Alternative Dispute Resolution (ADR) Act

• Alternative Dispute Resolution (ADR) under the ADR Act includes nonbinding, confidential proceedings with a neutral third party facilitating dispute resolution.
• ADR also covers agreed binding arbitration under the Texas General Arbitration Act or the Federal Arbitration Act.

Types of ADR

• The Act outlines five nonbinding ADR procedures: mediation, mini-trial, moderated settlement conference, nonbinding arbitration, and summary jury trial.
• Parties can create other nonbinding ADR procedures by agreement.
• Agreed binding ADR is available only under the Texas General Arbitration Act or the Federal Arbitration Act.

Benefits of ADR

• ADR processes are informal, quick, economical, flexible, and less traumatic than formal procedures.
• Due to direct party involvement, ADR often yields practical, creative agreements and more satisfied clients.

Reasons for ADR Despite High Settlement Rates

• Parties often delay serious negotiations until close to trial.
• Earlier settlements through ADR save time, money, and emotional costs.
• ADR illustrates practical case possibilities and limitations.
• ADR can preserve relationships and lead to creative solutions.

Why ADR Leads to Voluntary Settlements

• ADR is confidential, non-adversarial, and promotes constructive negotiation.
• The neutral facilitator ensures consideration of all viewpoints and helps attorneys and clients focus on mutually acceptable settlements.

Obtaining Participation in ADR

• Participation can be obtained through personal request or court order, though the other party can object reasonably and in a timely manner.
• Actual good-faith participation is at the other party's discretion.

Addressing Cost Concerns

• Many ADR neutrals offer pro bono services or sliding-scale fees.
• Dispute resolution centers provide ADR services at minimal or no cost.

Settlement Rates in ADR

• Settlement rates vary based on the ADR type, timing in litigation, and party commitment/skills.
• Approximately three-quarters of cases at community dispute resolution centers reach agreements.
• ADR success isn't solely formal settlement as it can clarify issues and set the stage for constructive negotiation.
• Client satisfaction tends to be high, especially in processes with client participation.

Timing of ADR in Relation to Discovery and Legal Issues

• ADR can be effective before discovery.
• Courts may halt further discovery pending ADR outcomes.
• Courts are usually sensitive to ruling on essential legal issues before ADR.

Cases Not Appropriate for ADR

• Cases with gross bargaining power disparity, like those involving abuse, may not be suitable.
• Cases involving constitutional rights or test cases might not be appropriate.

ADR's Relationship to Jury Trials

• ADR does not replace the right to a jury trial.
• The efficacy of ADR relies on the availability of a jury trial if negotiations fail.

Attorney's Role in ADR

• Lawyers must help clients evaluate settlement options, including ADR.
• Attorneys prepare for and participate in ADR with clients.
• If no settlement occurs, attorneys proceed to trial.
• Attorneys are obligated to advise clients to comply with court orders for ADR, with the right to object.

Implications of Requesting or Participating in ADR

• It does not imply weakness.
• A settlement initiative based on careful case research is a strong move.
• No adverse inference can be drawn from participation in court-ordered ADR.

Obligations of Parties During ADR

• There is no requirement that ADR participants make any offer.
• There are no consequences for not making an offer.

Texas Alternative Dispute Resolution Procedures Act

• Codified as Chapter 154 of the Texas Civil Practice and Remedies Code.
• Establishes a statutory framework for ADR in Texas.
• Authorizes courts to refer disputes to ADR, either on motion of a party or the court's own motion.
• ADR results are non-binding unless agreed upon by the parties.
• ADR proceedings are generally confidential.

Alternative Dispute Resolution System Established by Counties

• Chapter 152 of the Texas Civil Practice and Remedies Code creates a county-by-county system for community dispute resolution centers.
• Centers are funded by additional court costs in civil cases.

Settlement Weeks

• Chapter 155 of the Texas Civil Practice and Remedies Code requires counties with populations of 150,000 or greater to conduct two Settlement Weeks annually.
• Volunteer attorneys facilitate ADR procedures, such as mediations or settlement conferences.

Trial by Special Judge

• Chapter 151 of the Texas Civil Practice and Remedies Code allows for a stay of a pending case for trial by a specially appointed and privately compensated judge in civil and family law matters.

Texas General Arbitration Act

• Provides a framework for enforcing contracts where parties agree to submit disputes to binding arbitration (Tex. Civ. Prac. & Rem. Code, Chapter 171).
• Furnishes substantive and procedural rules governing arbitration, unless otherwise specified by the parties.

International Commercial Disputes

• A separate Texas statute deals with arbitration and conciliation of "international" and "commercial" controversies (Text Civ. Prac. & Rem. Code, Chapter 172).

Federal Arbitration Act (FAA)

• Found at Title 9 of the United States Code (9 U.S.C.A. Secs.1-15).
• Sanctions and encourages binding arbitration in maritime transactions and contracts involving interstate or international commerce.
• Similar to the Texas General Arbitration Act.

1988 Judicial Improvements and Access to Justice Act

• Amended by the 1998 Alternative Dispute Resolution Act.
• Found at 28 U.S.C.A. Secs. 651-658.
• Provides congressional endorsement of ADR.
• Authorizes federal district courts to require parties to consider ADR.
• Provides framework for "court-annexed" arbitration.
• Losing parties may obtain a "trial de novo" but may be taxed with certain costs.

Dispute Resolution in Texas

• The system assumes most cases will settle outside of court.
• Courts should be the place where disputes end, after ADR has been considered and tried.

Texas Alternative Dispute Resolution Procedures Act

• Legislation encourages early resolution of pending litigation through voluntary settlement procedures.

Definition of Alternative Dispute Resolution

• In Texas, ADR generally refers to using a neutral third party to facilitate settlement outside of a formal court.
• ADR includes a range of procedures, from voluntary and nonbinding to mandatory and binding arbitration.

