The Virtues of Virtual ADR

With no sign of the COVID-19 pandemic abating on a national level, clients with pending litigation are left with three basic options: (1) endure delays in litigation proceedings as a result of inevitable backlogs in state and federal courts; (2) negotiate an out-of-court solution; or (3) participate in virtual alternative dispute resolution (“ADR”), such as mediation or arbitration.  Because virtual ADR can be as effective as in-person ADR, it may be a viable, long-term alternative for clients and lawyers.  This article describes what parties can expect when conducting an ADR proceeding virtually, addresses potential concerns with the virtual format as well as noting its many benefits, and discusses best practices in navigating virtual proceedings and providing for virtual ADR options in future agreements.

What to Expect from a Process Perspective

Unlike traditional ADR, virtual ADR is conducted over a video conferencing service like Zoom, GoToMeeting, or Webex.  Prior to the mediation or arbitration, the mediator or arbitrator usually will conduct a video conference with both sides to explain the process and answer any questions.  The mediator or arbitrator will also schedule the mediation or arbitration and set a schedule for the submission of mediation statements or arbitration briefs.

After the parties submit their initial papers, the mediator or arbitrator often will schedule additional ex parte calls or video conferences to better understand each side’s position, including any perceived obstacles to settlement.  At this point, the mediator or arbitrator may want to know which client representative(s) will be attending the mediation or arbitration.  For a mediation, the mediator ordinarily will ask for confirmation that at least one attending client representative from each side will have settlement authority.

On the mediation or arbitration date, all parties will start off in one virtual “room.”  In a mediation, the mediator may ask for an opening statement from each side.  The mediator will then separate the parties into private “breakout” rooms, which allow each side’s counsel and clients to engage in private discussions.  The mediator will be able to access the private breakout rooms to confer separately with each side; the opposing party and counsel will not.  In an arbitration, witnesses may appear in the same location as their counsel or a witness may testify from his or her own respective locations with counsel appearing remotely from a different location.  The parties can display exhibits by circulating them electronically in advance or by screen-sharing.  Opposing counsel can cross-examine the witnesses remotely.

Potential Concerns About and Benefits of Virtual ADR Proceedings

Of course, virtual ADR is not a panacea and carries with it certain noteworthy disadvantages:

• In a mediation, it may be more difficult for clients and counsel to gauge the reactions of the mediator and the opposing party. The loss of face-to-face interactions and inability to see nonverbal cues can lead to strained conversations.
• In an arbitration, clients and counsel may be concerned about their ability to present their case effectively without being able to confer in person with witnesses, the arbitrator, and one another.
• Given that no travel is involved, it may be easier for parties to adjourn a mediation or arbitration prematurely and continue on another date, which can diminish efficiency or simply slow things down.
• Clients and counsel may have concerns about confidentiality and cybersecurity with the exchange of documents and video conferencing.

Many of the concerns about virtual ADR are overstated or easily addressed.  For example, each ADR institution has its own cybersecurity protocols.  JAMS uses a Zoom HIPAA-compliant platform for virtual mediations and arbitrations,^[1] which allows mediators and arbitrators to encrypt audio, video, and screen-sharing data that are transmitted.^[2]

As the pandemic continues, clients and counsel are becoming increasingly comfortable with video conferencing, and the advantages of virtual ADR are plentiful:

• Virtual ADR eliminates travel time and expense, making it a less burdensome alternative.
• Scheduling concerns are reduced since parties can present their cases from anywhere. Clients can participate from their homes rather than traveling domestically or internationally.  This is particularly important given that the coronavirus pandemic has impacted more than 200 countries to date, and brought about travel restrictions both domestically and internationally.
• Additional client representatives and lawyers can participate with less added expense and disruption.
• Electronic document-sharing is often a necessary part of virtual ADR but is more efficient and less burdensome than paper exchanges.

Best Practices in Conducting a Virtual ADR Proceeding

The downsides from the loss of face-to-face interaction can be mitigated with these best practices:

• Counsel should discuss expectations with the client prior to the virtual mediation or arbitration. In the case of a mediation, particularly in the virtual context, counsel should develop a draft term sheet for the client’s approval.  The mediator will often ask for a draft term sheet, and even if he or she does not, the draft term sheet will ensure that counsel and the client are on the same page and facilitate settlement discussions with the opposing side.
• Counsel should hold practice sessions with the client and witnesses prior to the mediation or arbitration so that everyone knows what to expect. Mediators and arbitrators will often offer a simulation on Zoom or another video conferencing service so that the parties are comfortable with the technology on the day of the mediation or arbitration.
• Counsel should inform clients of how best to communicate in the event of an urgent concern during a mediation or arbitration. Counsel will usually be able to request a break during an arbitration or ask to confer with the client in a private breakout room during a mediation.

Looking Ahead:  Incorporating Virtual ADR Provisions into New Contracts

Given the advantages of virtual ADR and the uncertain status of in-court proceedings for the foreseeable future, clients may want to consider including a virtual arbitration provision when entering into new contracts.  Clients may also consider entering into a post-dispute virtual arbitration agreement to preserve the option for virtual ADR given that in-person ADR may not be possible or that virtual ADR may be more convenient.  Such a provision may resemble the following:

In light of the current COVID-19 pandemic, each of the parties agrees that any dispute [arising out of or relating to this Agreement] shall be submitted for binding resolution by arbitration by [insert arbitration forum] under its [insert rules] then in effect.  Any arbitration award will be enforceable in a court of competent jurisdiction.

The arbitration may be conducted virtually using [video conferencing service associated with the applicable arbitration forum] before an arbitrator selected pursuant to the [insert rules] who will have no personal or pecuniary interest, either directly or indirectly, from any business or family relationship with either of the parties. 

Of course, clients may understandably prefer in-person ADR when and where it is available, but it is not always possible, and it may be impracticable to delay ADR until in-person proceedings are again possible.  It therefore is important for counsel to be able to help clients navigate the ins and outs of virtual ADR.

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Elizabeth Bierut is an associate at Friedman Kaplan Seiler & Adelman LLP and concentrates her practice on complex commercial litigation.

This is not intended to provide legal advice for any specific situation, and no legal or business decision should be based on its content. If you would like us to advise you on your specific situation, please feel free to contact us.

[1] https://www.jamsadr.com/blog/2020/jams-addresses-security-in-virtual-adr (last accessed August 6, 2020).

[2] Id.