The advantages and disadvantages are too numerous to be fairly addressed here. It will depend on the type of case you have, your financial abilities, the strength of your case and your opponents case, and the good faith that the parties will come to the negotiating table with.
There are two types of ADR: Binding and non-binding. I would never advise a client to submit to binding ADR. Binding Arbitration is normally placed into contracts to give corporate entities a quick way to settle dispute for a reasonably determinable amount. That type of agreement is usually not beneficial to individuals. Accordingly, I do not enter into binding arbitration.
The other type is non-biding, normally called mediation. Mediation is frequently beneficial because it allows the parties to present their cases and forces a hard look at the facts and the law of their cases and those of their opponents. The disadvantage, off course, is you're inevitably showing some of your hand before trial. That may work to your favor if you have a reasonable opponent who is negotiating in good faith in that it will lead to a settlement.
I am usually in favor of non-binding mediation and avoid binding arbitration.
ADR - Alternate Dispute Resolution - a/k/a mediation, conciliation, or arbitration may be used instead of litigating by the parties mutual agreement or stipulation to be bound by the arbiter's decision. The parties have a say in picking the arbiter, unlike in the court where the presiding judge is selected by random assignment by the clerk of court. An arbiter is often an attorney, or retired judge. Most arbitration result from contracts requiring arbitration, where the parties have agreed on arbitration, not the court, as the preferred means of resolution if any dispute arises.
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Your question is much too broad, but generally speaking, ADR is less expensive and achieves a resolution is less time. The current trend is to mediate all civil disputes, and it has been very effective in resolving litigation.
The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.
The most popular type of ADR is mediation which is a non binding process. The principal advantage is that it allows parties to voluntarily resolve a dispute and avoid an uncertain outcome. It can allow for early resolution of a dispute and save litigation expenses. Since the process is not binding, not all cases are resolved through mediation because all parties must agree to a settlement. A possible disadvantage is that a party may incur the expense of the mediatiion and not resolve the dispute. Most all types of civil disputes are suitable for mediation, but it works best when the parties have adequate information to evaluate their claims or defenses and the evidence supporting them.
ADR is generally less time consuming and cheaper than litigation. The parties also generally get a result they can live with more easily when they go through ADR.
THIS RESPONSE DOES NOT CONSTITUTE LEGAL ADVICE AND DOES NOT FORM AN ATTORNEY CLIENT RELATIONSHIP
There are advantages and disadvantages to both, and it also depends on what type of ADR you are referring to. in court, you normally have a right to a jury of your peers, generally depending on the amount in dispute. You also have more options for discovery in court. Court, however, is a very forma, generally governed by strict rules of procedure, and and expensive process that can take years.
Mediation is one type of ADR. In mediation, the parties select what is called a neutral. The neutral then works with both sides in an attempt to reach a settlement or otherwise resolve the matter. The mediator, however, has no real power over the parties, and discovery is scarce unless the parties agree.
Arbitration is another type of ADR. In arbitration, the parties seek either a single or panel of arbitrators to hear the case. Discovery too can be decided upon by the parties, or if the parties do no agree the arbitrator(s) can order discovery. Arbitration is normally much cheaper that court, and arbitration is binding on the parties. The award issued by the arbitrator(s) can be taken to court and made a judgment of the court. The disadvantages to arbitration is that it can be difficult to subpoena non-parties to the dispute, and the right of review or appeal is almost non-existent.