Chapter 4
Legal Representation and
Alternative Dispute
Resolution
Chapter Objectives
1. Describe the role of attorneys in the
dispute-resolution process.
2. List the differences between litigation
and the other forms of dispute
resolution.
3. Discuss the processes of negotiation
and mediation.
4. Identify the steps in the arbitration
process.
5. Define summary jury trials and minitrials.
2
Attorneys and Dispute Resolution
Despite the diversity of legal issues
that attorneys may confront on a dayto-day basis, they share a common
approach to the law because their
education nearly always involves an
in-depth study of basic legal
principles and concepts.
3
Roles of an Attorney
Adviser – advises a client on steps to
take to avoid possible legal problems.
Drafter – writes contracts and other
documents for clients.
Negotiator – persuades, argues, or
settles with another party on a client’s
behalf.
Advocate – presents a client’s position
in court.
4
Attorney-Client Relationship
A client must disclose all relevant
information to his or her attorney so the
attorney can determine the best course
of action.
The attorney must keep the information
confidential—the attorney-client
privilege prevents a court and other
government bodies from compelling
disclosure of the information.
5
Decision to File a Lawsuit
Factors include:
 Whether the law provides a remedy.
 Whether the person can expert to
prevail.
 Whether the expected benefit will
compensate for expenses and other
costs, including any business lost as a
result of the lawsuit and
accompanying publicity.
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Decision to Defend
Against a Lawsuit
Factors include:
 Whether the relationship with the
plaintiff is too valuable to risk.
 Whether the publicity surrounding a
trial would damage the defendant’s
reputation or image.
 Whether the dispute could be
resolved in a less costly manner.
7
The Search for
Alternatives to Litigation
Alternative dispute resolution
(ADR) is less costly, less timeconsuming, and an increasingly
attractive alternative to
litigation in the courts.
8
The Search for
Alternatives to Litigation
Forms of ADR include:
Negotiation
Mediation
Arbitration
Summary
Jury Trial
Mini-trial
Rent-aJudge
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Negotiation and Mediation
Alternative dispute resolution
methods differ in the degree of
formality involved and the extent
to which third parties participate in
the process.
What is the primary difference
between negotiation and
mediation?
10
Negotiation and Mediation
Negotiation
The parties come
together, with or
without attorneys
to represent
them, and try to
reach a
settlement
without the
involvement of a
third party.
Mediation
The parties
themselves reach
an agreement
with the help of a
third party, called
a mediator, who
proposes
solutions.
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Arbitration
A more formal method of ADR in which
the parties submit their dispute to a
neutral third party, the arbitrator, who
renders a decision, which may or may
not be legally binding, depending on the
circumstances.
Some courts refer certain cases for
arbitration before allowing the cases to
proceed to trial; in most cases, this
kind of arbitration is nonbinding on the
parties.
12
ADR Around the Globe
Other countries also encourage
mediation, arbitration, and other
forms of ADR. Examples:
 Japan has recently authorized neutral panels to
act as mediators in product liability suits.
 China passed an arbitration law in 1995 that
spells out what types of disputes are arbitrable,
the form and content of valid arbitration
clauses, etc., all of which should make it simpler
for disputes to be settled through ADR.
13
The Federal Arbitration Act
The Federal Arbitration Act (FAA) does
not establish a set arbitration
procedure.
The FAA provides the means for
enforcing the arbitration procedure
that the parties have established for
themselves.
The FAA covers any arbitration clause
in a contract that involves interstate
commerce—even where the business
activities may have remote
connections or minimal effects on
interstate commerce.
14
Case 4.1 Hooters of America, Inc. v. Phillips
Annette Phillips was employed by Hooters restaurant from
1989-1996. Five years after she was hired, Hooters
implemented an alternative dispute-resolution program
which was not supplied to the employees. In 1996, Phillips
was allegedly sexually harassed by Gerald Brooks, a
Hooters’ official. Her manager told her to “let it go”, so she
quit. Phillips threatened to sue and was told by Hooters that
she needed to submit her claim to arbitration, which she
refused. Hooters filed a suit against Phillips to compel
arbitration but was denied by the court.
Increasingly, employers are including arbitration clauses in
contracts with their employees. Some argue that while it may be
fair to enforce such clauses in contracts between parties of equal
bargaining strength, it is not fair to enforce them in employment
contracts—because employees usually have no right to negotiate
the terms of the contract. Do you agree with this argument?
Explain.
15
State Arbitration Statutes
Thirty-four states and the District of
Columbia have adopted the Uniform
Arbitration Act, under which courts
generally give full effect to voluntary
agreements to arbitrate disputes
between private parties.
Those states that have not adopted the
Uniform Act nonetheless follow many of
the practices specified in it.
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The Arbitration Process
The three steps of arbitration
are:
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International Arbitration
International standards for the recognition of
arbitration agreements and awards are set out
in the U.N. Convention on the Recognition and
Enforcement of Foreign Arbitral Awards.
Article V(2) provides an exception to
enforcement where the arbitration clauses are
“contrary to the public policy” of the relevant
country.
Should businesspersons evaluate the policies of
different countries before deciding where to
arbitrate their disputes?
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19
Enforcement of Agreements to
Submit to Arbitration
When a dispute arises as to whether or
not the parties have agreed to submit a
particular matter to arbitration, one
party may file suit in court to compel
arbitration.
The court’s role is essentially
interpreting a contract, either the
arbitration clause or submission
agreement, to determine to what the
parties have committed themselves.
20
Case 4.2 Wright v. Universal Maritime
Service Corp.
