I used to think that judges had it so easy. That all they had to do was read the briefs, listen to the arguments, and make a decision. Only after I started serving as an arbitrator did I understand how hard it is to be the one responsible for making a decision. Not only that, I realized advocates did not always ask or answer the questions that would elicit the most critical information to making that decision.
Serving as an arbitrator has made me a better advocate – from understanding what matters in a case to better using the tools at my disposal to highlight those critical substantive facts and credibility determinations. Here are the top five lessons I've learned so far. 1
1)Know the rules of the road. The first step always involves understanding the forum, the laws governing it, and how to procedurally maneuver from the starting point to the result your client wants. In almost every arbitration I'm involved in, at least one of the advocates has either a). not read the rules applicable to the arbitration, or b). does not understand the substantive law governing the arbitration (usually the Federal Arbitration Act and U.S. Supreme Court and other federal decisions interpreting the FAA), thus, often making decisions that cost their client money.
Arbitration is a private dispute resolution system created by a contract – an arbitration clause in a pre-dispute agreement or a submission agreement if created post-dispute. Thus, the parties' agreement is the beginning of any inquiry regarding jurisdiction, including the arbitral tribunal's jurisdiction to hear the dispute and the scope of the disputes subject to arbitration. The goal of the FAA was to put arbitration clauses on equal footing with other contracts to reverse historical judicial hostility to arbitration.2 In doing so, the U.S. Supreme Court made clear that although arbitration clauses are subject to contract defenses like fraud and mistake, to avoid jurisdiction of the arbitral tribunal, those defenses must go the decision to arbitrate itself rather than to the agreement as a whole.2 This is commonly known as the separability doctrine: the arbitration clause's validity is considered separate from the container agreement's validity. As to the enforceability of the arbitration provision, contract defenses must go to the making of the arbitration clause itself. Although this precedent has been the law of the land for more than half a century and was expanded by the U.S. Supreme Court, advocates still regularly appear seeking to challenge the agreement to arbitrate by claiming fraud or mistake in the making of the agreement as a whole. Fifty years of precedent makes it difficult to wiggle out of an arbitration agreement.
It is equally important to understand how the arbitrator will view discovery and the rules of evidence. Most arbitration rules do not allow for extensive court-style discovery. While possible by agreement, the rules generally do not automatically allow depositions. Litigants must also seek permission to bring dispositive motions or deviate from the schedule. You cannot assume that all the discovery tools available in a typical civil case in court will be available to you. Subpoenas to third parties, for example, are not allowed or enforceable during the discovery phase of arbitration. These features force advocates to be creative and efficient.
For the evidence presented, understand whether the federal rules of evidence or some other agreed rules apply. Typically, because there is no jury, some evidentiary rules are relaxed. For example, I regularly allow in hearsay and accept testimony that may lack all foundation elements. That is not to say that hearsay evidence will be given equal weight (or any weight). I would rather litigants have their day in "court," allow the evidence in, and then give the evidence its appropriate weight (including none at all) in the final determinations. Find out your arbitrator's preferences so the evidentiary presentation can proceed seamlessly.
Because arbitration is a private dispute resolution system, your client pays for it in terms of administration costs and fees for one or up to three arbitrators, each of whom gets paid an hourly rate competitive with most lawyers in the market. In a typical commercial arbitration, fees are split between the parties, so for every motion and procedural move your client pays you to make, it also must pay at least half of the cost it takes for the arbitrator to review and decide the motion. Understanding the rules is, therefore, critical; be strategic with your procedural choices.
2) Research your arbitrator 'cause you're stuck with them. Picking an arbitrator can often be like reading tea leaves, yet it can be the most crucial choice you make in a case. The arbitrator decides everything, and under the FAA, there are few grounds to appeal an arbitrator's final award. Picking an arbitrator is very important, but the lack of information available about potential arbitrators can handicap that decision.
