What is alternative dispute resolution (ADR)?

What are the main types of ADR?

The two most common types are mediation and arbitration.

Mediation uses a neutral third party to help both sides reach an agreement. The mediator does not decide the outcome—it only helps guide the discussion.

Arbitration is more like a private court. An arbitrator hears both sides and makes a decision, which is often binding and enforceable.

How is ADR different from going to court?

ADR is usually faster, less expensive, and more flexible than court. It is also private, while court cases are typically public.

Court cases follow strict rules and result in a judge or jury decision. ADR allows more control over the process, but may limit appeal rights, especially in arbitration.

What to do next...

1. Check if your contract requires ADR before court.
2. Understand whether the process is binding or optional.
3. Decide which method fits your business needs.
4. Plan for how disputes will be handled ahead of time.

What to consider in your specific situation

While ADR is widely used, the best approach depends on your contract and risk level.

• The type of disputes your business may face.
• Whether you want flexibility or a final decision.
• The cost and time involved in each method.
• The importance of privacy in disputes.
• Whether your contract requires specific ADR steps.
• Your ability to enforce outcomes if needed.

Using ADR can streamline disputes, but the right setup depends on your goals and the nature of your business. Since every situation is different, consider more information through Rocket Copilot, a Legal Pro, or a legal document review to move forward with confidence.