The Evolution of ADR Systems at Large US Corporations

Vol. 20 No. 3


The dispute resolution practices within US corporations were first documented empirically through a survey conducted in 1997, which profiled and explored ADR in firms belonging to the Fortune 1000.[1] This groundbreaking work illuminated several important facets of what has been termed the “quiet revolution” that gave rise to ADR as an alternative to litigation during the latter portion of the twentieth century.[2] Empirical evidence documented that firms in the Fortune 1000 were frequently turning to mediation, arbitration, and a variety of other alternative approaches to dispute resolution, often because of perceived benefits of these practices relative to litigation.[3]

The publication of these results reflected a growing interest in understanding the variegated ways in which corporations handle consumer, business, and employment disputes. In the decades that have passed since that initial Fortune 1000 survey was conducted, the conversation regarding the role ADR plays in resolving conflict within corporations has continued – and in many ways has grown increasingly loud. Some observers, for instance, have questioned the appropriateness of mandatory pre-dispute arbitration waivers, and the Supreme Court has taken considerable interest in issues surrounding ADR, most recently within the consumer arena.[4]

In 2011, researchers returned to the Fortune 1000 to conduct a new survey, cosponsored by Cornell University’s Scheinman Institute on Conflict Resolution, the Straus Institute for Dispute Resolution at Pepperdine University School of Law, and the International Institute for Conflict Prevention & Resolution (CPR), of the companies’ ADR practices. The aim of this survey was not only to garner a sense of the current (or, at least, more recent) state of ADR at major US corporations but to explore the extent to which ADR practices had either remained stable or changed in the 15 years between the two surveys.[5] Were corporations still optimistic that ADR would present a better method of handling conflict than traditional litigation? Did these companies continue to favor rights-based approaches such as arbitration, or were they moving to more interest-based practices? Were firms becoming more sophisticated in their conflict management systems than they might have been a decade and a half before?

Then and Now

The results of the 2011 survey offer some surprising answers to these questions. For instance, the findings provide evidence of a significant decline in arbitration usage in some arbitration settings relative to the first wave of analysis. The issue of arbitration fairness has taken on paramount importance, especially in the consumer and employment arenas, where employee and consumer rights advocates have voiced considerable concerns about the privatization of justice.

On the one hand, in the consumer arena arbitration usage has remained roughly unchanged. In 1997, a total of 17.4% of companies indicated that they had used arbitration to resolve conflicts with consumers. When surveyed again in 2011, a similar number of firms (20.6%) reported using consumer arbitration. This indicates a degree of stability in consumer arbitration among the Fortune 1000, though companies tend to deploy this method of resolution somewhat infrequently on the whole.

On the other hand, employment arbitration has undergone a sizeable shift. When surveyed in 1997, nearly two-thirds of companies (62.2%) indicated that they had used arbitration to resolve employment conflicts over the past three years. However, when asked again in 2011, only about one-third of firms (37.8%) affirmed that they used employment arbitration. These results are not unique to the employment arena, either: in commercial disputes, 62.3% of companies use arbitration currently, a number substantially lower than the 85% of firms using arbitration to resolve commercial disputes in 1997.

What’s New? More Mediation

What has replaced arbitration in the commercial and employment arenas? The answer, according to the new survey, is mediation and other interest-based options. Virtually every company surveyed in 2011 indicated that it used mediation at least once in the past three years (this represents an increase of about 11% when compared to the 1997 findings). In the commercial and employment settings, mediation usage rose by just under 10%, from 77.7% to 83.5% in commercial cases, and from 78.6% to 85.5% in employment cases.

In fact, mediation usage is on the rise across almost every type of dispute to which ADR applies. Even in the consumer arena, where arbitration has held steady over the past 15 years, mediation usage has grown substantially, from 24.1% in 1997 to 43.9% in 2011. Firms were also asked about their mediation practices in corporate finance, environmental, intellectual property, personal injury, product liability, real estate, and construction disputes. Uniformly, mediation was more frequently used in 2011 than in 1997.

Firms were also asked how often they use mediation. Results there were similar: Most companies indicated that they either always or frequently use mediation in corporate/commercial, consumer, and employment disputes. In contrast, few firms indicate that arbitration is commonly used. Consumer cases again are a slight exception – though even in these cases, the most common category for arbitration is that firms never use it.

