Originally from Dispute Resolution Journal

In this article, John Hinchey and Laurence Schor review the most significant developments in the construction industry ADR use over the last 15 years. During this period the industry has criticized, scrutinized, and revised ADR processes, all the while asking itself, “What’s wrong with these processes? What’s right?” The authors, however, think that such questions are misleading. “Perhaps the more appropriate questions would have addressed how and under what circumstances any or all of the various ADR processes should be applied to construction disputes,” they write.

Over the past 15 years in the United States, the number of construction industry disputes referred to alternative dispute resolution (ADR) processes increased dramatically. Because construction industry disputants in America typically looked to their litigation lawyers for advice, the various ADR processes quickly came under the critical eyes of lawyers trained in trial advocacy. Arbitration rules and regimes existing in the 1980s were particularly criticized by American construction litigators as inadequate to deal with the “complex construction case.” On the other hand, construction industry executives resisted the construction bar’s tendency to “lawyerize” traditional arbitration.

Throughout the 1990s, virtually every American construction industry bar group and organization conducted surveys, established special committees or sponsored programs to consider and criticize various dispute resolution processes for resolving construction industry disputes. No segment of the industry was content with the status quo; valid criticism came from all sides. There was also some conceptual confusion about whether the preventative measures of enlightened contract risk allocation or “partnering” should supplant other forms of ADR, and whether mediation should be an alternative, rather than preliminary, to arbitration. It seemed that everyone was searching for the perfect process or the “Holy Grail” of alternative dispute resolution. Professor Tom Stipanowich encapsulized the search well:

Throughout its history…the construction industry has sought out mechanisms aimed at: (1) avoiding or minimizing relational conflicts; (2) minimizing the temporal and financial costs of conflict resolution; (3) preserving the working relationship of the parties…; and (4) bringing to bear the practical and technical insights of adjudicators and advisors from within the industry.1

In hindsight, the lessons learned over the past decade are that ADR cannot be monolithic in character. One size will never fit all, and there is no single perfect process. Instead, the rack of ADR “tools” should be selectively applied to the needs and requirements of the parties in particular cases. Perhaps the primary problem lay in the fact that ADR procedures are typically cast into a contract before the parameters of future problems are known. Then, once the parties’ interests have diverged, and after disputes have developed, the pre-arranged ADR processes become more a straightjacket than a comfortably fitting customtailored suit.

Over two decades ago, Professor Frank Sander of Harvard promoted his vision of a “multi-door courthouse,” in which incoming disputes would be directed to various dispute resolution forums, e.g., court adjudication, arbitration, mediation, negotiation or other processes, on the basis of such criteria as the nature of the dispute, the relationship between disputing parties, the amount in controversy, and concerns regarding the speed and cost of dispute resolution.2 Professor Sander envisioned a dynamic system, premised on a flexible tailoring of the process to the problem. In the intervening years, substantial progress was made toward realizing Sander’s vision in the public realm; yet, little was achieved in the realm of private dispute resolution.3

In brief, our thesis is that while efforts should not necessarily cease in searching for the ideal ADR process, perhaps the focus should shift from how to contractually bind the parties, in advance, to specific forms of ADR, to urging the parties to agree to be bound or guided by the informed recommendations of a neutral advisor or a “disputes process board,” regarding process design and selection, after, not before, the dispute is known.