Employers are reluctant to use alternative dispute resolution

Employers are reluctant to arbitrate or to investigate other alternatives to litigation despite claims from the legal profession that adapting alternative dispute resolution strategies can save them time and money.

Marcia Burgdoff, chief executive officer, The Guilford Group, a workers' compensation management and ADR firm in Baltimore, Md., says employers are not using ADR as much as they should.

Employers that take workplace disputes to court have little to gain financially even if they win Burgdoff says. "Most of what they win is put back into the legal system in the form of attorney fees," she says.

Employers that take a case to court can spend at least $25,000 in legal fees, but costs are typically higher. Mimi Sal-Pritchard, an attorney with Dykema Gossett, a law firm in Detroit, says employers "can realistically expect court costs for a jury trial to be between $50,000 and $100,000." Arbitrati on and mediation, procedures that are typical ADR mechanisms, can cost as little as $2,000. Mediation and arbitration involve the use of a neutral third party, whose role is to help both parties uncover opportunities for creating a mutually beneficial resolution. Employers pay a fixed one-time administrative fee, typically ranging between $500 and $1,000, in addition to an hourly fee that is negotiated with the arbitrator or mediator.

Daly Temchine, chairman, litigation department at Epstein Becker & Green, a law firm in Washington, says arbitration and mediation are gaining in popularity as a means of settling business disputes, in part because the procedure contains costs and also because employers prefer the privacy of ADR. David Greenberg is director at National Health Lawyers Association, in Washington, which recently opened an ADR division that offers an ADR service nationally. He says, "With ADR there are the obvious advantages of cost and speed. There's also the question of privacy ... ADR takes place behind closed doors and employers find that appealing."

Burgdorf says one obstacle to increased use of ADR is "that Fortune 500 employers take an adversarial approach when facing a dispute." In addition, employers have difficulty convincing employees who are involved in the dispute that the ADR process is fair. "The employee must believe that the person deciding his case is not in the employer's pocket," she says.

Despite a general reluctance among the employer community to adopt full-scale ADR the Center for Public Resources Inc., New York, an authority on the development and implementation of ADR, reports some progress. The center has so far pursuaded more than 600 large corporations to sign a position statement sanctioning ADR. More than 1,200 law firms nationally also have pledged to promote ADR techniques. The firms say that in cases where it is appropriate they will brief their clients about the possible benefits of ADR.

Pat Moore, a mediator at Endispute, a national ADR firm with offices in Boston, says, "There is still a feeling in the employer community that people who resolve disputes with ADR are soft and that they are pushovers." Moore says employers do use ADR, but they fear that if they admit to doing so they may be seen by their competitors as "easy marks and as ineffective managers."

Despite employer reluctance to ADR, health care professionals who staff hospitals and managed care organizations are embracing the concept as a means of settling disputes and containing litigation costs. Edward Christiansen, general counsel for the University Hospital at Boston University Medical Center, says, "The court systems have become a less and less desirable place to settle disputes. The number of lawsuits that are filed exceed resources and you usually obtain better results if the parties involved can resolve the dispute themselves through methods of conflict resolution."

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