ADR Clauses in Contracts: Should You Mediate, Arbitrate or Litigate?

Should you negotiate means for Alternative Dispute Resolution into your next business contract?

Alternative Dispute Resolution (ADR) refers to either mediation or arbitration, which provide alternatives to litigation. ADR, by comparison to traditional litigation, can sometimes be a less expensive, less risky means for parties to a contract to resolve their disputes.

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    Unsurprisingly, then, parties to business contracts routinely include ADR clauses as a precaution against potentially becoming embroiled in a lengthy, protracted dispute with their counterparts in court. However, there are circumstances in which an ADR clause might not be appropriate, depending on the sophistication of the parties, the nature of the contract and the kinds of disputes that can arise from it, among other factors.

    In this post, we focus on whether and the extent to which ADR, specifically, mediation (arbitration was discussed here) should be negotiated into your next business contract. For now, it will suffice to know that, while arbitration and mediation share similar pros and cons, the most important difference between the two is that arbitration automatically yields a binding decision, whereas mediation does not. In practical terms, this means if the parties to a dispute cannot reach a settlement through mediation, they remain free to pursue their claims in court (or through arbitration).

    What Are the Objectives of Mediation?

    The objective of mediation is to resolve a dispute by informally talking through issues in a low-pressure environment conducive to open communication. Discussions are facilitated by the mediator, who is usually an attorney, and who might also have experience practicing in whatever area of law is relevant or applicable to the parties’ dispute. The mediator seeks to ease tensions and facilitate negotiation and dialogue between the parties by speaking to them both jointly and individually.

    What Are the Benefits of Mediation?

    There are no “winners” and “losers” in mediation. The only outcome that can be reached through mediation is one that both parties agree on.

    Some statistics suggest mediation might be a more productive forum for dispute resolution to traditional litigation. For example, the Federal Mediation & Conciliation Service (a federal agency designed to mediate labor disputes that was created in 1947 under the Taft-Hartley Act, 29 U.S.C. §§ 141–197) reported that 87.1% of the negotiations it was involved with in 2017 achieved settlements.

    Moreover, if the parties cannot reach an accord through mediation, they can still decide to litigate (or arbitrate) their dispute. The costs of litigation (and to a lesser albeit similar extent, arbitration), however, provide a significant incentive for parties to reach settlements at mediation. By avoiding litigation and everything it involves (depositions, document requests, subpoenas, motion practice, trial, etc.) the parties are better able to control costs and mitigate risks. The costs of attending mediation, which are nominal compared to the costs of filing a lawsuit, are borne equally by the parties. Mediation and its outcome are also private and just between the parties. The privacy of mediation is generally regarded as a benefit, unless an aggrieved party wants to bring public attention to an issue, in which case a lawsuit, which naturally becomes part of the public record, may be more appropriate.

    Mediation can also bring closure to a dispute much faster than litigation. From this perspective, contracts containing ADR clauses likely also alleviate burdens on the court system. Indeed, courts frequently encourage or, in some circumstances, even order litigants to attend mediation before permitting their case to proceed to trial. Not doing so might mean backlogged court dockets for years or even decades. For (an extreme) example, some courts in India have a backlog of cases through the year 2330.

    When Should Mediation Be Avoided?

    Of course, there are also times when mediation might not be the best means for resolving a dispute. The history of the parties’ business relationship, for example, might not make it worthwhile to negotiate an ADR provision into a contract. Mediation usually works best between parties who approach it with a ready and open willingness to communicate and resolve their dispute. Mediation is less likely to produce a successful resolution if one party goes into it with an inflated belief in the strength of its position—whether that belief is true or not.

    Mediation is also not well suited for resolving disputes that arise from intentionally deceptive or other bad faith conduct. For instance, parties that stand accused of engaging in deceptive behavior seldom admit to engaging in that conduct, which leaves very little, if any, neutral ground for negotiation. Claims arising from this conduct are therefore best pursued through arbitration or litigation.

    Of course, if the parties negotiating a contract are uncertain about the desirability of mediation, they can always propose revisions tempering the restrictiveness of the ADR clause. For example, the parties can agree that they “may” rather than “must” resolve any disputes arising from their contract through arbitration or mediation. Parties can also agree to attempt to resolve disputes through mediation first before escalating to arbitration or litigation.

    This article is meant to be utilized as a general guideline for mediation clauses in contracts. Nothing in this blog is intended to create an attorney-client relationship or to provide legal advice on which you should rely without talking to your own retained attorney first.  If you have questions about your particular legal situation, you should contact a legal professional.

    Max Julian is an attorney at The Gertsburg Law Firm. Julian’s practice is focused on commercial litigation. He can be reached at mj@gertsburglaw.com or by phone at (440) 571-7541.


