When Settling Your Dispute Makes Better Sense
“Avoid lawsuits beyond all things; they impair your health, and
dissipate your property...”
--- J. de La Bruyere
“Discourage litigation. Persuade your neighbors to compromise
whenever you can. Point out to them how the nominal winner is often the real loser in fees, expenses and waste
--- Abraham Lincoln
“The [legal fees] are outrageous. With the cost of litigation
these days, I think clients would often be better off if they just met in the halls and threw dice. Certainly it
would be cheaper.”
--- Walter McLaughlin, Chief Justice, Supreme Court of
This chapter will equip you to:
Understand the different ways of winning your case short of the
Use ADR (Alternative Dispute Resolution) to your advantage
Know and understand the Ten Commandments of Settlement
Negotiate and come out on top
Now you’ve read this book and you’re ready and equipped to take
your case all the way to trial and litigate the facts and the law before a judge or jury and win your damage
award. So what are the actual chances you will have your day in court? Not good according to Bergman and
Berman-Barrett. “Informal estimates are that around 90 percent of cases filed wind up being settled [out of
court] rather than resolved by the verdict of a judge or jury. … Not only did just 10 percent of all the cases
in the New Jersey sample [of a recent study by the Jonathan Hyman conducted for the New Jersey Administrative
Office of the Courts] go to trial, but 12 percent of those cases were settled after a trial
The American Arbitration Association adds “National statistics
indicate that 85 percent of commercial matters and 95 percent of personal injury matters end in written
according to the National Center for
State Courts, fifteen million civil cases were filed in 2000. The Administrative Office of the U.S. Courts
estimates that 95 percent of those cases were settled prior to trial.
So, even as you file a lawsuit or answer a claim someone else is
making against you, it helps to be mindful that the vast majority of cases can and actually are worked out by
the parties before trial.
There are several good reasons that most cases never get as far
as the courtroom. In addition to daunting attorney’s fees and assorted case related costs, hot-tempers often
tend to mellow over time. Where the fire of anger may have been enough to sustain a case through its early
phases, as the case draws closer to the day of trial, the less indignant a litigant is likely to feel, and the
more amenable he may be to an agreement. Also, during discovery phase information often comes up that can cast
the dispute in a new light make an out-of-court settlement more agreeable. Finally, as trial approaches the risk
of losing a case becomes more real. The litigants come to the realization that just because they feel strongly
about the “righteous” of their cause may not prevail.
There are basically two main avenues of settlement open to
litigants before and during trial to resolve the dispute before a judge or jury renders a decision. One side may
approach the other with an offer of settlement to resolve some or all of the issues of a dispute, which
typically opens a period of negotiation often resulting in an agreed upon outcome. A second, increasingly common
approach – alternative dispute resolution – involves some form of mediation or arbitration, a process that
essentially empowers a neutral third-party to hear and decide the issues of a case. A third evolving method is
an arbitration with a high-low agreement that the parties privately reach (the arbitrator does not know about
the high-low agreement).
What Is Alternative Dispute Resolution
Overloaded court dockets are not a new phenomenon in America’s
judicial marketplace. True, the volume of cases filed by an increasingly litigious culture grow larger every
year, exacting an ever-heavier burden on an already strained court system, but in a free society disputes are
not that uncommon and rather than restrict access to increase responsiveness, Americans have generally preferred
to grow the judiciary to meet the need.
Access to our legal system where we can have our grievances
redressed by a jury of our peers is the greatly prized “jewel of our democracy” and Americans have generally
resisted efforts to tamper with this core framework of liberty.
Most judges and lawyers date alternative dispute resolution (ADR) to the early
1900’s with the advent of the American Arbitration Association and other institutional forms of arbitration.
However, arbitration dates to early Biblical times with one of the first noted arbitrators King Solomon. Even
earlier, arbitration was used as a method to resolve tribal and nation territorial disputes. In England
arbitration was a common means of commercial dispute resolution predating the common law as early as the
George Washington, the nation’s first president, had an arbitration clause in his
will requiring any dispute regarding an interpretation of the will to be decided by a panel of three
arbitrators. His will stated that the decision was as final and binding as any decision of the Supreme
Perhaps the most common form of dispute resolution, arbitration, was used to resolve
labor disputes. This form of dispute resolution was codified by acts of congress and many state legislatures
and today is incorporated into most labor collective bargaining agreements. Almost every commercial contract
contains an arbitration provision. Also, many form contracts produced by industry specialty groups such as
boards of realtors contain arbitration or mediation provisions.
Mediation has also been applied to assist individuals and countries resolve disputes
for thousands of years. Through many seasons its use diminished and then later became common
Remarkably, neither form of dispute resolution was recognized in any consistent
definitional form. It was not until the second half of the 20th Century when the legal community began to
focus on trial court delay, that the different forms of dispute resolution began to be defined in commonly
accepted ways. The acronym ADR did not become commonly used until the 1980s.
These days, settling a dispute out of court can be accomplished
in any of several different ways: negotiation, conciliation, mediation and arbitration. Taken together these
techniques come under the umbrella of alternative dispute resolution or ADR.
Today, all fifty states have enacted the Uniform Arbitration Act which accommodate
START YOUR ARBITRATION , MEDIATION, NEUTRAL CASE