There is a great argument that lawyer advocacy in an arbitration is more essential than at trial in court. Agreeing to arbitrate disputes is a serious decision for any general counsel. There are many pros and cons, but when a dispute is arbitrated, finality is the rule rather than the exception. Great arbitration lawyering is therefore essential.
The following are the top seven mistakes I have seen while representing parties in arbitrations, as well as while serving as an arbitrator.
1. Mangling the Arbitration Clause. Arbitration is a matter of contract. There are detailed articles on drafting arbitration clauses, but far too often drafters fail to consider the basics. Which disputes will be subject to arbitration, “any and all” disputes or only limited issues? Pre-hearing discovery is limited, so what information will you need in the event of a dispute over this contract? What rules will apply? What discovery will be allowed? Who will choose the arbitrator and how will she/he be chosen? Will there be one arbitrator or a panel of three, and should qualifications be listed? Will you need to formally include third parties in the event of a dispute, and if so, allow for such consolidation in the clause?
2. Not Performing Due Diligence on the Arbitrator. After an arbitration demand is filed with the alternative dispute resolution (ADR) agency, all counsel are sent a list of potential arbitrators with bios. The selection process is like selecting a jury. Cross off unacceptable arbitrators; list the rest in order of preference; send the list back to the administrator. Soon you will be assigned an arbitrator. Remember, this is the person who will render a final and non-appealable decision.
The mistake is not researching beyond the provided bios. You want someone who will “call balls and strikes” with no conflicts. Look for presentations or articles. Call colleagues. When you are assigned your arbitrator, start the process all over again to find out the arbitrator’s preferences and dislikes.
3. Not Folding Bad Claims/Defenses. As the late philosopher Kenny Rogers sang, “You gotta know when to hold ‘em, and when to fold ‘em.” Don’t present every possible claim or defense to the arbitrator and refuse to concede positions. An arbitration is not a hearing before a judge who may not know anything about the subject matter. The arbitrator is an industry expert. A party’s credibility on all positions is vital. Presenting four great claims and two highly questionable ones, or stubbornly sticking to losing positions, is an error. Conceding certain claims/defenses during a hearing can increase your credibility to the arbitrator.
4. Not Understanding Pre-Hearing Discovery Limits. In arbitration, party document discovery is always allowed. The mistake is not knowing your arbitration pre-discovery rights and limitations. Does the arbitration clause address pre-arbitration discovery? The rules of civil procedure do not apply in arbitrations. Depositions may not even be allowed. What about pre-hearing “third-party” document discovery?
Unlike in a court trial, there is no right to third-party discovery. This is a huge factor in agreeing to arbitration in the first place. Federal circuit courts differ on the enforceability of such subpoenas. The arbitrator has no power to enforce any subpoenas.
5. Not Getting the Exhibits Right. In arbitration, exhibits are introduced, but remember, the rules of evidence do not apply. Typically, on the day of the hearing each side shows up with its own set of exhibit books. This is a mistake, and can cause confusion and an unhappy arbitrator, as many times there are identical exhibits that have different exhibit numbers. Counsel should first exchange a list of proposed exhibits and then work together to create a joint set of exhibit books. Create an index that can also include tabs for pre-hearing briefs, summaries of damages, and pictures. A joint exhibit set allows everyone to “sing from the same song sheet.” It is also extremely helpful for counsel’s pre-hearing preparation to know all the exhibit numbers. If the arbitration is document intensive with multiple exhibit books, use binders that are easy to open and close. In addition to the index, include a dated exhibit list.
6. Not Being Creative at the Hearing. In court, there may be key witnesses or experts who testify on day one, and the witnesses who rebut that testimony may testify days later. No witnesses can be taken out of turn, regardless of circumstances. In arbitration, creativity is the key. If there are experts, you can suggest a “hot box” and have them testify back-to-back or even at the same time, presenting their multiple opinions one at a time. There may be key witnesses on both sides on more than one issue. Suggest having them testify back-to-back, take them out of order, or testify via zoom. Always remember that the arbitrator is being fed facts and arguments through a fire hose.
7. Not Making the Arbitrator’s Post-Hearing Decisions Easier. Well before the time that the proof in an arbitration is closed, think how you can help the arbitrator make a well-informed award. Offer to submit post-hearing summaries that link up specific issues or claims to witnesses and exhibits. Be clear about the damages and relief you are requesting. Although most arbitrators do not request formal post-hearing briefs, it may help to offer a short and pointed summary of your damages or defenses, or answer a specific question of law.
The takeaway is this: Don’t let the informality of arbitration cause you to not prepare as you would in court. Great arbitration lawyering is essential to get to the best possible result. An award is, with very few exceptions, final.
David K. Taylor is a partner with the Bradley Arant law firm and chairs his firm’s ADR and Construction practice. He frequently writes and speaks on ADR topics such as arbitration and has been an arbitrator more than 100 times.