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    Next up: Affordable Wellbeing for a Healthy, Engaged Workplace
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  • Affordable Wellbeing for a Healthy, Engaged Workplace

    A recent study found that 69% of employees are unengaged at work. This means in your business, it’s possible that more than two out of three of your employees are unengaged, unmotivated, and, likely, unhappy.

    A recent study found that 69% of employees are unengaged at work. This means in your business, it’s possible that more than two out of three of your employees are unengaged, unmotivated, and, likely, unhappy.

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    You’re probably asking yourself, “Why?” Chances are, a big reason behind this dissatisfaction at work could be because your business does not have a workplace wellness program in place. It’s been shown that companies with a healthy work culture support programs that help minimize pressure on employees—be it emotional, economic, or otherwise.

    So, now you’re probably asking yourself another question: “How do I go about setting up a workplace wellness program?” Well, the good news is it’s affordable and easier than you might imagine. Allow me to walk you through some of the basics.

    Survey your employees

    The first place you should start is to take an honest look at your workplace culture. Do you think people are engaged and productive? Or could engagement and productivity be strengthened? If you think it might be time to discuss new cultural strategies to reenergize employees and help them thrive, you might want to consider doing a quick survey of your staff with a brief employee engagement survey. A few questions you should ask include:

    • Question 1: At work, do I have the opportunity to do what I do best every day?
    • Question 2: In the last week, have I received recognition or praise for doing good work?
    • Question 3: At work, do my opinions seem to count?

    Simple steps

    Instituting a workplace wellness program at your business does not have to be complicated. It might be as simple as providing an office treadmill desk with 15- to 30-minute time slots for employees to use during conference calls or creative brainstorming. Or using stand up desks or ergonomic ball chairs to reduce back pain and improve posture. Some other wellness-related practices you might want to institute include:

    • Chair Massage Thursdays with a masseuse in the office for 15-minute sessions per employee to reboot and reduce stress.
    • Stay fit while you sit with stretch and exercise tips to stay limber.
    • Increase use of personal strengths on the job with a program to raise awareness of strengths and talents to enhance occupational wellness.

    Ask your employees for ideas as well. Regardless of what you end up doing, the important thing is that you are providing healthy and easy lifestyle changes in your office. Changing the routine also helps reduce burn out and turnover, which brings me to my final point …

    Wellness is appealing to employees

    By making your business wellness-friendly, you’re also making it appealing to potential employees. Not only will it be easier for you to recruit job candidates, you’ll also likely retain current employees for longer. The new generation of workplace health emphasizes wellbeing of the total person—mind and body. Top talent today expects to work in a healthy environment. And with an estimated 50 million millennials in the workforce who jump jobs more quickly than generations that came before, any edge you can give your own workplace culture is one you should take.

    Sunny Lurie, PhD. Is CEO of Advanced Performance, Inc., a firm that helps organizations maximize employee engagement, motivation and performance by promoting organizational wellbeing. She is also a member of COSE’s Expert Network.

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    Next up: After the Disaster: 5 Things You Need to Know
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  • After the Disaster: 5 Things You Need to Know

    Bad things happen. Regardless of how well your employees are trained, how often you inspect your equipment, or how well safeguarded you might believe your organization is, disasters can still occur. As you’ll learn in other blogs that will be posted this month in recognition of National Preparedness Month, prevention should be a company’s top priority. But what do you do after disaster strikes? Here are five things to keep in mind.

    Bad things happen. Regardless of how well your employees are trained, how often you inspect your equipment, or how well safeguarded you might believe your organization is, disasters can still occur.

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    As you’ll learn in other blogs that will be posted this month in recognition of National Preparedness Month, prevention should be a company’s top priority. But what do you do after disaster strikes? Here are five things to keep in mind.

    1. Safety first

    In the event that your store or building is damaged, there is going to be a temptation to re-enter the building to survey the damage and try to save as much of your expensive equipment or sensitive data as possible.

    Don’t do that. Damaged buildings can be unsafe to enter, so it’s important to wait for emergency personnel to give you the all clear before you re-enter your building.

    2. Communicate

    Strong communication is the hallmark of any successful company, and that adage holds true during an emergency. Ensure key groups are informed of what’s happening, including company officials, vendors and media, if necessary.

    3. Document the damage

    When you are able to safely approach the property, take photos and video of the damage for future reference. Don’t forget to bring along other items you might need when visiting the site, including flashlights and anti-bacterial wipes.

    4. Put security in place

    Looting is a real concern following a natural or man-made disaster. If you’re able to do so, try to repair your building so potential looters aren’t able to get inside. You might also want to consider hiring professional security to watch over your store or business until things get back to normal.

