PRO-SE PARTIES

Sometimes, a disputant decides to represent himself in the arbitration, called pro-se.

Just as in a courtroom setting, this is not a good idea, since the party isn't likely to be familiar with the arbitration process, the kind of evidence to be presented, the applicable rules, and so on.

What's worse, most of the cases I've seen are an individual against a large corporation.  The fact that the resources are so stacked against the pro-se party makes matters even worse and can tip the balance in the corporation's favor when the evidence does not support such a condition. 

I have had parties self-represent themselves, and the problem it presents to the arbitrator is that the unrepresented person often will not know to challenge a piece of evidence that should be challenged, or not present evidence that exists and would be helpful to them.

The standard intelligence is that the arbitrator(s) should let the parties do what they are going to do, without interfering or trying to present a case or challenge either side.  But it is frustrating when we see that the case is being mishandled in that way.

In such a circumstance, and in an attempt to know the truth, if a key piece of evidence is not questioned by the pro-se party, I will ask a few clarifying questions that help define the differences between the two sides.

In my opinion, the best suggestion any arbitrator can offer to a pro-se party, since the stakes can be high, is to recommend in the strongest terms that they engage an attorney, or at the least, bring an adviser who can help present their case.

ONE, TWO OR THREE?

So you are a principal of an important case.  You feel confident that your side will prevail, since you think you have the best evidence and most credible witnesses.

One of the next decisions that need to be made, unless it already has been made in the pre-dispute contract, is how many arbitrators should be on the panel.

Generally, on small cases, perhaps under $50,000 claimed, a single arbitrator is sufficient.  The cost for a larger panel escalates quickly, particularly if transportation costs are involved.  Most such cases can be resolved in a day or so which also keeps costs down.

Yet, if the claims in the case are $1,000,000 or more, then the stakes are that much higher, and it can be useful or prudent to have a larger panel, usually three, to make sure that the issues are given full consideration.  In those cases, the ancillary costs including transportation and administration will be proportionally small.

For a three-person panel in a case involving technology, I strongly recommend that at least one of the arbitrators be technologically-knowledgeable.  He or she can then advise the other panel members when matters arise that are outside their experience.  You can check out my relevant background here.
Another possibility is that the arbitration clause calls for two arbitrators, where they appoint a third.  I don't have any personal experience with this arrangement, but it seems to me that whenever the parties appoint their "own" arbitrator, already the neutrality of the process is compromised.  

POST-DISPUTE ARBITRATION CLAUSES

You are the chief executive of a manufacturing firm, and have gotten embroiled in a dispute with one of your suppliers or customers.

Other executives in your firm encourage you to "go to the mat" on this one, meaning that you should spend what ever monies are necessary to win, since they think your case is so strong, and "it's the right thing to do."

Yet you know that a court case will be very costly, lengthy and will have no sense of finality and closure, since either side can appeal the decision of the court.

Your corporate attorney advises you that arbitration may be a viable option to litigation, but there is not an arbitration clause in your existing contract with your opponent.

No problem.  You should be able to convince the other party that it is in both your interests to arbitrate rather than litigate. Since the benefits are so strong, it might not take much convincing unless they are emotionally attached to their position.  The process then involves incorporating an addendum to your contract and adding one of the standard arbitration clauses, such as this one from the AAA:

"We, the undersigned parties, hereby agree to submit to arbitration
administered by the American Arbitration Association under its
Commercial [or other] Arbitration Rules the following controversy:
[describe briefly]. We further agree that a judgment of any court having
jurisdiction may be entered upon the award."

ARBITRATION COSTS - Part 2

There are so many aspects to the cost of any dispute resolution process.  One of the most significant is the fees charged by the attorneys and their staff on both sides of the case.  The fees charged by the arbitrator(s) are usually less, because their time is spent primarily on the hearings, and not on the extensive evidence gathering and client meetings performed by the attorneys.

In a courtroom litigation for example, the actual court costs can be a small percentage of the total costs.  Any attorney wishing to represent his client to the fullest will no doubt take advantage of every opportunity to confound his opponent by taking extensive depositions of every potential witness, preparing interrogatories, demanding copies of every possible document, relevant or not, and filing motions.  For obvious reasons, this aggressive effort is called a "fishing expedition."  Often it produces no more results than a true fishing expedition would.

All of this can run up the cost of the litigation to the point where it can make the principals wonder why they ever thought it was a good idea to pursue the case.

Enter arbitration.  While arbitrations are not cheap, they do avoid the kind of intensive investigation and evidence gathering that a litigation does, and so can have a much smaller bill for professional fees of all kinds.  When one considers the fact that arbitrations are not subject to appeal (except on the occurrence of various malfeasances on the part of the arbitrator(s), the time spent on the case is proportionally reduced, along with the cost.  

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.

WHY USE A SPECIALIST ARBITRATOR?

In our complex business system, there is an increasing dependence on technology, both for running the business, and in the products that the business produces. 

If the issues in a business dispute are labor-related, then there are arbitrators experienced in that field.  A business wanting the best outcome of the process would naturally make sure that at least one arbitrator sitting on the panel would be knowledgeable about labor matters.

Similarly, if the dispute was about construction where industry techniques and procedures are important, would certainly want an arbitrator who was intimately familiar with construction. 

In both those business cases, having arbitrator(s) with deep experience is only logical to make sure that the issues brought up in an evidentiary hearing are understood by the panel.  This is in fact one of the great advantages over arbitration compared to a courtroom setting where the jury is composed of citizens who may have no understanding or experience in the field.

So it is also logical that in a technology case that the arbitrators also need to be conversant with the technology at issue.

This is my strength - a wide and deep understanding of many technologies gained over my 45 years of business experience, both as an executive and technologist.

If you are a principal or attorney involved in such a case, I would be pleased to discuss what I can offer.  Just go to my website.

INTRODUCTION

This is the first posting on my new blog.

I have been a commercial arbitrator for the American Arbitration Association for more than 30 years, and am now promoting my services independently of the Association as well.

I will be frequently commenting on technology matters and arbitration of disputes in general, and those involving technology specifically.

If you want to find out more specifics on arbitration, my background and practice, please check out my web site.