Entering an arbitration agreement is a major decision for both parties. By forfeiting the right to a courtroom trial, it is often possible to obtain a resolution more quickly and effectively. On the other hand, arbitration awards are also significantly more difficult to appeal, which can be a major risk for unprepared attorneys.
We created this mini-series to help you avoid the worst mistakes that lawyers often make during arbitration. In this article, we’ll cover procedures for early-stage arbitration and offer our tips and tricks to help you ensure everything runs smoothly!
Drafting a Vague Arbitration Clause
Believe it or not, arbitration mistakes can occur before your first dispute arises! Arbitration is a contractual agreement, which means that any vague language could lead to months (or even years!) of delays while either party argues over the scope of the case. To prevent these distractions, be sure that you’ve clearly explained the terms of engagement.
An effective arbitration clause should address how arbitrators will be selected, who will pay the filing fees, and what kinds of disputes will qualify for arbitration. Once you’ve made these determinations, consider how they will impact your discovery needs and potential discovery process. If you anticipate the need for specific records or information, be sure to phrase your discovery rules accordingly.
Blind Acceptance of an Arbitrator
The arbitrator selection process can have clear and obvious consequences for the outcome of your case. If you’re working with the American Arbitration Association or another ADR organization, you will receive a list of potential arbitrators. Resist the temptation to offer perfunctory approvals. Instead, consider all the options available with the same discernment that you would use during voir dire. When you review the list, eliminate any unacceptable options and rank the remaining options in order of preference.
Remember: your arbitrator will be both judge and jury during your proceeding. For that reason, it is beneficial to gather a clear picture of an individual’s preferences, biases, and potential conflicts of interest. If possible, take a look at some of the arbitrator’s previous cases to learn more about how he/she operates. For example, if you plan to conduct extensive discovery, you may wish to avoid arbitrators with a reputation for denying discovery requests.
Failing to Research Your Discovery Rights
Once you’ve completed the arbitrator selection process, you’ll enter the pre-hearing discovery phase. To make the most of this time, you need to fully understand your discovery rights, obligations, and limitations. In some cases, discovery rules might be set by the group that will administer the arbitration (such as the American Arbitration Association). Be sure to refresh your memory of the rules before crafting your discovery strategy.
When you know what information you can obtain under the arbitration clause, you’ll be better prepared to negotiate with opposing counsel if necessary. If you do enter negotiations, understand that this is not the time to introduce your case to the arbitrator. You should always make a genuine, good-faith effort to resolve disputes without arbitrator involvement.
Arbitration discovery is less structured than trial discovery because the rules of civil procedure don’t apply. This can feel unnatural at first, but try to remember that you don’t need to send formal document requisitions, interrogatories, or requests for admission. Without these distractions, you’ll save valuable time that would be better spent preparing your arguments.
Thanks for reading! If you enjoyed this article, let us know in the comments, and feel free to share it on social media. Don’t forget to check back later this month for part two of our arbitration mini-series!
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