Litigation vs. Alternative Dispute Resolution: Benefits and Detriments for Both Sides

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Litigation versus ADR: Benefits and detriments for both sides For many companies, entering into litigation is not cost-effective in terms of time and money. "Although many companies have in-house counsel who are accustomed to the trials and tribulations of litigation, company executives still have to be involved, either as witnesses, in settlement negotiations, or in explaining the case to other management" (Weiss 1999). For smaller firms without in-house counsel, the financial burden of litigation can be even greater and they can ill-afford time that must be allotted to dealing with litigation. In addition to the opportunity costs in terms of expense and human resources, here is also the negative publicity that can be stirred up through litigation, which can damage the firm's reputation. ADR (alternative dispute resolution) offers a feasible alternative: it is conducted in a private setting, which can be invaluable for companies which are concerned with how their customers perceive their product. A company accused of a safety violation, for example, might prefer to settle out-of-court, even if they felt the lawsuit was frivolous, just to ensure that it did not lose its 'good name.' Another advantage to arbitration is that both parties can set their own terms. "Parties can develop their own ground rules" (Murray 2012). They can also come to an agreement on who will mediate the proceedings: participants "in the arbitration process parties decide jointly on the

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