Saturday, February 1, 2014
ARBITRATION COSTS - Part 1
One of the putative benefits of arbitration is that because of its relaxed rules and finality, it can cut costs compared to litigation with its lengthy and costly appeals and evidence-gathering processes.
In order for this assumption to work, though, it is important for the arbitrator(s) to exercise control over the process. For example, attorneys, in their zeal to represent their client, can aggressively challenge every piece of evidence, each instance of which disrupts the process.
To avoid these disruptions, the arbitrators must set the tone and discourage frequent challenges. On one hand, they cannot refuse to allow an instance of evidence that later might have proven to be important. So the way this is handled is by giving the arbitrators the flexibility to assign different weights to various pieces of evidence.
To avoid this becoming an issue, it is important that the arbitrators tell the attorneys at the start of the hearing, that generally speaking all evidence will be allowed, but not necessarily given the same weight when it comes to preparing an award.
In my view, this is one of the major advantages of arbitration versus a courtroom setting, in that the arbitrators being professionals, are able to make such determinations, whereas a citizen jury may not be.