    5. Stop!

    In the aftermath of a tragedy, things are going to seem like they’re coming at you at a million miles per hour. Take some time to stop and review all of the details that you have collected. This will help you understand what steps you might need to take next to get your business back up and running as quickly as possible.

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    Next up: An Employers Guide to Preventing Workplace Theft
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  • An Employers Guide to Preventing Workplace Theft

    As a business owner you may not be aware that even small thefts can have a large negative impact on your business. Have you ever had days where your cash register is a little short? Does it seem like you are replacing office supplies more often than usual? Maybe you’re finding materials or items missing? These are all examples of employee theft. Studies show that employee theft outpaces shoplifting by customers, by more than eight times!  It’s been reported that the median loss total for companies nationwide was $160,000. And, small businesses are even more susceptible to theft than larger ones due in part to the fact that small companies usually have fewer anti-theft measures, policies and procedures in place.

    As a business owner you may not be aware that even small thefts can have a large negative impact on your business. Have you ever had days where your cash register is a little short? Does it seem like you are replacing office supplies more often than usual? Maybe you’re finding materials or items missing? These are all examples of employee theft. Studies show that employee theft outpaces shoplifting by customers, by more than eight times!  It’s been reported that the median loss total for companies nationwide was $160,000. And, small businesses are even more susceptible to theft than larger ones due in part to the fact that small companies usually have fewer anti-theft measures, policies and procedures in place.

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    Charging an employee with a crime can be very difficult, especially if the person is a trusted, long-time worker whose motive may be desperation or compulsion. As a business owner, you need to have policies and procedures in place to handle the situation without emotions, and deal with employee theft. This protects you and minimizes any potential liability.

    So what do you do if you suspect an employee is stealing? First, decide whether to conduct an internal investigation or to call in outside expertise. An internal investigation may cost less, but an important consideration is whether you have the resources and experience to conduct the internal investigation fairly and without bias. An outside firm may be better equipped to deal with the investigation. Remember, the word “theft” is a mine field all by itself.  Used in the wrong circumstances it could expose your company to litigation, a defamation claim or worse. It’s better to accuse the employee of “violating company policy” or of a “cash handling violation” than accusing them of “theft”. Either way, you must conduct an investigation and here are some specific tips to consider when dealing with suspected employee theft:

    • Have policies and procedures in place and make sure every employee knows them.  Let employees know that ANY theft will be dealt with seriously, severely and harshly, including immediate termination if that’s your policy, even if the infraction is small.
    • Do your due diligence before hiring employees.  Conduct a thorough background check to determine whether the applicant had trouble with past employers or has a criminal record. Follow up on all references and make sure that there are no character issues or concerns.
    • Always investigate claims of employee theft as thoroughly as possible. Let employees know that the issue is taken seriously and will not be tolerated. Interview all employees to determine what is known about a particular theft incident. Gather facts and corroborate any accusations. Don’t rely on the testimony of any one individual.
    • If employee theft has been documented, you must follow through with discipline. Whatever discipline system you establish, you must use it consistently to avoid any claims of discrimination. Review the employee’s past disciplinary record to see whether there have been other incidents and warnings. Evaluate the severity of the conduct and the likelihood that the employee will engage in similar behavior in the future.  Determine whether the employee poses a risk for retaliation or physical harm to you, your employees or to the business. If so, take steps to mitigate the risk.
    • Make sure your evidence is strong. Video is preferred, but witnesses can also work. Gather facts and compile documentation; audit computer files, financial records; preserve evidence, such as documents, computer files and e-mails; and maintain a chain of custody to prove the evidence wasn’t tampered with. Document all steps and summarize your interviews. The investigative report may be important in the event of any subsequent legal action. Evaluate whether to administer a lie detector test. The Federal Employee Polygraph Protection Act governs the use of polygraph exams in the workplace.
    • You will probably want to terminate the employee’s employment immediately. Make sure the method you use to document the termination follows your company policy and check to see if there are any issues that must also be addressed such as contracts, collective bargaining agreements, union representatives that need to be notified, etc.  In a union setting, an employee has the right to have a union representative or co-worker (not a lawyer) present during any interview that the employee expects could result in discipline.
    • Notify the police. If you have insurance covering employee theft, a police report will be needed.
    • Don’t deduct anything from the employee’s final paycheck. There may be state restrictions governing this.
    • Don’t discuss the situation with other employees or outsiders.
    • If your employee chooses to leave immediately while you are terminating them, have someone else contact the police. If you fear for your safety or the safety of your workplace, hire an outside firm who can be armed to escort them off premises.

    Prevention and preparation are important. You must have a policy in place that outlines procedures to be followed. Let employees know that any dishonest acts come with serious consequences. Advise employees that if they know of another employee’s dishonesty and fail to report it, they can be subject to discipline as well.

