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A veteran employee, infuriated that lucrative work assignments have been yanked away, goes on leave.

A small business and one of its valued vendors are embroiled in a dispute that threatens to ruin the relationship.

A terminated worker accuses an employer of enforcing disciplinary procedures in an inconsistent -- even discriminatory -- fashion.

These touchy scenarios may sound like lawsuits waiting to happen. In reality, all are recent examples of situations that were handled out of court using impartial outsiders, peer review panels or some other form of "alternative dispute resolution."

The experts call it "ADR" and they say a growing number of businesses are recognizing the benefits of keeping their battles outside the courtroom.

"It makes a lot of sense for smaller businesses, because going to court is a lot more expensive," said Janice Robertson, associate executive director of the Society of Professionals in Dispute Resolution in Washington, D.C. "Also, the process can be much more adversarial in a courtroom, because there's always a winner and a loser."

Lindy Korn, a Williamsville attorney who heads Diversity Training/Workplace Solutions Inc. puts it another way: Airing a dispute before a mediator can be less threatening, more private and allow for what she calls more "creative" solutions.

"Mediation is really an outside-the-box approach to conflict resolution," said Korn. "One of the valuable things that happens with mediation is that the process lets both sides see the weaknesses and the strengths in their respective positions."

Korn, a former commissioner of Workers' Compensation for the state and past counsel to the New York State Liquor Authority, founded Diversity Training nearly three years ago as a full-service agency that helps companies and their employees to foster healthy communication and resolve work place conflicts.

She works with more than a dozen independent contractors who also embrace what is known as the "psycho-legal approach," where lawyers and psychologists team up to create a legally based and emotional understanding of issues that allow a hostile environment. Korn has clients throughout the country and is currently working on cases in California, Texas and New Mexico.

Alternative dispute resolution is one of Korn's six main areas of focus, including mediation services. Mediation is when an impartial outsider is brought in to listen to arguments from all parties. There are many mediation models, but a common approach involves the facilitator meeting with each side separately in hopes of reaching a settlement.

While it doesn't have to be binding -- a party who is dissatisified with the outcome can still opt to go to court -- national figures indicate that mediation generally results in a settlement in four out of every five employment cases.

There are other forms of ADR, including arbitration, which can either be binding or non-binding and is very much like a trial without a jury. An arbitrator is more like a judge than a facilitator, and in arbitration there are often clear winners and losers.

A growing number of businesses are using peer review systems to resolve workplace conflicts, including disciplinary actions. Often, the panel of in-house reviewers is comprised of three rank-and-file employees and two supervisors, all of whom are picked from a list by the individual who lodged the complaint.

Amherst business owner Kathryn A. O'Donnell has never used mediation to resolve workplace issues, but she said she is big believer in peer review and what she calls "team-method" approaches to dispute resolution.

O'Donnell is president of Botanicus Inc., an interior landscaping company that employs 25 people in Erie County and Rochester.

"Attorneys often look at things strictly from the legal aspect, taking a very narrow view of situations," said O'Donnell, who sits on the public policy committee for the National Association For Women Business Owners. "Sometimes, examining workplace situations in a broader context makes it easier to resolve any problems."

Experts noted that more companies are attempting to avoid conflicts from escalating by including "dispute resolution clauses" in all contracts. These clauses typically state that in case of a disagreement, both parties will try mediation or some other form of ADR before heading for the courts.

Korn also noted that the mediation process often involves bringing in an expert with specialized knowledge in a given area, something that can be helpful in complex cases such as environmental issues.

Mediation costs can typically run under $50 an hour for a small claim to anywhere from $125 an hour up to $400 an hour for a complicated case involving an experienced mediator.

While mediation, arbitration and other forms of ADR are becoming more common in the small business arena, Korn acknowledged that some CEOs and human resources professionals are still hesitant to pursue these alternatives.

"Some people still think if you agree to mediation, you have a weak case," said Korn. "We're still dealing with a lack of understanding, but we're making steady progress in shattering these misconceptions."

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