Arbitration Need Not Be Expensive: 5 Ways to Make Arbitration Affordable
By Leigh Wilco
Think arbitration is expensive? It doesn’t have to be. Arbitrator Leigh Wilco lists five ways to keep arbitration costs down.
When I was practicing law, and now as an arbitrator, I often heard, and hear, complaints about arbitration. Arbitration has too many rules. Arbitration takes too long. Arbitration is too expensive for mid-sized and smaller cases. After all, you must pay the arbitrator’s fee, the arbitration service, and your own attorney’s fees as well.
However, I am here to tell you with some cooperation and old school lawyering, arbitration need not be cost-prohibitive for smaller cases. Let’s take a closer look at how you can help keep arbitration costs down.
Think Like an Old School Lawyer
The old school lawyering part is letting yourself go back to the days when lawyers did not have to turn over every possible stone and depose every possible witness before going to trial. There is no question that some cases (and clients) require and deserve the full-blown litigation model. But, if you have a case and/or client that does not need or who cannot justify those expenses, you can advise your client to take a somewhat riskier, but less costly, litigation approach.
Once you and your client have made that determination, you need to convince the opposing side that this approach is in their best interest as well. Sometimes they will see this as a weakness and threaten an all-out litigation war. But with the right dispute and opponent, this approach can work to everyone’s benefit.
Once you have your client on-board and have cooperation from opposing counsel, you can move forward with an arbitration, with the goal of keeping costs down for both sides. Here are five proven strategies that can help limit the cost of arbitration.
Five Strategies to Keep Arbitration Costs Down
- Choose expedited arbitration. Expedited arbitration keeps costs down as it limits the length of the arbitration proceeding and the number of documents that can be introduced. Full disclosure: I am an arbitrator (and mediator) at Miles Mediation & Arbitration and am biased toward our expedited arbitration proceedings. You can opt for an expedited arbitration for cases involving claims of $50,000 or less (unless the parties agree otherwise) and the cost is $2,500 per party for a one-day arbitration. This fee includes the arbitrator’s fee and administrative costs.
- Agree to “form” discovery requests. Discovery can easily eat up hours and hours. When you and opposing counsel agree to use basic discovery requests, such as the initial disclosures required by Federal Rule 26, you can exchange information and documents without spending hours drafting and objecting to discovery requests.
- Agree to limit the number of witnesses. Limiting the number of witnesses will help shorten prep time and help the hearing run more quickly. Also, consider exchanging affidavits in advance of testimony to be submitted in lieu of depositions or live testimony. This way, each side knows what the testimony will be in advance of the hearing and can ask the other side to revise the affidavit or submit to a deposition if there is a controversy about the testimony. While it is true that you can’t cross-examine a witness when you agree to this, your opponent can’t either—and this will save time and let you focus on presenting the pertinent facts. And you can still argue that the witness is wrong or that the testimony is incomplete at the hearing.
- Submit the case to the arbitrator on briefs without testimony or oral arguments, or agree to limited oral arguments. This saves everyone — including your client — time and money. If you squirm at the idea of being prevented from using your considerable oral advocacy skills to persuade the arbitrator, consider a compromise. Agree to a limited oral presentation by both sides, with or without the testimony of the principal parties.
- Agree to a standard “bare bones” award or a reasoned award. Instead of requiring findings of fact and conclusions of law, opt for a reasoned, or a “bare bones,” award. A reasoned award will provide the parties with the arbitrator’s analysis of the law and the facts that form the basis of the award and will take less time (therefore will cost you less) for the arbitrator to prepare.
Several of these suggestions are incorporated into the basic structure of many ADR expedited proceeding rules, but they can also be used or modified for a traditional arbitration to save costs. Ultimately, if the parties have similar interests in resolving their dispute without breaking the bank or spending more than is being fought over, these strategies can make arbitration an attractive and cost-effective solution.
About Leigh Wilco
Leigh Wilco has been mediating cases for more than 10 years, settling more than 80 percent of them. He also arbitrates real estate and commercial disputes and has been appointed by the courts as a special master and as a receiver.
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