I Don’t Always Do ADR . . .

993785_370610139728020_64149524_nBut when I do, I vastly prefer mediation to arbitration. Here are five reasons why:

1. The Split-The-Baby Problem.

I’ve had retired judges and other neutrals tell me they don’t like presiding over arbitrations because they invariably lose a future potential client: the lawyer for the losing side. There is one thing arbitrators will try to do to temper this inevitability: they may issue a “split the baby” award, giving an allegedly aggrieved plaintiff something even if he failed to prove his case or suffered no damages. While many will argue that a small “split the baby” award is far better than a runaway jury verdict, in cases involving fee-shifting statutes, such as employment discrimination litigation, the employer who might have won outright in front of a jury is forced to pay the “prevailing” plaintiff’s attorney’s fees (in addition to the arbitrator’s fees and costs).

2. Informality Is Not Necessarily A Good Thing.

It is often thought that arbitration is preferable to a bench or jury trial because the proceedings tend to be more informal. Informality might sound good, but it can be a problem if your arbitrator decides to relax the rules of evidence (which is typically within her discretion) and your opponent’s case hinges on an item of otherwise inadmissible evidence, such as a hearsay statement.

3. No Appellate Review.

What do you do if you lose the arbitration due to a clearly erroneous ruling by the arbitrator? Don’t look to any appellate court for relief. While it is true that the Federal Arbitration Act (FAA) and other schemes may create a situation in which some appellate review is available, the circumstances and scope of review is inevitably limited compared with a state or federal appellate court.

4. Good Luck With That Summary Judgment Motion.

While it can be argued that certain courts are more or less likely to grant meritorious summary judgment motions, many will agree that obtaining summary judgment in a case pending before a private arbitrator may be the toughest sell of all. Without naming names, I suspect there are two reasons for this. First, an arbitrator who grants summary judgment is foregoing a significant income opportunity. While many first-rate neutrals are so fully booked they have no trouble filling time gaps created by a vacated arbitration hearing, this is not always the case. Second, a party who is deprived its right to a full evidentiary hearing because of a summary judgment will almost certainly feel shorted. Her lawyer is unlikely to hire the neutral again.

5. It’s Damn Costly.

Many practitioners feel as I do that arbitration is just too costly to be seriously considered as an alternative to resolving a dispute in state or federal court. In addition to the arbitrator’s hourly rate, which equals or exceeds that of most lawyers, many ADR providers tack on large administrative charges. Those of us that represent employers in employment litigation are stuck trying to explain to our clients why they must deposit, in advance, all of the arbitrator’s fees and costs.

I recognize these are pretty broad strokes. But in most instances, given the choice between a bench or jury trial and a binding arbitration, I’d prefer to stay in court and try to resolve the case through mediation.

About Alex Craigie

I am an AV-Preeminent rated trial lawyer. My practice focuses on helping companies throughout Southern California resolve employment and business disputes. The words in this blog are mine alone, and do not reflect the views of the Dykema law firm or its clients. Also, these words are not intended to constitute legal advice, and reading or commenting on this blog does not create attorney-client relationship. Reach me at acraigie@dykema.com. View all posts by Alex Craigie

5 responses to “I Don’t Always Do ADR . . .

  • Andrew Woll

    Alex – Your concerns about arbitration are all ligitimate, but there are many arbitrators who have vast experience and serve simply to keep there hand in the game, so to speak. I, for one, am one of them. As you know, I have been trying suits for both plaintiff’s and defendants, for my entire career. Ie – since 1979. I have served as an arbitrator in over 1000 cases and a mediator in about 50. I charge 200 per hour per party and I have no administrative fees. I do require payment on each day of arbitration, but that is only because experience has taught me that if you don’t get paid up front, it is sometimes very hard to get paid at all. If you need me, feel free to call 530-626-7654, or email me at awoll@aol.com. My credentials are available for review at andrewwoll.com.
    Best regards,

    Andy

  • Deborah Rothman

    Your concerns — echoed by many corporate counsel and litigators — impelled the College of Commercial Arbitrators, an invitation-only organization dedicated to the continual improvement of commercial arbitration–to convene the National Summit on Business to Business Arbitration. Out of that Summit came a series of “best practices” that were vetted and voted upon by all stakeholder groups–litigators, corporate counsel, ADR providers such as AAA, JAMS & CPR, and arbitrators. You owe it to yourself and your readers to check out the Protocols, and make sure any arbitrators you work with are on board with the recommendations.
    http://www.thecca.net/CCA_Protocols.pdf

  • Five Ways To Improve Your Client’s Experience At Arbitration | At Counsel Table

    […] last wrote, rather flippantly I thought, about why, when given the choice, I generally shun arbitration in favor of mediation. One of the comments I received, from über-neutral Deborah Rothman, suggested that I owed it to my […]

  • Rich Matthews / Juryology

    As a better alternative to ADR (see what I did there?), or at least a better alternative to arbitration as you describe it, what do you think of the summary jury trial?

    The truth is that just about every case COULD be presented to a jury in one day (we do it in focus groups all the time with very little or no loss of fidelity to reality; complex patent cases get 15-hour trials in East Texas, etc). It seems to me that could be accomplished cheaper than the situation you’re describing… And with more safeguards, especially in fee-shifting suits.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: