Courtbusters

College student Maria Shockley was angry when she couldn't seem to clear up a mistake on her records: A course she had dropped had been recorded as failed, and her account had not been credited. Getting a college degree was tough enough with two kids to raise and a job that required a lot of travel. She didn't need a college official telling her that she would have to pay again in order to repeat the course.

Shockley, who is in her fifties, thought her age was one reason college officials weren't responsive to her efforts to clear up the mistake. She wanted to sue. But before resorting to the courts, she filed an age-discrimination charge against the college through the U.S. Department of Education. And thus Shockley entered the world of alternative dispute resolution (ADR) in the federal government.

Under the Age Discrimination Act, Shockley's case was automatically referred to the Federal Mediation and Conciliation Service (FMCS), which assigned a mediator to sit down with Shockley and a college official. After three hours, they signed an agreement that satisfied both parties: Shockley would not have to pay tuition. In return, she dropped the discrimination charge. Shockley was happy. "Mediation gave me a chance to get my position heard," she said. "They had to listen."

Whether or not Shockley's discrimination complaint was valid, mediation at least provided a resolution of her problem that was faster and cheaper for both parties than going to court.

The Education Department program, one of the oldest ADR programs in government, is an example of one type of ADR; other agencies use many different techniques. Used properly, ADR is an effective means for reducing and resolving disputes both among agency personnel and between agencies and members of the public affected by an agency action. It has been used to resolve disputes in contract, enforcement and equal employment opportunity cases, as well as to assist in rule-making. ADR is applicable to every agency and department of the federal government, as Vice President Gore recognized when he endorsed expanding its use as part of his National Performance Review.

The term ADR covers all methods of resolving disputes other than through courtroom litigation or agency adjudication. These include mediation, arbitration, regulatory negotiations, mini-trials, advisory arbitration and fact-finding. ADR has been increasingly used by federal, state and municipal governments, courts and private entities to avoid litigation costs and delays. Generally, parties may turn to the courts if ADR fails to produce a settlement, except with techniques that are meant to be final, such as binding arbitration.

The need for ADR has increased as the number of complaints filed, both in the courts and in administrative venues, has exploded. In 1992, roughly 275,000 lawsuits were filed in federal courts around the country, almost double the number filed 20 years ago. The courts and the Equal Employment Opportunity Commission (EEOC) are now overburdened with 70,000 employment discrimination charges filed last year alone. The volume is likely to increase in the coming years, since two new laws -- the Civil Rights Act of 1991 and the Americans with Disabilities Act of 1990 -- provide for additional causes of action. Both acts encourage the use of ADR methods.

Agencies now using ADR report many administrative and financial benefits. The Federal Deposit Insurance Corporation uses ADR for valuation issues, creditor claims, commercial litigation and professional liability matters. According to its ADR coordinator, Cathy Costantino, the FDIC saved an estimated $ 4.3 million in legal fees and expenses in fiscal 1992, recovered $ 22.6 million and avoided liability of $ 52.1 million through the use of formal ADR techniques such as mediation, mini-trials and early neutral evaluation.

ADR's Growth

Two federal agencies are responsible for promoting the use of ADR. The Federal Mediation and Conciliation Service, an independent agency, was established in 1947 to deal with labor disputes affecting interstate commerce. Since then, its responsibilities have expanded to include a wide range of disputes, beginning with a congressional request to tackle a land dispute between the Navajo and Hopi tribes in the 1970s. Federal labor disputes became an official part of its responsibilities in 1978. In addition to providing mediation services, FMCS also helps federal agencies establish and maintain ADR programs, consulting on systems design, mediation training and mentoring.

The second federal agency spearheading the use of ADR is the Administrative Conference of the United States (ACUS). Its primary responsibility is to develop improvements in the legal procedures employed by federal agencies. As part of that function, ACUS actively promotes and reports on the use of ADR throughout the government and advises agencies on ADR policy development. ACUS has established four committees relating to ADR: training and education, clearinghouse and outreach, systems design and implementation.

Several other agencies use ADR techniques routinely. The National Mediation Board deals with labor disputes in the railroad and airline industries, and the Federal Services Impasses Panel of the Federal Labor Relations Authority provides binding resolution of certain federal labor disputes. The Community Relations Service, part of the Department of Justice, has trained community mediators to deal with racial and ethnic strife since it was formed by the Civil Rights Act of 1964. A number of government agencies use ADR in performing their adjudicative functions. Administrative law judges, who preside over agency hearings to resolve complaints, are beginning to experiment with ADR by using settlement judges, for example. A settlement judge is someone other than the trial judge who acts as a mediator or neutral evaluator.

Though ADR is receiving increased use and attention of late, it is not really a new idea. Federal labor relations specialists have been using negotiation, mediation and arbitration in disputes over collective bargaining agreements for years. Government attorneys have always negotiated settlements, although not as part of a systematic ADR process.

Early pioneers of ADR, such as Les Edelman, chief counsel of the Army Corps of Engineers, began piloting the use of "mini-trials" and advisory (non-binding) arbitration in the mid-1980s. "In those days," says Frank Carr, the Corps' chief trial attorney, "people were reluctant to even talk about ADR and resisted any efforts to experiment with it. Now the parties and agencies are receptive to the idea -- they look for creative ways to solve disputes. It's a 180-degree turn!"

Today, the courts are beginning to use ADR techniques as well. In one demonstration project, federal district courts are required to refer appropriate cases to ADR programs. The federal judiciary has also experimented with settlement judges and with the use of outside experts as volunteer mediators for early neutral evaluation, wherein an expert gives an early opinion on the merits of a case and how each side is likely to fare in court. As a result of the Civil Justice Reform Act, all federal trial courts are now examining how to make use of ADR. In addition, while the legislative branch has not actively used ADR, recent equal employment opportunity legislation provides for mediation of Senate employees' EEO complaints through the use of skilled neutrals.

The recent explosive growth of ADR in the executive branch can be traced to several sources. The 1990 Administrative Dispute Resolution Act authorizes use of ADR techniques in cases involving federal agencies. Each agency must appoint a senior official as an ADR coordinator and develop an ADR policy. The government's incentive for using ADR is clear: In 1990, the United States was party to one-fourth of the civil cases filed in federal courts.

In 1990, Congress also passed the Negotiated Rulemaking Act, which promotes the use of regulatory negotiations ("reg-negs") to develop agency rules. This process brings agency representatives and various interest groups together to negotiate the text of a proposed rule. The negotiations take place before the notice-and comment period required by the Administrative Procedure Act, which outlines the procedures that government agencies must follow when engaging in rule-making.

The most recent stimulus to the growth of ADR in federal government was an executive order that emerged from recommendations by the the Bush Administration's Council on Competitiveness. Effective in January 1992, the order requires federal attorneys to reduce case loads through increased use of ADR. A checklist is provided to make sure that all steps have been taken to resolve an issue prior to going to court.

Employment Complaints

Equal employment opportunity complaints have provided a fertile field for use of ADR in the government.

In one case, Mary Smith (not her real name), a secretary for the Air Force, was furious when she found out that her boss had made an entry in her employment file noting that she had been continually late for work. She knew another employee who was late all the time and was sure that he didn't have an entry in his record. Smith, who is black, believed that she was being singled out because of her race, and filed a race discrimination charge against her boss, a white male.

Smith and her boss agreed to try to settle the dispute by going to mediation. First, they sat down with a mediator from the agency. Each had a chance to tell his or her side of the story. They also met individually with the mediator to discuss things that they might not have felt comfortable saying in front of each other. The mediator did not take sides, but helped Smith and her boss think of ways to solve their disagreement.

Some interesting information came out during the mediation. For instance, Smith explained that she was occasionally late because she couldn't always control the time her carpool would arrive. In response to her accusation of favoritism, Smith's boss told her that she was not in fact the only employee who had been disciplined for tardiness. Smith's boss then suggested that she switch to a different carpool; in fact he knew of one from her neighborhood that was looking for another member.

In the end, Smith agreed to change to the new carpool and make a sincere effort to arrive at work on time. In exchange, her boss agreed to temporarily remove the notation about her tardiness from her record -- and to delete it permanently if the problem disappeared during the next six months.

In 1992, the EEOC adopted new regulations governing procedures for government employees with discrimination complaints. Section 1614 of the regulations extends the pre-complaint counseling phase from 30 to 90 days if an agency has an ADR system in place and the complaining employee chooses to participate in it. ADR can be used at various stages of an EEO dispute. Some agencies provide for mediation before a case goes into counseling, after counseling and prior to investigation, or after a formal investigation but prior to the issuance of an agency decision.

Agency EEO offices have begun to recognize the value of mediation in EEO disputes. As a result, many agencies now teach dispute-resolution skills to their counselors and investigators. The Air Force estimates that it costs more than $ 80,000 to take each discrimination case through the complete, formal complaint process. The Air Force Civilian Appellate Review Agency, which is charged with investigating complaints of civilian employees, has attempted mediation for 446 EEO grievances and complaints. Of these, 254 (57 percent) have been successfully settled.

