Alternative dispute resolution (ADR) refers to an informal process for deciding civil disputes outside of the courtroom. The two main forms of ADR are mediation and arbitration. Any type of civil dispute, including product liability actions, contract suits, and probate cases, can be mediated or arbitrated.

Mediation can be used to resolve a dispute before a lawsuit is filed or immediately after a suit is filed. Mediation is a voluntary process. Both sides in the dispute, and their attorneys, meet informally with an independent third party (mediator), who attempts to help the parties reach a settlement of their dispute. The mediator does not decide the case but assists both sides in exploring issues and possible compromises. If the parties reach a settlement, a written agreement is signed by the parties. If no settlement is reached, the parties can agree to submit their dispute to binding arbitration. The main advantages of mediation are that it is quicker and less expensive than a lawsuit.

Contracts often include arbitration clauses, which provide that the parties to the contract will submit any dispute to arbitration. Arbitration can also be ordered by a court. Arbitration is conducted by a single arbitrator or by a panel of arbitrators. The arbitrator holds a hearing, which is less formal than a trial, listens to the evidence, and makes a decision. An arbitration award can be reviewed by the court for fraud or duress. The court can also review the award to determine if the arbitrator exceeded his or her powers.