Originially from: World Arbitration and Mediation Review (WAMR)

FDIC FAVORS USE OF ADRs
By Cathy A. Costantino. Ms. Costantino is Counsel at the FDIC in
Washington, DC, where she oversees the ADR program. Prior to its reorganization
in February 1992, she was also the Director of the ADR Unit at
the Resolution Trust Corporation. Ms. Costantino lectures and teaches
extensively on ADR and dispute system design issues.
(Editor’s Note: This is the second article of WAMR’s Practice &
Perspective series on federal agency use of ADR. The first part, “ADR in
Federal Agencies: A Status Report,” by Dana Freyer, appeared in the
September issue at 3 WAMR 227. )
The Federal Deposit Insurance Corporation (FDIC) in the first two
quarters of 1992 saved an estimated $1.6 million in legal fees and expenses,
recovered $8.9 million, and avoided liability of $12.9 million, all through the
use of formal ADR mechanisms such as mediation and arbitration. These
estimated cost savings, which do not include cases resolved by informal
ADR such as negotiated settlements, are more than five times the ADR
savings for all of 1991. They reflect all types of cases, including troubled
real estate work-outs, creditor claims, commercial litigation, and professional
liability matters. Currently, there are 114 matters valued at $285 million
pending at the FDIC in some type of ADR.
FDIC Program Shows Initiative, Early Success
These statistics demonstrate the continued utilization and success of ADR
at the FDIC. The FDIC has used ADR since 1989, well in advance of recent
legislative and executive directives. During this period, the FDIC has
adopted policies and programs that authorize, indeed encourage, the use of
ADR in appropriate instances. There are now trained ADR coordinators, on
both the business and legal staffs, in each of the 19 site and four regional
FDIC offices.
The FDIC uses all forms of ADR, including mediation, early neutral
evaluation, minitrials, and, in certain limited circumstances, arbitration. In
particular, the FDIC selects and tailors the spectrum of ADR mechanisms to
meet the needs of the disputants in a specific case. The ability of the
disputants to choose and design the ADR process allows them greater control
over both the process and the product.