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4 Advantages and Disadvantages of ADR

4.1 Benefits of ADR
4.2 Disadvantages of ADR

The take-up of ADR depends on a combination of three critical factors. First, the extent to which disputants and their advisors are aware of ADR. Second, the adequacy of the supply of ADR services for those that would wish to take-up ADR services. Third, the perceived advantages and disadvantages of ADR.

This section is concerned primarily with the third of those factors. It notes, however, the low level of awareness of ADR among disputants, the critical and influential position of lawyers in determining whether disputants seek resolution through ADR, and comments on the extent to which the court system raises awareness about the potential for ADR as a dispute resolution pathway.

4.1 Benefits of ADR

The international literature on ADR identifies five major outcomes from ADR. They are:

  • increased settlement
  • improved satisfaction with the outcome or manner in which the dispute is resolved among disputants
  • reduced time in dispute
  • reduced costs in relating to the dispute resolution
  • increased compliance with agreed solutions.

Among stakeholders there is broad agreement that dispute resolution through ADR mechanisms can be beneficial. Nevertheless, there are some significant variations among stakeholders about the extent and nature of those benefits for disputants. ADR practitioners are most enthusiastic about the benefits of ADR take-up. Lawyers and disputants tend to be more qualified with regard to the actual benefits associated with ADR.

ADR Practitioners' View of ADR Benefits

Participants in the ADR Practitioners Survey were convinced of the efficacy of ADR techniques in resolving disputes that were already or could be filed in the District or High Courts. Two thirds of the respondents (66 percent) reported that they believed that more that 80 percent of disputes could be resolved through ADR. Only 4 percent reported that they believed that 55 percent or fewer disputes were amenable to effective resolution through ADR (Table 4.1).

Table 4.1 ADR Practitioners' Estimates of Disputes Effectively Settled by ADR (ADR Practitioners Survey n=139)*

Proportion of Disputes Settled by ADR ADR Practitioners
Responses %
0-20 percent of disputes 0 0
21-30 percent of disputes 1 <1
31-40 percent of disputes 0 0
41-50 percent of disputes 4 3
51-60 percent of disputes 9 6
61-70 percent of disputes 5 4
71-80 percent of disputes 28 20
81-90 percent of disputes 32 23
91-100 percent of disputes 60 43

* Six missing cases.

It was noted in the ADR practitioner focus groups, however, that not all ADR techniques generated benefits in the same way or to the same extent. A strong distinction was made between mediation and arbitration. Table 4.2 represents ADR practitioners' assessment of the relative potential of arbitration and mediation in relation to the benefits typically associated with ADR.

Infobox 4.1 ADR Practitioner Views on the Relative Potential of Arbitration and Mediation

  Arbitration Mediation
Reduced financial costs Low-Medium Medium-High
Flexible solution Low High
Confidentiality High High
Ability to influence outcome Low High
Disputant control Medium High
Disputants satisfaction Low-High Medium-High
Speedy resolution High High

ADR practitioners see the real benefits of arbitration lying in the ability of the disputants to select an arbitrator by mutual agreement and the considerable specialist expertise an arbitrator may bring to the resolution of a dispute with substantial technical components. It is for the latter reason that arbitrators have so frequently been used in technical sectors such as the building industry.

Lawyers' Perceptions of ADR Benefits

The majority of lawyers believe that disputants seek ADR resolution of disputes in an effort to:

  • reduce the cost of a dispute
  • speed resolution, and
  • reduce uncertainty around the outcome of judgment in the court system (Table 4.2).

Table 4.2 Lawyers' Perceptions of Disputants' Reasons for ADR Take-up* (Lawyers Survey)

Perceived Disputant Reason Responses % of Lawyers (n=196)
Want to reduce costs 183 93.4
Want speedy resolution 159 81.1
Uncertainty of court outcome 142 72.4
Preservation of ongoing relationship 86 43.9
Desire for compromise solution 82 41.8
Desire for more control over process and outcome 80 40.8
Privacy and confidentiality 74 37.8
Directed by contract, statute or existing agreement 61 31.1
Desire for creative solution 48 24.5
Concerns about court procedures [8] 39 19.9

* Multiple response.

Mediation and negotiation are seen as more likely than arbitration to generate ADR benefits including:

  • increased opportunities to resolve a dispute in a way satisfactory to the parties
  • increased likelihood of the parties complying with the remedies or solutions generated through ADR
  • reductions in time delays
  • reductions in costs, and
  • maintenance of confidentiality about both the dispute, the remedies sought and the outcomes.

For lawyers, reaping the potential benefits of ADR is by no means straightforward. For most lawyers the effectiveness of ADR is contingent on two major factors. Firstly, the willingness of disputants to engage in a resolution process, and, secondly, the experience of the ADR practitioners (Table 4.3).

