At the recent Annual Meeting of the CPR Institute in New York, Cornell Professor David B. Lipsky presented some of the results from a recent survey of the Fortune 1000, comparing the current use of ADR with the use that was reported in a similar survey in 1997. The results are very interesting and, for the most part, good news.
The study was co-sponsored by Cornell’s Scheinman Institute on Conflict Resolution, the Straus Institute for Dispute Resolution at Pepperdine University, and CPR. The objective of the study was to obtain information regarding the current use of mediation, arbitration, and other ADR techniques used by major U.S. corporations, focusing on commercial, consumer and employment disputes.
The results of the influential 1997 survey were published at the time and may be found in Emerging Systems for Managing Workplace Conflict (Josey-Bass, 2003). That study garnered responses from 606 of the Fortune 1000; the current study has 368 responses. About half the respondents were General Counsel and half were other attorneys in the General Counsel’s office.
With respect to conflict resolution “policies” of the corporation, by far the most common (38%) was to “litigate only when appropriate; use ADR for all other disputes.” The response was about 50% higher in 2011 than it had been in 1997. Decreases were found for policies of “litigate first, then move to ADR when appropriate” (24% – 19%) and “always litigate” (6% – 1%).
Of the corporations responding, 97% had used mediation at least once in the previous three years; 83% had used arbitration. Interestingly, 63% reported using Early Case Assessment, a technique that was not in the 1997 survey at all. Most corporations said they use ADR to save time and money; more than half said it is because it is court-ordered and about the same number use it because it allows them to resolve disputes themselves.
Types of disputes in which mediation was used were almost even with those cited in 1997. The most frequent were employment, commercial/contract and personal injury. A boost of almost 35% was reported in the use of mediation in Intellectual Property disputes, however. By contrast, the use of arbitration fell by about half in employment disputes; by about 40% in commercial/contract disputes; and by a surprising 60% in construction disputes.
Many respondants cited the absence of appeal as a discouraging feature of arbitration. Many also perceived that the process results in compromise outcomes, though many reputable studies have demonstrated that it is simply not so. Some cite “external law” making arbitration more complex, costly and time-consuming. Integrated conflict management systems for employment disputes are now adopted by about one-third of respondents.
Lipsky concludes that about 50% of American companies have adopted ADR as their principal approach to resolving consumer, commercial and employment disputes, and that they employ a wide array of ADR techniques such as ENE, ECA and other approaches that have recently come to the fore. Moreover, ADR seems to have advanced from a method of companies’ avoiding litigation to a process for managing and resolving disputes at the earliest possible stage, prompted by their own interest.
I feel like an old man. When I joined CPR in 1998, founder Jim Henry stated that the Institute’s mission was to “put ADR into the mainstream of the American legal practice.” He seems to have succeeded and then some: ADR is not just in the legal mainstream; it is in the pantheon of corporate best practices.
Jim, take a bow.