Media

Review - The cost-benefits of alternative dispute resolution revisited

The Australian Financial Review Boss Magazine - 10 September 2004
Professor Malcolm Rimmer reviews Tom Altobelli's paper, which first appeared in The Arbitrator and Mediator August 2004

THE ARBITRATOR & MEDIATOR - August 2004

While business continues to spend vast sums of money on litigation, alternative dispute resolution (ADR) has enjoyed growing popularity. But is ADR a cost-effective choice? There has been research in the US in which assistant US attorneys reported average savings from ADR of $US9837 in litigation costs, 77 hours in case preparation, and up to six months in litigation time.

Altobelli's aim is to estimate the cost-benefits of ADR in Australia. The purpose of this paper is to develop a measurement tool that can fully cost conflict so that the savings from ADR can be calculated.

The tool he describes is the Dana Measure (named after its inventor). It lists eight factors to be accounted for in costing conflict: wasted time, reduced decision quality, loss of skilled employees, restructured work flows to separate disputants, deliberate damage, lower motivation, lost work time, and impaired health.

In the absence of empirical data in Australia, Altobelli estimates the likely savings of ADR using a fictional case of ideological conflict in an Australian university (what else). If ADR can save a university department from squandering a quarter of its budget on in-fighting, then it looks like money very well spent.

We gratefully acknowledge the permission from Professor Malcolm Rimmer and The Australian Financial Review to reprint this article.