their graduates to use alternative dispute resolution processes to resolve disputes by offering a curriculum in ADR, we conducted a national survey of 50 U. S. business schools, one from each state. Our findings show a large gap between corporate utilization of ADR processes and what is being taught about ADR in business schools. Although the use of ADR is growing in the business community, a significant majority of business schools do not train their graduates in these processes. This needs to be remedied by adding ADR courses to the business curriculum and requiring all business students to take them.

Over the last several decades, alternative dispute resolution processes have gained widespread acceptance by business firms as substitutes for litigation. The increased use of ADR has been described as "dramatic" in a 1998 ADR survey of 1000 of the largest U.S. corporations, published by the Cornell/PERC Institute on Conflict Resolution (the 1998 Cornell study). A 2003 study sponsored by the American Arbitration Association (AAA), entitled Dispute-Wise^sup sm^ Management: Improving Economic and Non-Economic Outcomes in Managing Business Conflicts, reported that 95% of the companies surveyed used mediation and 85% used arbitration during the previous three years.

ADR, however, is not limited to arbitration and mediation. It includes hybrid combinations like arb-med and med-arb, and embraces such processes as fact finding, early neutral evaluation, negotiations, mini-trial, summary jury trial, and even conflict avoidance techniques, like partnering, standing neutrals and dispute review boards.

Two compelling reasons for using ADR processes instead of going to court is to save time and money, both important resources to business firms. The cost of civil litigation in the United States is approaching $300 billion annually, according to the 2003 Dispute-Wise study. These costs reflect not only the actual amount of judgments and settlements in litigated cases, but also the associated transaction costs, such as attorneys' fees, fees and expenses of expert witnesses, and the cost of engaging in discovery (probably the most expensive part of litigation). The 1998 Cornell Study reported that litigation transaction costs "are often two or three times greater than the settlements themselves."

ADR is more informal and flexible than litigation, so it allows for more efficient use of time. For example, under Rule R-30 of the AAA Commercial Arbitration Procedures, arbitrators are authorized to exercise their discretion toward expediting the hearing, as long as the parties are offered an opportunity to present their case. They are also authorized to direct the order of proof, bifurcate proceedings and direct the parties to focus their presentations on issues the decision of which could dispose of all or part of the case. Under AAA Rule R-31 arbitrators are authorized to determine the admissibility, relevance and materiality of evidence offered and have discretion to exclude evidence they deem to be cumulative or irrelevant.

In addition, ADR processes can be scheduled at the convenience of the disputants, whereas litigation is scheduled by the court without regard to the litigants' needs.

An important benefit of ADR is the fact that the parties determine the process by which their dispute will be resolved. The parties can design the ADR process themselves, by, for example, selecting the rules that will apply, determining the locale for the hearing, the law that will apply in arbitration, and the criteria for selecting the neutral. In mediation, the parties even control the outcome since they cannot be forced to reach a settlement. A settlement will result only if they both agree to the settlement terms. Since the parties have so much input into the ADR process, it can be argued that they are more likely to be satisfied with the outcome. …