This is a challenging question, primarily because the differences are bigger then the similarities. The key to the answer is in distinguishing between the various alternative dispute resolution (ADR) methods, because they are very different between themselves. Let’s make a short list of the various methods that are normally placed into an ADR quiver, starting with those that have lower element of deciding by a third person in Liu of the parties themselves: negotiations, moderation, mediation, early neutral evaluation, arb-med, med-arb, mini trial, arbitration, litigation. Due to the limited format here we will not explain what are their individual characteristics and differences. Nevertheless, let me give you just a bit of detail in order to be able to answer this question.
I am throwing in litigation together with the ADR methods just to point to the distorting view we get when we call any dispute resolution method “alternative”. Many of us who are involved in dispute resolution as lawyers believe firmly that the litigation needs to be seen as alternative to any other method that damages the relations between the parties less then the full blown judicial dispute does. Especially confusing is the view in which arbitration is often thrown in the same bag as mediation, while it’s adjudicative nature and the reliance on the state authority in execution makes it much similar to the litigation then it is to mediation or any other ADR method. The only element that makes it similar to mediation is the fact that it is started navy the free will once made by the parties. However, once an arbitration procedure starts it will continue and end on purely legal terms, without the possibility by the parties to control its outcome, unlike in a mediation. Mediation is often described as the negotiations with the assistance of a third neutral person ready to help the disputants to regain the possibility of communication that was broken, thus enabling them to find mutually acceptable solution to their dispute.
The main difference between the legal process, such as arbitration, mini trial or litigation is that the process and its outcome are based on law. In order to prevail, the parties need to build their legal positions and this is why we describe legal procedures as in stark contrast to the “interest-based” procedures that characterize majority of other ADR methods. The outcomes in the interest-based ADR are driven by the parties’ interests and the mediator, for example, tries to help the parties in identifying and articulating them so that the parties can help each other in fulfilling their mutual interests. Legal procedures cannot provide for that and any method that uses third person deciding instead of the parties building the mutually acceptable outcomes is likely to diminish the possibility for them to fully realize their interests. That much for the main difference, without analyzing the whole plethora of other differences.
The similarities are fewer, but as the questions seeks that answer let me try to summaries them too. The essential similarity stems from the fact that all of the methods try to resolve an existing dispute. All of those dissimilar methods still provide for type of a procedure, regardless of how different they are between themselves, with the extreme differences of litigation where everything spits ruled on the basis of law and mediation where almost everything is based on the mutual agreement of the parties. This is to say that in all of the methods, there will be certain procedural issues that will need to be dealt with and they will entail (a very different) involvement by the parties.