Table 4.3 Lawyers' Perceptions of Determinants of ADR Efficacy (Lawyers Survey)

Perceived Determinant

Total Lawyers Working Primarily in District Court (n=74) Lawyers Working Primarily in High Court (n=64) Lawyers Working Equally in High Court and District Court (n=58)
Disputant willingness 76.0% 80.8% 78.1% 69.0%
Experienced ADR practitioner 62.8% 68.5% 60.0% 66.1%
Supportive counsel 40.3% 37.5% 40.6% 45.6%
Judicial support 14.8% 21.9% 10.9% 10.7%
Ongoing relationship between disputants 14.3% 13.7% 15.6% 14.3%

The quantitative data does indicate some of the subtleties around this issue, however, in relation to the importance of judicial and counsel support as factors in the efficacy of ADR. Overall, 40.3 percent of lawyers saw counsel support as an important determinant. Lawyers working in the High Court or equally in the District Court and High Court were over-represented among those who saw counsel support as an important factor. Lawyers working primarily in the District Court were significantly more likely than lawyers working primarily in the High Court to see judicial support as an important factor in the efficacy of ADR.

It is unclear why those differences emerge. The lawyer survey data suggests that there may be some relationship between the ADR skills and experience of lawyers and the extent to which they perceive the importance of their own role in encouraging effective ADR. The High Court lawyers are more likely to be trained in and/or engaged in delivering ADR services than the lawyers working primarily in the District Court (Table 4.4).

Table 4.4 ADR Training* and ADR Practice Among Lawyers (Lawyers Survey)

  Lawyers Working Primarily in District Court (n=74) Lawyers Working Primarily in HighCourt (n=64) Lawyers Working Equally in High Court and District Court (n=58)
N % N % N %
Combines legal practice with ADR Practice 8 10.8 17 26.6 12 20.7
Trained LEADR Accreditation Workshop 2 2.7 13 20.3 3 5.2
AMINZ Associate or Fellow 3 4.1 2 3.1 6 10.3
Massey University Dispute Resolution Diploma 1 1.4 0 0.0 1 1.7
Dispute Resolution paper(s) as part of LLB 1 1.4 1 1.6 1 1.7
On-going ADR training - workshops, seminars etc 4 5.4 8 12.5 4 6.9

* Multiple response.

In relation to the willingness of the disputants, it was also noted by many ADR practitioners, lawyers and the judiciary that although disputants may initially feel hesitant and uncomfortable about ADR, disputants in retrospect often find the experience very useful. This view is consistent with the findings of the disputant research project.

Disputants' Perceptions of ADR Benefits

In-depth interviews with 60 disputants with civil cases filed with the court system in the 2000-2002 period revealed that only fourteen used ADR to help resolve their dispute.

As Table 4.5 shows, settlement was achieved in eleven of those cases through ADR and for a further case ADR resolved some issues. Eleven of those fourteen disputants reported that they would use ADR if ADR was 'suited' to the nature of the dispute.

Table 4.5 Disputant Views on ADR's Contribution to Resolution of their Dispute (Disputant In-depth Interviews n=14)

ADR's Contribution to Resolving the Case


The case settled as a result of ADR 11
ADR did not lead to settlement 2
ADR resolved some issues in the case 1
Total 14

Overall, thirty of the sixty disputant interviewees had had some experience of using ADR to resolve a dispute. A further twenty disputants knew of ADR. Forty-nine of the sixty disputants involved in in-depth interviews felt able to make some comment about the advantages and disadvantages of ADR. It is clear that ADR is seen as a less costly approach to dispute resolution than having the dispute resolved through a judgment given by the Court. Almost as many see ADR as a comparatively faster mechanism for dispute resolution (Table 4.6).

Table 4.6 Disputant Views on the Advantages of ADR Identified by Interviewees (Disputant In-depth Interviews n=49)*

ADR Advantages Responses (n=49)* % of Interviewees
Cheaper resolution 30 61.2
Faster resolution 27 55.1
More control 8 16.3
Informal process/relaxed/less stressful 6 12.2
More creative solutions 5 10.2
Other 5 10.2
Preserves relationships 3 6.1

* Multiple response.

4.2 Disadvantages of ADR

There was widespread support across stakeholders for the use of ADR techniques to resolve disputes. ADR was not always seen as an alternative to resolution through the courts, however. Moreover, even the most enthusiastic supporters of ADR - ADR practitioners - still saw some potential disadvantages for disputants in using ADR.

ADR Practitioners' Views on the Disadvantages of ADR

Unlike other stakeholders, ADR practitioners tended to see any disadvantages of ADR for disputants as being related primarily to the particular ADR technique used or the methods by which ADR techniques are implemented.

It has already been noted that ADR practitioners, like lawyers and disputants, see arbitration as a less attractive ADR technique than mediation. It should also be recognised, however, that even within mediation, some processes are seen as more likely to achieve all the benefits claimed for ADR than others.

ADR practitioners recognise that mediation may encompass a variety of models, ranging from developing consensual solutions to risk management or evaluative models for dispute resolution. As Boulle notes, mediation is:

"a decision-making process in which the parties are assisted by a third-party, the mediator; the mediator attempts to improve the process of decision-making and to assist the parties reach an outcome to which each of them can consent". [9]

Many ADR practitioners believed the full range of potential benefits, especially those related to increased user satisfaction with outcomes and compliance with ADR resolutions, were less likely to be achieved where mediation focused on risk assessment, cost-benefit review, or evaluation of the likelihood of success in court rather than consensual solution development.

