Business organizations face many disputes in the course of their activities. Therefore, from time to time, these organizations use different forms of dispute resolution. Traditional litigation system is a dispute resolution system that uses the court system. The law binds attorneys in representing their clients. This method is expensive and time consuming. A less expensive form of litigation is the Alternative Dispute Resolution. ADR transpires if both parties decide to seek a solution without the need of having to go to court. The decisions made using ADR are legally binding. ADR gives both parties the option of returning to the conventional court system at any time (Kerley, Hames & Sukys, 2011).
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The common forms of ADR are negotiation, concilition, mediation, and arbitration. The main differences between the traditional and nontraditional litigation are the use of a third party in ADR, power of the parties, and confidentiality (Kerley, Hames & Sukys, 2011).
In ADR, a third party is necessary in coming to an amicable resolution. The third party may be a conciliator or, in other words, a mediator. The third party makes the final decision on whether there is a settlement. However, in traditional litigation system, the third party is not necessary. The judge or jury makes the ultimate decision (Liebmann, 2000).
Publicity in most ADR cases is low. ADR may proceed without any notice even after the conclusion of the case. However, there are instances when the attorneys may increase the ppublicity works in their favor. This is different from the traditional legal system where the case has much publicity (Liebmann, 2000).
In most traditional cases, both parties have equal power. The strength of the evidence of both parties determines the ultimate decision of the court. This contrasts ADR, where only one side may enjoy the power (Kerley, Hames & Sukys, 2011).
Business organizations endeavor to reduce the risks that they face. Confidentiality and low cost of ADR make it be suitable for the use by businesses in solving financial disputes. Most business organizations use ADR in solving client’s claims, staff-related claims, and contractual disputes. ADR enables the company to maintain its public image (Liebmann, 2000).