Wright was a longshoreman and member of
the International Longshoreman’s Association (ILA).
The ILA provides workers to the South Carolina
Stevedores Association (SCSA), with which they
had a collective bargaining agreement. Wright
suffered a job-related injury that ended in
disability. After recovering, the SCSA would not
hire him because of the disability. Wright filed suit
claiming discrimination and violation of the
Americans with Disabilities Act (ADA). The court
ruled in favor of the defendants.
Does compulsory arbitration contradict the public
policy enunciated in statutes specifically designed to
protect employees’ rights, such as the right to be
free from discrimination (see Chapt. 18)?
21
Arbitration Clauses in Employment Contracts
Arbitration is easier, faster, and less costly than
litigation. Therefore, more businesses are including
arbitration clauses in their contracts. What happens
if a potential employee objects to the clause? Is this
mandatory condition enforceable?
A majority of courts have followed the Gilmer
precedent of the U.S. Supreme Court in 1991.
Recently, courts have been examining the issue of
mandatory arbitration more closely.
Why might victims of employment discrimination
prefer to litigate their claims in a judicial forum
rather than having them arbitrated, even assuming
that arbitration proceedings would be unbiased and
would not violate due process rights?
22
Setting Aside an
Arbitration Award
No award will be enforced if
compliance with the award
would result in commission of
a crime or would violate public
policy.
23
Setting Aside an
Arbitration Award
An arbitration award may also be set
aside because of defects in the arbitration
process.
 Award was result of corruption, fraud,
etc.
 The arbitrator exhibited bias or
corruption.
 The arbitrator’s actions substantially
prejudiced the rights of one of the
parties.
 The arbitrator exceeded his or her
powers.
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Setting Aside an
Arbitration Award
Arbitration awards may be set aside for
a number of reasons, but courts do not
generally look at the merits of the
dispute, the sufficiency of the evidence
presented, or the arbitrator’s reasoning
in reaching a particular decision.
Since the parties freely contracted to
enter into arbitration, the courts will not
interfere simply because one side feels
that it received a “bad bargain.”
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Case 4.3 Orlando v. Interstate
Container Corp.
After Interstate denied Orlando’s request to
return to work and an arbitrator also rendered a
decision in favor of Interstate, Orlando brought
suit claiming such decision was not final or
binding because the agreement to arbitrate
failed to state so.
The Court of Appeals held that the arbitration
award was not binding unless the parties
specifically agreed that it should be.
Why might the parties to an arbitration
agreement prefer that the arbitration award not
be final?
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Case 4.4 Garvey v. Roberts
In 1986, 1987, and 1988, the Major League
Baseball Players Association complained that the
Major League Baseball Clubs had engaged in
collusion to underpay some of the players. The
grievance was submitted to arbitration before a
panel.
The association and the clubs entered into a
settlement agreement, under which the clubs set
up a fund of $280 million to be distributed to
victims of the collusion.
Steve Garvey, player for the Padres from 19831987, filed for damages claiming his contract was
not extended due to the collusion. Garvey lost the
suit.
Is it fair for the courts to give such deference to
arbitrators’ findings of facts?
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Disadvantages to Arbitration
Arbitration has some disadvantages:
 Unpredictable, since arbitrators are not
required to follow prior precedents, but
must only follow whatever rules have
been provided by the parties.
 Expensive, sometimes as expensive as
litigation.
 Time consuming, since discovery is often
unavailable, the parties may have to call
more witnesses than they would in
litigation.
28
The Integration of ADR and
Formal Court Procedures
Many jurisdictions at both the state and
federal levels are integrating alternative
dispute resolution into the formal legal
process.
Utilizing methods such as arbitration
and mediation within the traditional
framework may relieve the logjams
afflicting most of the nation’s court
systems.
29
Court-Mandated ADR vs.
Court-Annexed Arbitration
Court-Mandated ADR
Most states (and about
half the federal courts)
have adopted
programs to encourage
the parties to settle
their disputes through
ADR.
Some courts require
parties to submit to
ADR before proceeding
to trial.
Court-Annexed
Arbitration
Some states require
the parties to undergo
non-binding arbitration
before proceeding to
trial.
Note that in courtannexed arbitration,
either party may reject
the award.
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Court-Related Mediation
Today, courts are increasingly
turning to mediation rather than
arbitration as an alternative to
litigation.
One reason for its popularity is
that its goal, unlike litigation, is for
opponents to work out a resolution
that benefits both sides, resulting
in a high rate of satisfaction with
the outcome.
31
Summary Jury Trials
A kind of trial in which litigants
present their arguments and
evidence and the jury renders
a nonbinding verdict.
32
Other Forms of ADR
Mini-trial
A private proceeding
in which each party’s
attorney argues the
party’s case before
the other party.
Often, a neutral third
party acts as an
adviser and renders
an opinion on how a
court would likely
decide the issue.
Rent-a-judge
The parties rent a
judge to hear their
case and render a
verdict to which the
parties agree to be
bound.
Several firms now
provide for this kind
of private justice.
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ADR Forums and Services
Services facilitating dispute
resolution outside the courtroom
are provided by both government
agencies and private organizations.
Sources of private arbitration
services include:




American Arbitration Association (AAA)
State and local arbitration organizations
Better Business Bureau
Industry-wide programs
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For Review
1. What roles do attorneys play in resolving
disputes?
2. What are some of the similarities and
differences between litigation and other
forms of dispute resolution?
3. How do the processes of negotiation and
mediation differ?
4. What are the steps in the arbitration
process?
5. What are the differences between voluntary
arbitration and court-annexed arbitration?
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