Editor: Please comment on allegations that the advantages of arbitration are being lost due to rising costs and unwarranted delays. How can these issues be addressed?
Dreier: The reputation of arbitration is being besmirched by repeated claims of high costs and unwarranted delays. This is a fair criticism in some cases, especially where the arbitrator loses control, the attorneys insist on all litigation procedures and the clients see the arbitration as a fight to the death.
Even an abusive arbitration like the one just described, however, can offer benefits over litigation: you still pick your arbitrator with the expertise you set (no luck of the draw at the county courthouse); you pick the forum; you can agree to your own schedules; and there is a freedom from costly appeals.
Further, abusive arbitration can be controlled. It is caused by the parties, the attorneys and even some arbitrators by their collective misuse or lack of understanding, both of the process and of how it can be trimmed through innovation to further the clients’ needs.
This lack of understanding can involve a number of overlooked considerations, including:
- Clients sometimes fail to understand the real priorities within arbitration, which are to preserve relationships, limit costs, secure expeditious disposition and achieve reasonable results – and which are not to obtain maximum and costly complete discovery; inflict substantial pain on the adversary, etc.
- Attorneys’ fees increase as a case drags on. Do counsel really want to settle or shorten the preparation and hearing? The good ones do! Such attorneys work to protect the client and do their best to win the case without bankrupting the client
- Costs can be controlled if planning and conferring is done on both sides and involves frequent contact with adverse counsel.
- Arbitrators can be trained in what the American Arbitration Association has called “muscular arbitration,” where the arbitrator is permitted to take real control of discovery and hearings.
Some techniques to address these issues include restricting overblown documentary discovery, file dumping, and e-discovery. Give up the expensive search for the nonexistent smoking gun. Multiple depositions are usually a waste of funds and time. Would a short statement after a recorded telephone call suffice?
In addition, arbitrators’ fees mount up. Why choose three arbitrators rather than one? Why is there a failure to use a single independent expert, or to try pre-hearing conferences of partisan experts, with a single report and footnotes by each for remaining disagreements?
There are many other techniques that a good arbitrator can suggest to shorten the preparation and hearing process. Do not be afraid to be innovative.
Rosengard: As a representative of a party, you can avoid delay by limiting the discovery requests that you propound and by working cooperatively with opposing counsel to identify the key facts each side needs in order to put in its case. You can serve concise document requests. You can avoid interrogatories except where they are needed to identify witnesses or identify specific dates and times. You can forego most requests for admission. You can resist taking more than one or two depositions, if, indeed, any are necessary.
In turn, if you receive excessive discovery requests, you should confer with opposing counsel to try to narrow them. If you are reasonable in what you reach for, it will go a long way toward convincing your opponent to react similarly. And if you find opposing counsel uncooperative, you can more easily enlist the aid of the arbitrator if you can show by your own actions that you understand that arbitration calls for far more limited discovery than litigation.
The arbitrator’s role is to permit only limited, reasonably necessary discovery that is consistent with the goal of arbitration to be faster, less costly and more efficient than litigation. The arbitrator should set the tone at the first conference, stating that he or she expects the parties to refrain from wide-ranging discovery. Then, the arbitrator can carry through by giving the parties a very limited discovery window, by permitting only a few depositions per side, if any, and by insisting that any party that is aggrieved by over-reaching discovery requests immediately call for a telephone conference with the arbitrator.
The arbitrator can also prevent arbitration from turning into litigation by discouraging motion practice. First, there should be no discovery motions; phone conferences, when necessary, can resolve discovery disputes. Second, in the limited circumstances where a party believes a summary judgment motion may be appropriate, that party should provide a one- or two-page summary of the facts and law supporting the motion, and only if the arbitrator agrees to permit the motion may the party proceed to file it. Finally, motions in limine should rarely be permitted, given that a common ground for setting aside a final award in arbitration is that the arbitrator did not permit a party to present all its evidence.
Published June 19, 2012.
