What Is Alternative Dispute Resolution? (And Why Do Associations Sometimes Use It?)
Community associations and their members disagree from time to time. When this happens some association boards attempt to resolve problems by using a three-step, problem-solving approach called alternative dispute resolution (ADR). It can sometimes be an effective and money-saving alternative to the traditional justice system. The three steps are as follows: 1.) negotiation; 2.) mediation and; 3.) arbitration.
1. Negotiation - In negotiation, the issues are identified and both parties communicate with each other about their needs and interests. They also brainstorm settlement options and hammer out terms. It’s an informal, cooperative process in which both parties can focus objectively on their interests. Because negotiation is informal, it requires the least amount of time and expense.
When both parties are reasonable and engage in honest negotiation with effective communication, this is generally the only step that is needed. But, in those unfortunate situations where a solution cannot be found, the second step is mediation.
2. Mediation - In mediation, a neutral, trained mediator resolves conflict between two or more parties. Mediation is collaborative, but it does require a little more time and money. It tends to preserve relationships because the people involved create their own settlement agreements, which are not legally binding unless everyone agrees to formalize them. If mediation doesn't work, there's still one more step to take (arbitration) before parties head off to court.
3. Arbitration - Arbitration is a formal process that can require considerable time and money but usually less than lawsuits. This acts as a motivation to boards to resolve disputes before reaching this final step.
Arbitrators are usually highly trained legal experts who render final, legal decisions based on evidence and testimony. Only under limited circumstances can the arbitrator's decision be appealed to the courts.
Some boards review the pros and cons of the alternative dispute resolution (ADR) and consider it as a means to conserve association resources. Clearly, the more steps through the ADR process an association board has to take, the more expensive it becomes. Conversely, when the ADR process helps a board to perhaps avoid costly litigation expenses it can be a cost-effective approach.
Article Furnished by Community Association Institute
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