Chapter 4 Alternative Dispute Resolution September 19th 2014 4 0 Introduction Learning Objectives What are the benefits and drawbacks of ADR as compared to litigation What legal basis supports the use of ADR rather than litigation What unique challenges exist in ADR efforts among B2B business to business B2C business to consumer and B2E business to employees What are the ethical implications of ADR between parties that are unequal in power Alternative Dispute Resolution ADR Encompasses many different methods of dispute resolution other than litigation o Methods Negotiation Meditation and Arbitration Federal Arbitration Act FAA Federal statue under which parties are required to participate in arbitration when they have agreed by contract to do so even in state court matters Federal Arbitration Act Federal Preemption Judicially developed doctrine that recognizes the federal government s power derived from the Supremacy Clause of the U S Constitution Supremacy Clause Clause in Article VI of the U S Constitution that declares federal law supreme which means that in the event that federal and state law conflict federal law trumps state law Continuum of Different ADR Methods Part 4 1 Negotiation Learning Objectives Explore negotiation as it is commonly employed in business Understand the role of negotiation in avoiding and settling disputes Understand the implications of bargaining power during negotiation Become familiar with the benefits and drawbacks of negotiation as a form of alternative dispute resolution ADR Negotiation Retains power to resolve the dispute to the parties involved o Requires the parties to define the conflicts and agree to an outcome to resolve those conflicts Benefits o Speedy resolution o Inexpensive nature of participation o Voluntary participation Drawbacks o No set rules o Either party may bargain badly or unethically o No guarantee of resolution o Non involvement of attorneys is seen as a drawback or a benefit depending on the circumstances of the negotiation Bargaining Power Relative power of a party with respect to another party or parties that influences abilities to o Set agendas o Influence outcomes o Negotiate terms during bargaining Unequal bargaining power When parties possess different power relative to each other and this difference creates opportunities or obstacles with respect to o Setting agendas o Influencing outcomes o Negotiating terms during bargaining Rubbermaid s Unequal Bargaining Power Party with the weakest bargaining position can be in a very vulnerable spot Alternatives to a Negotiated Agreement BATNA Acronym for best alternative to a negotiated agreement o Used by negotiators to ensure that favorable terms are not rejected and unfavorable terms are not accepted WATNA Acronym for worst alternative to a negotiated agreement which is a concept used by some negotiators Areas of Negotiation Bargaining Zone Area in which parties to a negotiation are willing to trade barter or negotiate their positions within which parties can find an acceptable agreement Reservation Point Party s bottom line in negotiation
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