    Timothy A. Dimoff is founder and president of SACS Consulting and Investigative Services, Inc. a high risk security firm that specializes in security and vulnerability assessments and workplace violence issues. If you have any issues, SACS Consulting, Inc. can help you develop or modify your company policy / handbook.  Our personnel are professionally trained in employee theft, drug and alcohol at work issues, non-physical crisis intervention, verbal de-escalation, nonviolent confrontation management, and employee protection techniques, as well as assistance and training for management and supervisory personnel., Corporate headquarters is located at Canal Place, Suite 2516, 520 S. Main St., Akron, OH 44311. Telephone: 330-255-1101. Website:  www.sacsconsulting.com.  

    Our goal is always to reduce the potential threat of workplace violence and reduce potential liability to your business.

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    Next up: An Innovative Approach to Workplace Wellness
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  • An Innovative Approach to Workplace Wellness

    In case you missed COSE’s webinar featuring the new workplace wellness program, Better You Better Ohio, from the Ohio Bureau of Workers’ Compensation, we’re bringing you the highlights and a chance to view the full presentation, which you will find if you scroll to the bottom of this article.

    John Wilton of the Ohio Bureau of Workers’ Compensation gave an informative COSE WebEd Series presentation recently on the new Better You Better Ohio health and wellness program offered through the Ohio Bureau of Workers’ Compensation (OBWC). Having launched February 1, this program is already impacting employers and employees in Ohio.

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    Wilton shared a variety of statistics on the state of well-being in Ohio, including that 31.5% of people are obese, 29.5% of people are physically inactive and Ohio has one of the highest rates of drug-related deaths in America. It’s OBWC’s goal to help impact some of these numbers that are affecting employers and employees across the state.

    What is it and who is eligible?

    Better You Better Ohio is a comprehensive wellness program offered at no cost to employers or their workers and is a simple, paperwork-free process. This program is available for Ohio employers with 50 or fewer employees in the following industries:

    • Agriculture;
    • automotive;
    • construction;
    • firefighters;
    • healthcare;
    • manufacturing;
    • public employers;
    • restaurant and food service;
    • transportation and trucking;
    • trash collection;
    • wholesale and retail; and
    • police and public safety.

    The benefits of Better You Better Ohio

    Health and wellness programs have proven to positively impact well-being in the workplace. Some of the benefits include:

    • Early identification of an illness or issue before it strikes an employee;
    • prevention of an injury or increased speed of recovery from an injury;
    • lower workers’ compensation claims;
    • reduced healthcare and insurance costs of employees and employers;
    • increased morale within the workplace; and
    • reduced time away from work due to an injury or illness.

    The Better You Better Ohio program is innovatively designed and tailored to employees. It uses proven, effective wellness program elements, including:

    • Monetary incentives such as gift cards for participation;
    • the ability to do everything online and at the employee’s convenience; and
    • a private and confidential approach to collecting information and establishing appropriate well-being strategies with participants.

    How does the program work?

    The company running the program, ActiveHealth, is an experienced and nationally recognized health management company that collaborates with employers, health plans, governments and providers. They are currently working with over 32 million people to help them live their healthiest lives. Here’s a breakdown of how the program works in four easy steps:

    Step 1: Upfront testing. This is a two-part process that starts with an online risk assessment, which takes about 15 minutes for the participant to complete. The assessment is followed by a biometric screening that can be done by an outside company, your doctor, or through the use of an at-home kit.

    Step 2: Education plans. Once the information is collected from the assessment and screening, ActiveHealth can provide the participant with a tailored awareness, education and training plan.

    Step 3: Well-being resources. Participants will have access to personalized health coaching and a nurse advice line, as well as a plethora of online resources.

    Step 4: Lifestyle programs. Employees can earn additional incentives by participating in coaching calls and lifestyle and disease management programs to get a better understanding of their issues and establish specific strategies to improve their health.

    OBWC and Better You Better Ohio are here to help employers have a better workforce, and they want to partner with you to assist your employees in reaching their peak performance. In order to help spread the word about the program, OBWC can come out to speak to your employees directly. They will also provide online resources, articles and advice that employers can print and post in common areas in their business or send personally to their staff.

    The full recap of this webinar can be viewed below. Also, be sure to head over to COSE’s Events Page to discover other upcoming events that can help your business grow.


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    Next up: Anatomy of a Perfect Job Posting
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  • Anatomy of a Perfect Job Posting

    From an enticing headline to a perfectly worded job description to the expert delivery of your ad, CareerBoard President Richard Padgett explains how to get the most bang for your buck when it comes to writing job ads.

    From an enticing headline to a perfectly worded job description to the expert delivery of your ad, CareerBoard President Richard Padgett explains how to get the most bang for your buck when it comes to writing job ads.


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