Imbalances of Power in ADR: The Impact of Representation and Dispute Resolution Method on Case Outcomes

Abstract

In recent decades, Alternative Dispute Resolution processes have gained worldwide recognition, a growing role in legal practice, and academic attention. Despite their professed advantages they have also faced fierce opposition. In a seminal article, Owen Fiss argued that ADR exacerbates imbalances of power between the parties. But while the theoretical argument has been widely discussed and developed in academic literature, empirical evidence has remained scant. This Article purports to bridge the gap. It empirically examines the impact of two seemingly relevant factors in inherently imbalanced legal disputes: representation and dispute resolution method. Arguably, professional representation of weaker parties may reduce the effects of inequality, whereas less formal, transparent and adjudicatory processes may exacerbate them.

The Article focuses on small claims settlement conferences, using the Israeli labor courts system as a test case. It examines the impact of representation on the outcome of settlement conferences, and the effect of using settlement conferences on the outcome of the case itself. Our dataset is based on more than three hundred small claims filed by employees against their employers in the Haifa labor court. The data collected with regard to each case consisted of information about the representation of each party (self-representation, representation by a lawyer who does not specialize in employment law, and representation by a specialist in the field), the outcome of the case (a successful settlement conference, a court facilitated settlement or a judicial decision following full trial), and the amount obtained by the plaintiff (compared to the amount claimed).

The most salient and interesting findings are that representation increases the probability of a successful settlement conference, but reduces the ratio between the amount obtained by the plaintiff and the sum claimed. Perhaps more importantly, the more formal the process, the greater the proportion of the claim won by the plaintiff: the ratio between the sum obtained by the plaintiff and the sum claimed in settlement conferences is smaller than in judge-facilitated settlements, and smaller still than in full trials.

Keywords: ADR, settlement conference, mediation, dispute resolution, labor law, labor courts, Israeli law, empirical study

JEL Classification: K00, K10, K19, K31, K49