How Litigation Is Costly

¶ … traditional litigation and pursuing ADR in this case.

Litigation is becoming more prevalent within developed countries. As aspects of wealth inequality, poor economic prospects, and low job prospects taking hold, many individuals are elected to use the court system as a means of getting rich. Due to the sheer volume of cases that were being seen by the courts, the process has now become very slow. It is not uncommon for individuals to wait months, even years, to have their case seen before a judge and a resolution provided. Litigation can be a costly and unfulfilling endeavor, particularly if the dispute is frivolous. Fortunately, an ADR offers an efficient and timely method in which to resolve these disputes. Through ADR, parties can arrive at a solution that allows the dispute to be settled with the hassle, costs and negative publicity associated with litigation. In addition, an ADR, can provide a means of repairing a damaged business or personal relationship without the stressors of and processes of litigation.

The popularity of ADR has grown steadily over the years with almost 90% of all cases resolved through some form of ADR before trial. ADR is much more beneficial in dispute resolution as the tactic is much less formal and intimidating. This allows for quicker resolution, as the dispute can be seamlessly and efficiently mitigated. Typically, trials can be convoluted and costly for all parities involved. Simple forms of ADR usually provide a cost savings over litigation. However these cost savings can vary depending on the magnitude of the case. In some instances, larger disputes my actually cost more money than traditional litigation. The decision maker is paid by the hour irrespective if a resolution to the dispute is garnered or not. Even if the cost of ADR is split with the other side, that cost can add up quickly if the dispute resolution has a very long duration. For more formal ADR, both parties might still end up engaged in a protractive discovery and depositions adding further costs. For a larger case, arbitration by the American Arbitration Association rules may cost the same or even exceed the cost of standard litigation. Another cost associated with ADR is the unpredictable nature of the outcome. Mediators and arbitrators are usually free to decide cases without regard to case precedence. This is in stark contrast to litigation that often relies heavily on past case precedence. Due to this lack of regard for past experiences, mediators may have biases imbedded in their decision-making. This ultimately creates an uncertain outcome for both parties involved. Further contributing to the lack of outcome certainty are the rules related to discovery. In litigation, the rules of discovery allow both parties to obtain critical documents, testimony and other evidence out of an unwilling opponent. With ADR, the rules of discovery may not exist, which presents problems for both sides. In one instances a party may be giving up an opportunity to find out what's hidden in the opponent's files. Secondly, each party may not know what their opponent is going to offer as evidence until they are actually at the hearing. Finally, if a party chooses to use a non-binding ADR, the final award is not enforceable as a judgment. As a result, both parties may be wasting more time through an ADR as oppose to litigation.