Why ADR Programs Aren't More Appealing: An Empirical Perspective

Abstract

Standard law and economic theory suggests that litigating parties seeking to maximize welfare will participate in alternative dispute resolution (ADR) programs if they generate a surplus. ADR programs claim to generate social surplus partly through promoting settlements and reducing case disposition time. Although most associate ADR programs with trial courts, a relatively recent trend involves appellate court use of ADR programs. The emergence of court‐annexed ADR programs raises a question. Specifically, if ADR programs achieve their goals of promoting settlements and reducing disposition time, why do some courts find it necessary to impose ADR participation? Attention to ADR's ability to achieve its goals provides one clue. Most empirical assessments of ADR program efficacy have been mixed. This study exploits a uniquely comprehensive database of state civil court trials and appeals and tests hypotheses germane to questions about whether court‐annexed appellate ADR programs stimulate settlement and reduce disposition time. Using data from 46 large counties consisting of 8,038 trials that generated 965 filed appeals, with 166 appeals participating in ADR programs, findings from this study provide mixed support for ADR programs. Specifically, results from this study indicate that participation in an ADR program correlates with an increased likelihood of settlement but not with reduced disposition time. ADR program mixed efficacy diminishes its appeal to litigants. Institutional interests help explain why appellate courts impose ADR participation notwithstanding mixed results on ADR efficacy.