Federal and Texas Arbitration Acts

• The Federal Arbitration Act and Texas General Arbitration Act provide a framework for enforcing agreements in contracts where parties agree to submit disputes to binding arbitration.
• Agreements to arbitrate are enforceable by court order and subject to limited appeal.

Federal Arbitration Act Preemption

• The Federal Arbitration Act preempts the Texas General Arbitration Act and is broadly applied to transactions involving interstate commerce.
• Many limitations in the Texas Arbitration Act are not found in the Federal Arbitration Act.

Settlement Weeks in Texas

• Legislation requires Texas counties with a population of 150,000 or more to conduct two Settlement Weeks each year.
• Settlement Weeks are cooperative efforts between the local bar and courts to resolve pending litigation.

Trial by Special Judge Statute ("Rent-A-Judge")

• Authorizes a stay of a pending case for trial by a specially appointed and privately compensated judge in civil and family law matters.

Use of ADR Procedures Under the Act

• ADR procedures may be used before a lawsuit is filed or late in the litigation process.

Requirements for ADR Procedures Under the Act

• All ADR procedures require client participation.
• Procedures are nonbinding, confidential, and flexible.
• ADR provides an alternative to, not a substitute for, trial by jury.

Nonbinding Nature of the Texas ADR System

• Parties cannot be compelled to settle, even in court-ordered ADR.
• Disputants can proceed to trial if the ADR proceeding does not produce an agreement.
• Communications relating to and any record made at an ADR proceeding are confidential.

Appropriateness of ADR

• ADR is a prudent and economical intervention for most civil disputes, except for some cases involving constitutional rights or gross disparities in bargaining power.

Initiation of ADR Referral

• In pending litigation, referral to ADR may be initiated by agreement of the parties, by court order on motion of a party, or by the court on its own motion.
• The court may withdraw the order if counsel files timely written objections to an ADR referral and the court finds that there is a reasonable basis for the objection.
• ADR is often used to settle disputes that are not in litigation.

Confidentiality in ADR

• Communications are not subject to disclosure and may not be used as evidence.
• Oral communications or written materials that are otherwise admissible or discoverable do not become inadmissible simply by reason of their use in an ADR procedure.
• Participants and third-party neutrals cannot be required to testify or disclose confidential information.
• Third-party neutrals may not disclose information given in confidence unless authorized or legally required to do so.

Third-Party Neutrals

• Neutrals are not required to have any specific professional background.
• To qualify for court appointment, third-party neutrals must complete forty hours of training.
• Neutrals facilitating family disputes must receive additional training.
• The court may appoint neutrals with unique skills or expertise who do not meet the training requirement.

ADR Procedures Listed in the Act

• Mediation
• Mini-trial
• Moderated settlement conference
• Summary jury trial
• Nonbinding arbitration
• Variations or combinations of the five basic procedures can be used if acceptable to parties and the court.

Preparing for an ADR Proceeding

• The first step is to select the type of ADR that best fits the case.
• Mediation is often used before the parties file suit or even contact attorneys.
• Mini-trials, non-binding arbitration, and summary jury trials are generally utilized later in case preparation and are somewhat limited in their application.

Identifying a Third-Party Neutral

• A basic requirement of third-party neutrals facilitating an ADR proceeding is that all involved perceive them to be objective.
• Facilitating an ADR proceeding requires distinct skills or knowledge separate from legal education and experience.
• Attorneys as third-party neutrals serve as guardians of the objective dispute resolution process.
• The ADR Act allows the ADR third-party neutral's fee to be taxed as other costs of suit unless the parties otherwise agree.
• When clients possess limited resources, many ADR third-party neutrals accept pro bono cases or will adjust their fees on an individual case basis.

Evaluating the Success of an ADR Proceeding

• The success of an ADR proceeding cannot be solely tied to formal settlements.
• If significant progress is made, if issues are limited, or if the client has a more realistic view of the case, then the ADR proceeding can serve a useful role.
• Informed use of ADR generally saves time and money, leads to settlements that are realistic and hold up over time, and limits the expenditure of emotional energy associated with trial.

Effect of Written Settlement Agreement

• If the parties reach a settlement and execute a written agreement disposing of the dispute, the agreement is enforceable in the same manner as any other written contract.
• The court in its discretion may incorporate the terms of the agreement in the court's final decree disposing of the case.
• A settlement agreement does not affect an outstanding court order unless the terms of the agreement are incorporated into a subsequent decree.

Mediation

• Mediation helps parties communicate their concerns and explore solutions.
• The mediator does not render any decision or provide any evaluation of the cases.
• Lawyers may attend mediation sessions and represent their clients.
• Because the disputants themselves participate, there is usually a high degree of client satisfaction with any settlement reached and with the mediation process itself.

Mini-Trial

• The mini-trial is used in corporate or government litigation to provide decision-makers with the opportunity to resolve legal disputes while protecting future business or relationship interests.
• Opposing counsel present their best case to decision-makers and a third party neutral.

Moderated Settlement Conference

• A moderated settlement conference provides parties with a confidential, nonbinding case evaluation by an impartial panel of experienced attorneys.
• The panel confers privately and then provides the parties an evaluation of the strengths and weaknesses of their case.

Summary Jury Trial

• The summary jury trial is conducted by the court with limited questioning of jurors and presentation of evidence.
• The rules of evidence are relaxed, and the jury decision is advisory in nature.

Nonbinding Arbitration

• In an arbitration hearing, an impartial third party or panel meets with the parties, listens to presentations of both fact and law, and renders a confidential, advisory award. Non-binding arbitration is to be contrasted with traditional binding arbitration contractually agreed to by parties.