Thursday, July 23, 2009

Mandatory Arbitration is a Mandatory Waste of Time

Those of you who practice civil law know that cases which are deemed less than a particular jurisdictional amount are assigned to the mandatory arbitration call. Presumably, this is supposed to provide a more efficient way of disposing of "lesser" cases. Unfortunately, it does the exact opposite. Anyone that has participated in mandatory arbitration will know what I am driving at.

There really is no great victory at an arbitration hearing. Case in point. Assume, as a plaintiff, you put on your absolute best case and the abitrators give you a great award. The judgment is not worth the paper it is written on. Since the other party has the right to reject the award, pay a nominal fee, and proceed to trial, your great award will last a mere 30 days. Likewise, if a defendant obtains a low judgment or the ultimate victory, a not guilty, the plaintiff will reject the award and proceed to trial. Hence, you are left with a plaintiff who must tries his or her best to present a case that is strong, but not too compelling, since ultimately that good award will be rejected and a defendant who must make sure that a not guilty does not occur.

What are you left with? A long delay in getting the case to arbitration and one side having to pay an additional fee so that you can proceed to jury trial when you should have been on that path to begin with.

The better option would be an optional arbitration system. If two parties would like to see if they can resolve the case before a 1 or 3 panel arbitration, they can share the fees and reject without consequence. Indeed, cases are often disposed of more efficiently, with both parties relatively comfortable with the outcome, during voluntary mediation.


Michael W. Huseman said...

I completely agree. I don't think I ever had an arbitration award that wasn't rejected. They are a complete waste of time.

I blame the insurance industry. I recently had a defense lawyer tell me that he could not reach his adjuster during the 30 day rejection period, but he filed the rejection anyway because "they always reject unless they completely prevail at arb."

If they always reject, why do we go through the process?

Matlock said...

I actually did have one that wasn't rejected. D owned an eatery, we will call it Carbies. Contracts with P to re-asphault his parking lot. D is not happy with the work and does not pay. I look at the parking lot and it looks like any parking lot I've ever seen.

"What's wrong?" I ask. D answers, "It's not the asphault I wanted." Hmmm. I'm not sure if that's a valid defense. I say, "you're going to need an expert." His response: "I am an expert and I will testify. I will not pay for one." I explain to him that he is not an expert. His response, "I don't care." My thought, we're royally f****d."

We go to arb, and I'm getting beat like Rocky Balboa in Rocky IV. I cannot see due to the brutal beating my "expert" and I are taking.

We get to the prevailing party attorney's fees issue in closing arguments. P's counsel is arguing that it is a part of the contract (it was) and they are asking for XXX amount in fees and costs. I realize that they are technically correct, BUT the provision was on the BACK of the two sided contract. P's counsel forgot to copy the back side, so it wasn't in evidence....

Needless to say, my assclown client eventually had to pay the judgment (for the work they actually did, but it took alot of convincing), but got out of paying P's fees and costs. I have a feeling that P's attorneys ended up doing alot of their work pro bono after their blunder.

Always check your exhibits. As an aside, I seem to be a magnet for those type of clients.