Mediation Minute

A Cool New Thing – Neutral-Driven Dispute Resolution (NDR) for Modest Business Disputes

Cinematic image of a conference meeting.
November 20, 2023
There are many business disputes too large to ignore but too small to litigate for any period of time. Absent contingency fees and insurance coverage, when the amount in controversy is under $200,000, the fees and costs to resolve the dispute can ultimately be disproportionate to the settlement value of the case. Unfortunately, our rules of procedure and judicial processes are not well-suited for managing low-stakes business disputes. The rules and process don’t change with the amount in controversy and therein lies the problem. We need a simpler, more cost-effective model for resolving modest business disputes. Neutral-Driven Dispute Resolution (NDR) provides a solution for a wide category of low to modest stakes disputes.  NDR was a term coined by Robert Christopher in his book Just Right: How Neutral Driven Resolution Can Close the Gap in American Justice. NDR is exactly what its name implies, an alternative dispute resolution process that is driven or assisted by the neutral decision-maker(s) instead of opposing lawyers. NDR empowers a mutually selected, independent neutral to (a) conduct a robust, yet stakes-sensitive investigation into what happened, (b) gather and evaluate the facts, and (c) determine what law controls a dispute and (d) reach a decision. The neutral could produce a report of their investigation and use the report to facilitate mediation. This might be referred to as NDR-M. The parties can use NDR to handle certain issues within a larger litigated dispute. The scope of work and powers granted to the neutral are limited only by the creativity and will of the parties. NDR is far cheaper than a three-panel arbitration that takes months to complete.

In my preferred version of NDR, the neutral interviews the witnesses, reviews the documents and governing law and then makes preliminary findings of fact and law. There is no “motion practice.” If there is a lack of cooperation, the neutral will have the power to use adverse inferences or impose sanctions. The neutral will sort out the legal claims and defenses, albeit with input from retained counsel where needed. NDR is essentially a species of low-cost arbitration. Counsel for the parties can provide input and suggestions in shaping the scope of the investigation and will safe-guard privileges but will not engage in traditional discovery or motion practice. If an expert is needed by the neutral the cost may be allocated between the parties, or each side may retain one. The neutral will be obligated to respect work product and attorney-client privileges. One benefit is the ability to hire a neutral with subject matter expertise. After a reasonable investigative period, the tentative decision is distributed to the parties for comment. The decision is not “one and done.” The parties may submit whatever additional facts or law or analysis they believe are worthy of the neutral’s re-consideration. The NDR neutral may issue a revised proposed decision. In this way the process is iterative. There may be multiple opportunities for the parties and counsel to comment before the neutral reaches a final decision.
The NDR process leads to a final result only after consideration and reconsideration of the facts and law. The parties should feel as though their positions, even if rejected, have been fairly considered. The NDR process invites a fast but thoughtful and fair result. The costs are shared and negotiated in advance. This helps reduce power and wealth imbalances. Because the process is driven by the neutral, the cost of discovery is reduced by sixty percent or more. Mediation can take place before the neutral begins work. Alternatively, NDR may be a good option following an early mediation if it appears the parties have limited means and cannot well-afford full-blown civil litigation. In the preferred model, there are no appeals. Alternatively, the appellant bears the cost of the entire appeal to an agreed private panel. NDR is a helpful and innovative device for litigators, as DR aligns lawyer and client financial interests in stakes here traditional litigation may prove too slow or costly. DR is best seen as a complementary tool. Trial attorneys an refer out cases to NDR that otherwise make no economic sense (to them or their clients) and concentrate on cases that warrant traditional civil litigation. In this way the general public will come to see lawyers as thoughtful shepherds, offering different cost-sensitive paths to resolution of a dispute. For a thorough discussion of NDR check out Rob Christopher’s book here.