In addition to training agency personnel in ADR techniques, some agencies provide training to help managers and executives deal more effectively with EEO problems. "At HHS, we're in the process of introducing ADR concepts to management throughout the department," says John Settle, dispute resolution specialist for HHS and chair of its Departmental Appeals Board. "We couldn't have wished for a more positive response. We have federal managers truly ready and eager to look at conflict management in new ways." Settle produces an ADR newsletter for his staff explaining developments in this field and provides ADR training sessions to executives and managers.

Reg-Neg at EPA

In 1989, EPA used the reg-neg approach developed and endorsed by ACUS in writing new rules on harmful emissions of toxic and volatile organic compounds. A conflict arose over how frequently chemical manufacturing companies would be required to monitor for leaks at connection points such as flanges, valves and pumps. Public-interest groups argued for monthly monitoring of all connection points. Industry representatives believed this was unnecessary and unreasonable, since many plants have thousands of connection points, some as many as seven stories above the ground with no permanent access points. After the reg-neg committee visited a few plants, the public-interest groups recognized that monthly monitoring of all connection points would be extremely difficult and dangerous in many cases, and that their interests could be met in other ways. A compromise plan required the manufacturers to monitor according to a complex schedule, with increased monitoring whenever a leak was detected.

EPA has been using ADR programs since the mid-1980s in both rulemaking and enforcement. According to Deborah Dalton, deputy director of EPA's Consensus and Dispute Resolution Program, EPA has used reg-neg in the promulgation of 15 rules. The process not only reduces controversy and uncertainty while the rules are being written, but can minimize litigation after they are published.

While EPA has not been able to quantify the impact of reg-neg on its rule-making process, Dalton believes it has been significant. Through reg-neg, EPA knows in advance of a party's disagreement with a proposed rule and can narrow and refine the disputed issues. EPA has found that the reg-neg process helps keep the agency from ending up as the sole arbiter of an issue, because the two sides are able to discuss their concerns directly with one another and work out a compromise. Even when reg-neg does not produce a consensus rule, the agency and parties benefit from building a more productive relationship and from airing issues and problems.

In addition to a decrease in litigation, agencies report that parties involved in reg-negs have expressed satisfaction with the process. The Department of Transportation has formally employed the reg-neg process four times. Neil R. Eisner, assistant general counsel in DOT's Office of Regulation and Enforcement, says many groups involved in one reg-neg were lobbying on Capitol Hill four months later to have the approach used again.

Enforcement Disputes

The Occupational Safety and Health Administration (OSHA) routinely inspects businesses for health and safety violations. A few years ago, an inspection of a paint manufacturing plant uncovered 53 violations, including failure to safeguard employees' hearing, improper storage of flammable liquid, blocked exits and lack of ventilation. The agency issued citations with a total proposed penalty of $ 137,500. Claiming this would bankrupt it, the company threatened litigation.

Instead, the Labor Department (OSHA's parent agency) and the company representatives settled the case through mediation. After just two meetings, the parties agreed that the company would pay $ 40,000 in penalties and would implement an abatement plan that it had devised to correct the violations.

A company's incentive for attempting mediation is clear: It may result in a lower penalty. But where's the incentive for the government? In most cases, OSHA's first priority is abatement of the safety and health violations, says Marshall Harris, Labor's regional solicitor in Philadelphia. Through mediation, the agency can work with the company to abate unsafe conditions immediately, without a judicial hearing, while still securing an appropriate financial penalty. In cases such as this one, where the company faced bankruptcy, mediation provides a flexible approach to OSHA's enforcement duties.

In 1992, the Labor Department completed a pilot ADR program to resolve wage-and-hour, mine safety and OSHA cases. The program also provided negotiation and mediation training to department employees. Through an inter-agency agreement, FMCS trained senior managers in mediation and mentored the mediator-trainees during their first cases. ACUS also assisted in designing the pilot and provided training for regional managers and attorneys on the background of ADR and mediation. Suggested improvements that came to light during the pilot program have been implemented to make it even more effective, and plans are under way to expand the program.

Contract Disputes

When the contractor chosen by the Army Corps of Engineers began preparing for construction of an inland waterway in Tennessee, it discovered that the soil it had agreed to remove had a higher moisture content than anticipated. This increased removal costs, and the company filed a claim asking for added payments of $ 56 million. The Corps demurred, saying its contractor should have anticipated the problem -- and could have alleviated it by using a process to lower the soil's moisture content.

Instead of battling it out in court, the parties agreed to participate in a mini-trial. Over the course of three days and under the supervision of a government contracts expert, the parties presented facts and their positions to representatives they had chosen. These people eventually sat down with a neutral expert and negotiated a settlement under which the Corps paid the contractor an additional $ 17 million to complete the work.

