The Promise and Perils of “Med-Arb”

Maria Walsh

Maria Walsh

By Maria C. Walsh

When disputing parties tire of mediation (because it is too “weak”) or fear arbitration (because it is too “controlling”), they seek an Alternative Dispute Resolution solution that is “just right.”  Recently, I’ve heard a number of highly talented negotiators, and one famous law school, endorse med-arb as the best of all ADR worlds.  The advantages, however, come with caveats.

Through mediation, parties in conflict negotiate a dispute settlement with the assistance of a neutral mediator.  The materials, design, and strength of the deal all belong to the disputants.  If they can’t agree, the deal collapses.  Each party’s attraction to controlling the settlement terms through negotiation is tempered by the frustration that each lacks power to unilaterally impose a solution.  Sometimes mediation doesn’t feel sufficiently “muscular.”

In contrast, arbitration delivers closure because the parties give an impartial arbitrator authority to impose a decision.  The arbitrator decides the facts, judges the parties’ legal rights, and dictates the result.  Med-arb, as the name indicates, is a hybrid, sometimes proposed as a cure for a failed mediation.  Frustrated, tired of spending money, time, and effort in negotiation, parties want closure and may ask the mediator to provide a binding decision.  The neutral mediator who has weighed all the accusations and defenses, debated the various proposed solutions, and earned the trust of all parties during the mediation process, seems the perfect candidate to adjudicate the remaining irreconcilable differences between the parties.  Med-arb may be the perfect solution; but counsel considering med-arb should think about the following:

To continue reading Maria C. Walsh’s discussion on The Promise and Perils of “Med-Arb,” please read the full article from Law.com by clicking here.

Reimagining Arbitration

Richard Chernick, Esq.

Richard Chernick, Esq.

By Richard Chernick, Esq.

The rapid growth of commercial arbitration has not been without drawbacks.  As counsel have become more sophisticated in dispute process design, arbitrations now often incorporate many elements of a court trial.  Litigation constructs such as detailed pleadings, broad-based discovery, provisional relief, dispositive motions and formal rules of evidence are often now a part of arbitration.  The inevitable consequence of these changes has been increased expense and delay.

To preserve the benefits of arbitration, it is necessary to address this issue from several perspectives, starting with the arbitration clause.  A thoughtful process usually should include a negotiation or mediation step, reasonable limits on the scope of discovery, overall time limits on the arbitration, and the designation of one rather than three arbitrators whenever possible.

Limitations on discovery are crucial. The administering institution selected in the clause, and its rules, will initially define the scope of discovery.  The clause may add restrictions or additions to rules-based discovery.  The key is to choose a discovery process that is proportionate to the magnitude of the dispute, limit excessive e-discovery and give the arbitrator power to assure a reasonable scope of discovery.

Set specific time limits on arbitration and make sure they are enforced.  An outside limit could be specified (for example, one year from the commencement of the arbitration to the issuance of the final award) or the provider’s rules may be relied on where they impose such limits. Care should be taken not to set unreasonable limits, and discretion should be accorded to the arbitrator to vary these limits in exceptional circumstances.

To learn more about reimagining arbitration, please read the full article from Law.com by clicking here.

Is Your Arbitration Clause Outmoded?

Zela "Zee" G. Claiborne, Esq.

Zela “Zee” G. Claiborne, Esq.

by Zela “Zee” G. Claiborne, Esq.

Although arbitration is a “creature of contract” and many arbitrations proceed in the manner outlined in the arbitration clause, it is not unusual for the parties and their counsel to alter the terms of the original clause to suit the dispute at hand.  Often a dispute has arisen years after the arbitration clause was drafted, and circumstances have changed.  The clause may no longer be appropriate.  Although the parties and their lawyers may have strong disagreements on the merits of the case, they understand that stipulating to a customized process that suits the dispute is a huge benefit to everyone involved.  This flexibility is one of the strong points of the arbitration process.

The following suggestions are just a few of the ways to alter an outmoded clause:

1.  Select One Arbitrator

One goal of these stipulations is streamlining the arbitration process to make it more cost-effective.  When the clause calls for a panel of three arbitrators, counsel can make the process less costly and often more efficient by stipulating to use a sole arbitrator.  Although the parties may prefer a tripartite panel for a complex, “bet-the-company” case, choosing an experienced solo arbitrator can save time and money and does not involve extreme risk.  Counsel have an opportunity to review the arbitrator’s disclosures, to contact others about their experiences with the arbitrator and even to interview the arbitrator if there are concerns about fairness and the handling of the case.  Interviewing arbitrators has become a common practice, and a good way to do it is to meet with the candidate in the presence of the other side to ask various questions about how the candidate manages cases, while, of course, avoiding queries about the merits of the dispute.

2.     Select a Provider to Administer the Case

Arbitration participants often express a preference for a particular ADR provider based on factors such as experienced case managers, efficient administrative procedures, cost and a comfortable, high-quality hearing space.  While the arbitration clause may identify a particular provider, the parties may have had a negative experience with that provider in the past and may want to switch.  Therefore, it is not unusual for counsel to stipulate to a different, preferred provider.  As long as both parties agree, this is an easy process that will make the experience smoother and less frustrating for both sides.  Case managers are trained to assist with such a change.

For the rest of “Is Your Arbitration Clause Outmoded?” please read the full article from Law.com by clicking here.

Arbitrator Selection

Kim Taylor, Esq.

Kim Taylor, Esq.

by: Kimberly Taylor, Esq.

Much has been written in recent years about whether arbitration has lived up to its billing as a “better, faster, cheaper” alternative to litigation.  No matter one’s views about this, litigation is undoubtedly very costly, and wise counsel must look for ways to reduce unnecessary costs and time delays.  Unlike litigation, arbitration affords the parties much control over the process, including the selection of the arbitrator, arguably the most important decision in the process.

Also unlike litigation, if parties are unhappy with the decision of the arbitrator, there is very little recourse, because a fundamental tenet of arbitration is finality.  Grounds for vacatur are limited, and unless the parties have selected an appellate arbitration remedy, the arbitrator’s decision will likely not be overturned.  Therefore, selection of the arbitrator is a critical step.

Institutional rules generally provide a process for selection of the arbitrator if the parties cannot agree amongst themselves, often by use of a “strike list,” where several arbitrators are proposed and parties are permitted to strike names until an acceptable arbitrator remains.  Matters calling for a tripartite panel are handled differently, as each party usually selects its own party arbitrator (assumed to be neutral, but the parties can agree otherwise), and those two arbitrators select a neutral chair.  Having three arbitrators on the arbitral panel can alleviate the concern that a single arbitrator may not apply the law correctly and can justify the additional cost.

Whether the matter is to be determined by a sole arbitrator or a tripartite panel, there are important considerations to keep in mind in selecting the tribunal.  First and foremost, counsel should review the language of the arbitration clause, as it often dictates the qualifications of the arbitrator.  Second, counsel should review the arbitration laws of the place where the tribunal will sit.  Certain jurisdictions have restrictions regarding the nationality of members of domestic arbitration tribunals.  Beyond that, what should counsel look for when selecting an arbitrator, and how should those qualities be investigated?

Above all, parties want to select as their arbitrator someone who is familiar with the law and has a track record of fairness.  Certain disputes require someone with significant subject matter expertise (e.g., patent disputes, engineering and construction, entertainment, employment), so it is important to review the background and prior caseload (whether as a former judge, arbitrator or practitioner) to determine whether the proposed neutral has the requisite background to understand the unique facts and legal issues at stake.

To learn more about arbitrator selection, please read the full article from Law.com by clicking here.