Many ADR practitioners, both those who combine their ADR practice with legal practice and those who do not, expressed considerable concern at techniques directed primarily at trading-off the probability of success in court. This was perceived as particularly prevalent in the Auckland region and was characterised by some ADR practitioners as a model which allowed disputants to be 'bullied'. It was a model that some found antithetical to what they believed to be the core philosophical values of mediation and the core elements which led to better quality solutions - the empowerment of the disputants, and the expectation that disputants should take responsibility for mutually generating and committing to consensual solutions.

A trading-off approach in mediation was perceived by ADR practitioners to be particularly widespread in disputes around insurance and employment matters. Some concern was expressed that if that type of approach became prevalent, or the dominant perception of mediation, there would be a backlash against mediation, a hesitancy to take-up mediation opportunities, and a failure to capture the potential benefits of mediation such as solution flexibility, reduction in stress and relationship repair.

Lawyers' Views on the Disadvantages of ADR

For lawyers concerns about ADR focus on three issues. Those are whether ADR:

  • delivers reduced costs and increases timeliness
  • delivers a sound and fair outcome, and
  • generates agreements that can be sustained and enforced.

Lawyers were directly involved in two of the stakeholders research projects. Some of the ADR practitioners were lawyers and some practising lawyers were participants in the ADR practitioner research project as well as the lawyers' research project.

What emerged from the lawyer and ADR practitioner research projects as well as the disputant research project was that lawyers have, perhaps more than any of the other stakeholder groups, a diversity of views around the merits and potential problems of ADR. In particular there is a view among some lawyers that ADR both delays dispute resolution and increases costs. Increased cost was seen by lawyers participating in the lawyers' survey as a particular limitation of arbitration. Delay was seen as a particular problem associated with mediation.

As Table 4.7 shows only a minority of lawyers participating in the lawyers' survey saw significant limitations with ADR techniques. It is notable that the pattern of those minority concerns differed in relation to arbitration and mediation respectively. With regard to arbitration a substantial minority of lawyers expressed concern that arbitration increased the costs of dispute resolution. By comparison, with regard to mediation the most substantial minority of lawyers expressed concern that mediation could be used as a delaying tactic. A smaller but still substantial minority of lawyers expressed concerns about mediation's enforceability.

Table 4.7 Limitations of Arbitration and Mediation (Lawyers Survey)

Key ADR Limitation Limitations of Arbitration (n=196)* Limitations of Mediation (n=196)*
Responses % of Lawyers Responses % of Lawyers
Enforceability 17 8.7 54 27.6
Delaying tactics 35 17.9 74 37.8
Increased Costs 80 40.8 35 17.9

* Multiple response.

Only a minority of the lawyers participating in the lawyers' survey expressed concerns about those issues. However, the disputants research does reveal how powerful lawyers' views can be in relation to take-up of ADR. A small group of disputants were explicitly advised by their lawyer not to take-up ADR on the grounds that it was too expensive or ADR would be ineffective. Some disputants assumed that if lawyer-to-lawyer informal discussion had failed to resolve the dispute then ADR would simply not be an option.

Overall, however, surveyed lawyers tended to be supportive of ADR. Indeed, among the lawyers participating in the lawyers' survey around 64.4 percent accepted the notion that there might be merit in the court ordering parties to take-up ADR prior to proceeding with a case. It is notable, however, that only 22.2 percent of the participant lawyers felt court orders to arbitration were acceptable, compared to 53.7 percent who accepted the notion of the courts ordering parties to mediation.

Even among lawyers who believed the benefits of ADR were such as to justify some mechanism by which the courts could order parties to mediation, there was still a concern that ADR should not be promoted in a manner that compromised litigants' access to justice.

Disputants' Views on the Disadvantages of ADR

Although ADR was seen by the disputants participating in the in-depth interviews as a less costly pathway than the court system, a small proportion of the 49 interviewees who felt they could comment on the merits of ADR, identified a series of potential drawbacks with ADR. Those are set out in Table 4.8

Table 4.8 Disadvantages of ADR Identified by Interviewees (Disputant In-depth Interviews n=49)*

Key Disadvantages Identified Responses % of Interviewees
Lack of enforcement 10 20.4
Increased costs 9 18.4
Delaying tactic 9 18.4
Other 7 14.3
Compromise of principles 7 14.3
ADR practitioner may not have the technical skills required 3 6.1
Need other party to be willing to come to the table 2 4.1
No right of appeal 2 4.1

* Multiple response.

Twelve of 49 disputants stated that they saw only advantages and no disadvantages associated with ADR.

  1. These 'concerns' are an amorphous set of fears that many disputants have about becoming involved with the courts. Disputants often find these difficult to articulate clearly but in sum they reflect a discomfort with the perceived formality of the court and fears that they might not represent themselves well within what they see as an adversarial environment.
  2. Boulle, L. 1998. Mediation: Principles, Process, Practice (New Zealand edition). Wellington, Butterworths.