232. R. Mnookin, Alternative Dispute Resolution, 3/98; subsequently published in The New Palgrave Dictionary of Economics and the Law, Peter Newman (ed.), (New York: Stockton Press, 1998), Vol. 1. A-D, 56-60..
Abstract: Alternative dispute resolution (ADR) refers to a set of practices and techniques aimed at permitting the resolution of legal disputes outside the courts. It is normally thought to encompass mediation, arbitration, and a variety of "hybrid" processes by which a neutral facilitates the resolution of legal disputes without formal adjudication. These alternatives to adjudication are advocated on a variety of grounds. Potential benefits are said to include the reduction of the transaction costs of dispute resolution because ADR processes may be cheaper and faster than ordinary judicial proceedings; the creation of resolutions that are better suited to the parties' underlying interests and needs; and improved ex post compliance with the terms of the resolution.
The focus of this article is on mediation and arbitration and not on unfacilitated negotiation which is, of course, the most common means by which parties and their counsel resolve legal disputes outside of court. Part I provides essential background for understanding ADR by focusing on arbitration and mediation. By comparing these processes with adjudication and negotiation - the two procedures conventionally used to resolve legal disputes - the potential advantages and disadvantages of arbitration and mediation are exposed and briefly analyzed. Next, in Part II, a variety of hybrid processes often included within the scope of ADR are briefly described. These hybrids suggest that ADR procedures are now frequently included as processes within a dispute resolution system that includes formal adjudication. Part III briefly summarizes the theoretical scholarship that seeks to explore the incentive effects created by adding a layer of ADR to the litigation process, and also describes those few empirical studies that have explored its impact.