ADR stands for Alternative Dispute Resolution. Alternative to what? Litigation, or any other combative-based method of resolution (primarily arbitration and/or trial). In addition to settlement services, I serve as an Arbitrator:
Cost: In lieu of lengthy briefs which can be costly due to the amount of attorney time, the parties can submit to binding or non-binding arbitration. Arbitration is submitting evidence, usually on less formal grounds, for a decision on the merits by the arbitrator. Binding arbitration is typically found in contractual agreements (such as a construction or real estate sale-purchase contract), and is a commitment that if a problem arises, the parties agree to arbitrate instead of litigate. Non-binding arbitration is usually by referral of a judge to an experienced lawyer (or other professional, depending on the circumstances), for a decision on the merits, which the parties may then challenge. The parties themselves can also elect to utilize binding or non-binding arbitration.
Control: Litigation is governed by procedural rules which can be inflexible, and rigidly enforced by the Courts. Arbitration provides the parties some control, primarily of the costs. The procedure of an arbitration is typically guided by either the rules contained in the California Code of Civil Procedure, or may be pursuant to other prescribed rules (such as those provided by the American Arbitration Association, or perhaps as stated in a Collective Bargaining Agreement). At the very least, in arbitration, the parties are able to limit the amount of discovery which is exchanged between them, which can often be one element of litigation which can get out of control.
Time: In deciding how to govern the procedure, the parties have full control over how much time it will take to resolve their matter. One goal of arbitration is to resolve the matter on a faster schedule than litigation. This goal is often met since many arbitration rules restrict the amount of discovery which the parties are permitted to demand from each other.
Are there any downsides?
Arbitration can be as restrictive as litigation. There tends to be little flexibility in the rules of arbitration, which can make the process as distasteful to the disputants as if they had simply proceeded with litigation.
Binding arbitrations can yield a poor result if the matter requires a certain expertise which the arbitrator lacks. Non-binding arbitrations can simply be a waste of time, since one party or the other may simply appeal the arbitrator's award, and seek a trial.