- The first step is to use the information you have: review the arbitrator's resume carefully to see if there is some hint among their education and work history that might provide a clue as to how the arbitrator will view your client's position. Note: commercial arbitration may be of limited utility because experienced commercial litigators have often been on both sides of the "v" protecting their clients' interests.
- Try to expand beyond the resume: poll your colleagues on the list of arbitrators (and provide feedback if asked). A google search can uncover articles that the arbitrator has written that can give insight into specific topics.
Use all the tools at your disposal and then make the best decision with the information you have.
3) First impressions matter. In a typical arbitration, filing the demand for arbitration or statement of claim initiates the arbitration. The respondent is then served and has an opportunity to respond by filing an answering statement, or if no answering statement is filed, then the claim is presumed denied. All of this happens automatically, typically before the arbitrator is selected.
Once selected and sworn in, the arbitrator schedules the preliminary hearing. To prepare for the preliminary hearing, I always immediately go straight to the claim and the answering statement to understand the nature of the case and the parties' respective positions. This is much harder to do if the claim consists merely of a fillable PDF form and no answering statement has been filed. While it is not required to provide a narrative with counts and claims for relief like a complaint would, it is helpful and starts the persuasion process. The same holds for the respondent's position. An answering statement does not have to respond line-by-line to the claim, but a narrative that provides the respondent's side of the story is helpful. While there are circumstances where an advocate may want to do the bare minimum required under the rules, if your goal is persuasion, then absolutely provide a more comprehensive overview of the issues.
When you get to the preliminary hearing, be prepared for it. This is the most important hearing apart from the actual trial of the case – the schedule for the entire case, including the evidentiary hearing date, will be set at this time. Most tribunals' rules require the parties to confer in advance of the preliminary hearing but rarely does that happen in any meaningful way. Cooperation is part of the entire professional impression and only serves your client's interests. Those first impressions matter later in terms of credibility determinations and close calls.
4) Understand your burden of proof. Although the evidentiary rules might be relaxed in an arbitration, the burdens of proof and persuasion are not. If you are the claimant, you must meet the applicable burden of proof and persuasion (meaning your evidence must be credible) on all the elements of your claims. Suppose you are the respondent and have affirmative defenses. In that case, you must meet the burden of proof and persuasion on all the elements of the affirmative defenses to defeat the claim. This includes any claim for attorneys' fees that are a part of a damage award. This sounds simple, but most cases are lost on these battlegrounds. Go back to the basics. You either have the evidence, or you don't. If you don't, you lose. No exceptions.
5) There is no such thing as splitting the baby. Ask ten lawyers about arbitration, and at least nine will tell you that arbitrators "split the baby," meaning that the arbitrator will try to give each party some relief. In my experience, I have yet to "split the baby" as an arbitrator. There are close calls for sure, but it almost always comes down to a burden of proof and persuasion (see Tip Four). In each case, there has always been a winner and a loser.
So, in your next arbitration, be the winner. Be a more effective advocate by following these tips for success in your arbitrations.
Footnotes
1. Kristen E. Hudson is licensed to practice in Illinois and Texas, and in federal courts across the country. Kristen concentrates her practice in complex commercial litigation, including protection of intellectual property and insurance coverage, and all forms of alternative dispute resolution. Kristen is a panelist with the American Arbitration Association and teaches alternative dispute resolution and international means of dispute resolution at UIC Law School, where she is also co-coach of its award-winning Willem C. Vis International Moot Arbitration Team. Kristen also serves as an arbitrator in the Vis Hong Kong Competition. Kristen received her bachelor of arts in French education, with honors, from the University of North Carolina at Chapel Hill, and graduated magna cum laude from UIC Law School where she was editor-in-chief of The John Marshall Law Review.
2. CompuCredit Corp. v. Greenwood, 565 U.S. 95, 97 (2012).
3. Prima Paint Corp. v. Flood & Conklin Manufacturing. Co., 88 U.S. 395 (1967).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