The process took several months. But the dispute probably would have dragged on for several years had the parties elected to pursue the matter through the Corps of Engineers Board of Contract Appeals, says Corps attorney Carr. The trial time alone was reduced from an estimated six to eight weeks to less than three days. The mini-trial saved manpower as well; each side had teams of lawyers devoted solely to the litigation. And Carr says that although both parties had some employees who were unhappy with the settlement amount, the parties were able to put the dispute behind them.

The Corps is working on expanding ADR agency-wide, to resolve conflicts in construction, operations and disposal of toxic substances. In addition to having settled numerous claims through mini-trials, the agency has also used a disputes review board, where a panel of three experts is selected to handle any disputes or disagreements that arise between parties on a construction project.

ADR's Pros and Cons

Implementing an effective ADR program isn't easy. As a first step, the policies, practices, culture and mission of an agency must be examined, along with the types of conflicts that arise and current means of resolving them.

The next step is designing an ADR system to fit the agency's particular needs. This requires identifying disputes appropriate for ADR, matching these disputes to the appropriate type of ADR process, choosing neutrals, selecting proper areas to initiate pilot projects and establishing evaluation methods. Usually, agencies start by pilot-testing the concept of ADR on a select numbe of cases or in a certain geographic area.

ADR often saves time and money. It may result in an agreement where both parties feel that they have won, in contrast to the "winner-take-all" mentality of litigation. A consensual agreement can encourage agreements in the future.

ADR, however, is not a panacea. When ADR techniques such as mediation fail, they may add time and expense to resolving a dispute, and can sometimes provide discovery for one side at the expense of the other.

Some disputes are inappropriate for ADR. Mediation and settlement may be inappropriate for cases where precedent needs to be set; the lack of formal proceedings or findings with ADR means that a case cannot be used as a guide in resolving future disputes. Although critics object to the fact that many of the ADR processes take place behind closed doors, removed from public scrutiny, confidentiality is essential to creative problem-solving, testing out solutions and making the process work.

Some critics object to the fact that parties may give up legal rights during the ADR process. When private parties reach an agreement in mediation or other voluntary processes, they often sign a contract stating the terms of the agreement and that they will not pursue the matter in court. Generally, courts are reluctant to disturb such contractual agreements. Court-ordered ADR may require judicial approval of the agreement and continued judicial oversight. In arbitration, agencies have 30 days to vacate any award under the Administrative Dispute Resolution Act; third parties affected by an arbitral award may also object to the award in federal court.

Opponents say some ADR techniques may lack constitutional due-process and other safeguards. All these deficiencies, however, can be avoided by carefully selecting and implementing the most appropriate process, monitoring its implementation, evaluating its results and communicating this to agency ADR specialists.

Some predict that ADR will spread rapidly. Says Bernard DeLury, former director of FMCS, "Within the next decade, don't be surprised if you see the establishment of a Department of Conflict Resolution to help deal with ADR in the federal government and to assist the states."

A GUIDE TO ADR TECHNIQUES

Alternative dispute resolution encompasses many different techniques. They vary in many respects, including the participation of a third party and the degree of control that person has over the process. While the lines between them are not always clear, the ADR techniques listed here fall on a continuum from those where the third party has little or no role to those where he or she has control over the outcome.

Negotiation, the heart of most ADR techniques, is generally defined as communication for the purpose of persuasion.

In a mini-trial the parties to a dispute present an abbreviated version of their case to a panel made up of representatives of each side. Allowing the parties to see how their case would be presented in court encourages negotiated settlement by demonstrating the strengths and weaknesses of their positions.

Facilitation is more collaborative. The facilitator assists the parties in defining issues and setting priorities, but does not actively attempt to settle the conflict.

A settlement judge is a judge other than the trial judge who meets with the parties jointly and separately, acting as mediator or neutral evaluator.

In mediation, a neutral third party assists disputants in reaching a negotiated settlement by helping them communicate, but without issuing a decision.

Regulatory negotiation (reg-neg) is a form of public-policy mediation in which the parties reach agreement on proposed government regulations through the assistance of a mediator.

An ombudsman investigates grievances and recommends solutions.

Arbitration involves submission of a dispute to a neutral third person who hears arguments, reviews evidence and issues a binding decision called an award. It is similar to court adjudication, but is generally less formal, quicker and not as expensive.

In med-arb, one of an increasing number of hybrid forms of ADR, the neutral first mediates the dispute and tries to get the parties to agree on as many issues as possible and then issues a binding decision on unresolved issues.

Eileen Barkas Hoffman is general counsel at FMCS. John A. Wagner is director of field services and training at FMCS. Scott Gold and Lisa Belasco assisted in preparing this article.