Henning Mediation & Arbitration Service, Inc.

How To Avoid Litigation: Using ADR Clauses to Control Your Risks And Costs

Few people, other than trial lawyers, enjoy the prospect of going to court, because of the enormous costs, lengthy delays in having a dispute resolved, uncetainty of outcome, and lack of control disputants have over the process. Many people are unaware that by inserting an alternative dispute resolution (ADR) clause in their contracts, they can avoid ending up in court if a dispute later arises. ADR clauses provide alternatives to the court system for resolving a dispute. The most common ADR clauses provide for mediation and/or arbitration. Following is an example of an ADR clause that uses mediation as a first step, and arbitration as the final step for resolving a dispute:

Med-then-Arb Clause:

Any controversy or claim arising out of or relating to this contract or the breach thereof, shall be submitted to mediation administered by Henning Mediation & Arbitration Service, Inc. (HMA) in accordance with its procedures. If the parties are unable to resolve their dispute in mediation, the dispute shall be settled by binding arbitration administered by HMA in accordance with its rules, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

Arbitration clauses may specify the arbitration rules that the parties want to use. HMA has arbitration rules, but will use any other arbitration rules that the parties may specify. Parties may also include many other details in their agreement to arbitrate, including the number of arbitrators, location of the arbitration, how soon the arbitration hearing must be commenced and other matters.

Arbitration Clause:

Any controversy or claim arising out of or relating to this Agreement or the breach thereof, shall be settled by binding arbitration administered by Henning Mediation & Arbitration Service, Inc. (HMA) in accordance with its rules, and judgement upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration hearing and all proceedings in connection therewith shall take place in Atlanta, Georgia. The arbitration shall be conducted by one or more arbitrators selected by the parties from HMA panel of arbitrators, or, if they are unable to agree on the selection, by one or more arbitrators appointed by HMA. The arbitration hearing shall be commenced within 90 days of the filing of a Demand for Arbitration by either party, and the award shall be rendered within 30 days of the conclusion of such hearing.

Selecting an ADR Provider to Conduct the Mediation or Arbitration Process

Those people who are aware of the benefits of ADR clauses sometimes make the mistake of routinely inserting a clause naming a particular association to administer the ADR process without awareness that this association charges much higher fees than HMA. It often comes as an unwelcome surprise to learn that a substantial filing fee based on the amount of the claim will be charged by the association to use the arbitration process specified in the contract.

Before naming an organization in your contract to administer your ADR process, compare costs, service, quality:

• HMA charges no filing or hearing room fees to conduct your mediation or arbitration,
• At HMA there is no bureaucracy to wade through, and no lengthy delays in getting your process scheduled,
• HMA's panel of neultrals are recognized as the best in the field,
• Your mediation or arbitration will be conducted in a comfortable, confidential, and professional setting.

HMA does not provide legal services, and when drafting contract clauses, an attorney's assistance is recommended. Pat Siuta, President of the Training and Consulting division, is available to consult with attorneys and business people who are considering adopting an ADR clause.

For more information about our consulting services, please contact Pat Siuta at 770-955-2252 or patsiuta@henningmediation.com.