Written by attorney Scott T Ashby

Five Keys to Successful Arbitration

Understanding a few keys to successful arbitration can go a long way towards success. While there are many points on which an experienced attorney will focus, a short list of important considerations should include the following:

  1. Understand What Arbitration Is (And What It Is Not): At its best, arbitration is an efficient method for resolving disputes without going to court. At its worst, arbitration is a quagmire where no one participating in the process is satisfied. Arbitration is a private dispute resolution process. In its simplest form, an arbitrator acts as a judge, rules on procedure and motions, hears evidence, and makes a decision that is binding on the parties. Because the process is private, the forms arbitration may take are limited only by agreement of the parties. Often, the arbitrator is familiar with the area of law covering the dispute. For example, a securities arbitration may be decided by an arbitrator with securities expertise. A construction dispute may be efficiently handled by an arbitrator that has construction and construction-law experience. Arbitration is not always better than simply utilizing the court system, particularly where the parties are adversarial to the point that they cannot reach agreement on basic matters without rigid rules and the potential for court intervention. Courts are better at compelling the compliance of misbehaving parties. Courts are better at making early rulings, particularly where a party brings a frivolous action. 2. Plan Ahead: Agreements to arbitrate disputes are enforceable in most states and under federal law. When preparing contracts, critical importance should be given to alternative dispute resolution ("ADR") clauses. An initial consideration is whether ADR is appropriate under the circumstances. Properly drafted, ADR provisions can anticipate common issues, including selection of arbitrators and appropriate rules. 3. Select the Right Attorney: Select the right attorney to represent your interests at the arbitration, and pray that the other side does the same. Experienced arbitration attorneys know that arbitration is different than civil litigation in many respects and can maximize the benefits of arbitration for their clients. Attorneys that are experienced in arbitrations are able to make the arbitration fit the case. They are comfortable with limited discovery and modified evidentiary rules, particularly in smaller cases, so that time and attorneys' fees do not end up driving the case. They understand the goals of clients and work to accomplish those goals. For businesses, an experienced attorney will assist business leaders or general counsel to watch arbitration impacts to the business's bottom line. In appropriate cases, an experienced attorney, in cooperation with an experienced attorney on the other side, can make the process less adversarial so that after the dispute is resolved, parties may continue to work together. 4.Select the Right Arbitrator: Where agreements are properly prepared ahead of time, or where the parties agree after a dispute arises, the parties have the right to chose an arbitrator (or, in large or complex cases, a panel of arbitrators). There are several methods available. Many simply chose an arbitral organization and follow its rules. While there may be some advantages (such as ease of drafting), I have come to believe more and more that simply choosing an organization is a mistake. There are many excellent private arbitrators, and experience shows that in most circumstances where the parties are represented by counsel, selection of an arbitrator is not difficult and can be accomplished by agreement. When I prepare arbitration clauses I generally give the option to the parties to cooperate to select an arbitrator within a short period of time. This is almost always successful. It is important, however, to draft a backup selection process for instances where the other side has an inexperienced attorney or where the parties are so adversarial that an early agreement is not possible. The selection process can be as easy as the claimant selecting a number of arbitrators and the respondent ranking the selection. In complicated cases, each party can select an arbitrator, with the two arbitrators selecting a third arbitrator. Again, experienced attorneys are very good at cooperating to select good arbitrators, and agreement is the rule rather than the exception. 5. Select the Appropriate Rules: Experienced attorneys know that arbitration rules are important and that these rules must be crafted to fit the case. Contracts should include rules selections. Where that does not occur, experienced attorneys can often work together after a dispute has arisen to select rules appropriate to the case. In complicated cases, the parties may stipulate to follow the rules of civil procedure, although wooden adherence to those rules takes away most reasons for arbitrating in the first place. Modifications are almost always necessary. In relatively simple, low-dollar cases, the parties may want to agree to cost-saving measures, such as limited or no discovery and modifications of evidence rules. Conclusion: Arbitration certainly has its place among the tools of an experienced litigation attorney. For the experienced attorney, however, it is only one tool in the tool box. Properly employed, arbitration can be efficient and effective in reaching dispute resolution goals.

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