And Less Arbitration

Looking at these results, one wonders: Why are companies less interested in using arbitration to resolve their disputes? When asked, firms indicate concerns around the difficulty of appealing rulings, worries that arbitrators may not follow the law, lack of confidence in neutrals, and high costs. However, with the exception of high costs, many of the concerns associated with arbitration in 2011 are similar to those found in 1997. Only fears regarding cost have grown considerably in the past 15 years.

Perhaps Fortune 1000 companies initially opted to adopt arbitration as a favored approach to conflict management at least in part because they thought it would be faster and cheaper than litigation. Upon discovering that arbitration can sometimes prove quite costly, these same companies now increasingly look to resolve disputes using interest-based options – and at the earliest possible stage. Mediation isn’t the only option gaining in popularity; options such as fact-finding and in-house grievance systems are also on the rise. Other less traditional, generally interest-based ADR practices such as early neutral evaluation and early case assessment have also proven popular among the Fortune 1000.

In both surveys, companies were asked about their future plans for mediation and arbitration. The 2011 results confirm what might be expected: Regardless of the dispute arena (corporate/commercial, consumer, or employment), about 80% of firms report that they are either very likely or likely to use mediation to resolve future disputes. But more than half the firms in any ADR arena indicate that they are either unlikely or very unlikely to use arbitration in the future. This sits in stark contrast to the 2011 results for mediation and also to the findings from 1997. When asked the same question 15 years earlier, fully 71% of companies indicated that they were very likely or likely to use arbitration in the future.

All this presents compelling evidence that over the past decade and a half, US corporations have evolved in their perceptions of the benefits of ADR and have adapted their ADR systems accordingly. There has been considerable controversy over the Supreme Court’s rulings in Concepcion and Italian Colors (as well as D.R. Horton in the employment arena). Congressional politicians have also waded into the debate about arbitration, with some proposing to amend the Federal Arbitration Act. The results of this latest study, however, indicate that such controversy and legislative debate may be less effectual than it might have been only 15 years ago. If companies have already replaced arbitration with more interest-based options – and plan to continue to do so – legal and legislative efforts to govern arbitration by promoting or restricting the practice could be met not with outcry or applause by major US companies, but with a mere shrug of the shoulders.

Ryan Lamare is an Assistant Professor of Labor and Employment Relations at Penn State University. Before joining Penn State, he held academic positions at the University of Limerick and the University of Manchester. Professor Lamare’s research interests include labor and employment arbitration; ADR in the securities industry; the development of ADR systems in organizations; the role of unions in politics; employment relations and HR at multinational companies; and quantitative research methods. He can be reached at


[1] See David B. Lipsky, Ronald L. Seeber & Richard D. Fincher, Emerging Systems for Managing Workplace Conflict: Lessons from American Corporations for Managers and Dispute Resolution Professionals (2003).

[2] See Thomas J. Stipanowich, ADR and “The Vanishing Trial”: The Growth and Impact of “Alternative Dispute Resolution,” 1 J. Empirical Legal Stud. 843-912 (2004).

[3] See David B. Lipsky & Ronald L. Seeber, Cornell/PERC Institute on Conflict Resolution, The Appropriate Resolution of Corporate Disputes: A Report on the Growing Use of ADR by U.S. Corporations (1998), available at

[4] See AT&T Mobility v. Concepcion, 563 U.S. 321 (2011); American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013).

[5] For an overview of the results upon which this section draws, see Thomas J. Stipanowich & J. Ryan Lamare. Living with ADR: Evolving Perceptions and Use of Mediation, Arbitration and Conflict Management in Fortune 1,000 Corporations, 19 Harv. Negot. L. Rev. (forthcoming 2014).




DISPUTE RESOLUTION MAGAZINE is published quarterly (4 times a year) by the American Bar Association Section of Dispute Resolution. Dispute Resolution Magazine provides timely, insightful and resourceful information regarding the latest developments, news and trends in the growing field of dispute resolution throughout the world and features internationally-known scholars and practitioners as authors.


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Joseph B. Stulberg
The Ohio State University Moritz College of Law
Columbus, OH


Andrea Kupfer Schneider
Marquette University Law School
Milwaukee, WI


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Frank Sander
Cambridge, MA


James Coben
Hamline University School of Law
St. Paul, MN


Marvin Johnson
Silver Spring, MD


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Stradley Ronon
Philadelphia, PA


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McDermott Will & Emory LLP
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Federal Judicial Center
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Frederick Hertz
Oakland, CA


Machteld Pel
Pel Mediation


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Ben Davis
Toledo, OH

Gina Viola Brown


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Louisa Williams

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Darlene Hemerka

Joyce Fondong

Penn State University

Dickinson Schools of Law


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