ADR stands for Alternative Dispute Resolution. Alternative to what? Litigation, or any other combative-based method of resolution (primarily arbitration and/or trial). I also serve as a Discovery Referee:
Cost: In lieu of lengthy briefs which can be costly due to the amount of attorney time, the parties can agree to submit limited issues to the Discovery Referee for resolution. Alternatively, they can submit more lengthy issues to the Discovery Referee who can spend more time than a Judge in evaluating the issues surrounding the sharing of necessary information and deciding how to resolve them.
Control: Litigation is governed by procedural rules which can be inflexible, and rigidly enforced by the Courts. But since the parties can decide the procedural elements of HOW to settle their dispute, as well as agreeing on the substantive resolution, they control the amount of time and energy which will govern the process and the end result.
Time: In deciding how to govern the procedure, the parties have more control over how much time it will take to resolve their matter. And this does not have to mean a faster resolution. While disputants generally seek a faster resolution than the Courts might provide, some matters actually require more time and consideration than the Courts want to allow, which creates great tension for the litigants. One example is a case where a house was constructed on a hill, and was suffering damage as a result of land movement. While all of the parties and their consultants agreed they needed more time, the Court required resolution of the case in less time. Subsequently, the parties' need for investigation and analysis was limited by inflexibly short time restrictions imposed by the Court.
Are there any downsides?
Unless the parties do not wish to control their discovery procedures, there are no pitfalls to retaining a Discovery Referee, if the discovery needs of the case require it. A Discovery Referee is most effective in complex, multi-party cases, or in highly contested matters involving sensitive information.
If the parties cannot control the exchange of information, then a Discovery Referee may become necessary; the expense of the Discovery Referee may be yet another source of acrimony in the dispute itself.