Today's trial practice requires that attorneys be familiar with the most common forms of alternative dispute resolution (ADR). These include mediation and arbitration. It is rare to find a trial practitioner today who is not experienced with mediation or who does not appreciate the value of mediation. Mediation is relatively simple, safe (no decision is made) and effective in resolving more than 75% of the cases referred to mediation.
Arbitration, which is being rediscovered and is increasingly being used, is not nearly as common place as mediation. Arbitration has been in use for more than 1000 years. Historians believe it was first used by merchants from different countries trading with each other. Neither understood nor trusted the other's legal system, or their own for that matter, and developed arbitration as a means of resolving disputes fairly. Merchants agreed to allow a trusted fellow merchant to decide how a dispute should be resolved based on customs in their trade. Arbitration in a nutshell is an ADR procedure that uses a neutral third party or panel of three to make a decision about the merits of a dispute. Because, unlike mediation, arbitration results in a decision, lawyers and their clients must be cautious in agreeing to arbitration and knowledgeable about the arbitration procedure in order to obtain the best results.
Some of the reasons for using arbitration include the belief that it is both faster and less expensive than litigation in the civil courts. The more experienced the trial lawyer is with arbitration, the more likely the above is true. Rule 1.820 of the Florida Rules of Civil Procedure embodies this belief by requiring that the arbitration hearing be conducted informally, that the presentation of testimony be kept to a minimum and that facts and issues are to be presented primarily through documents and the statement and argument of counsel.
Arbitration can be voluntary, as is the case when parties to a contract agree to require arbitration in the event of a dispute. However, even when the subject matter of the dispute is not contractual or when a contract does not require arbitration, the parties may voluntarily agree to arbitrate after a dispute arises. Sec. 44.104 of the Florida Statutes, provides authority for voluntary binding arbitration, as does Chapter 682 of the Florida Statutes, entitled the "Arbitration Code". These two statutes overlap and accordingly, create some confusion. To further complicate matters, Rule 1.830 of Florida Rules of Civil Procedure governs the procedural aspects of voluntary binding arbitration. Unfortunately, even if the practitioner becomes familiar with the above statutes and rule, there will still be questions which will fall outside of all three. Because voluntary arbitration is, as its name implies, at some point in the process voluntary, it allows for creativity in tailoring the arbitration procedure to the desires of the parties. For example, the parties may wish to agree to one arbitrator rather than a panel of three to save time and expense. The parties may also agree to arbitrate pursuant to the rules and procedures of the American Arbitration Association, or the parties may create their own procedure. Some parties agree to limit testimony to that of the parties. All other witnesses' evidence is presented by way of affidavits. Also, discovery can be limited to production of documents only, or agreeing to limit the taking of depositions to the parties only.
In addition to voluntary binding arbitration, there is a procedure known as "court ordered non-binding arbitration". The authority for non-binding arbitration can be found in Sec. 44.103 of the Florida Statutes, and the procedure in Rule 1.820 of the Florida Rules of Civil Procedure. Non-binding arbitration is currently being ordered by the courts more frequently than it has been in the past. It differs from mediation in that a decision is made and differs from traditional arbitration in that it is neither voluntary nor binding. The courts are ordering non-binding arbitration in cases where mediation has failed to result in a resolution and the court feels that one or the other of the parties needs a reality check in the form of a third party letting the litigants know the merits or lack thereof of their dispute.
The courts are limited to ordering non-binding arbitration because to force litigants into binding arbitration would violate their constitutional guarantee of access to the courts. The use of non-binding arbitration still allows the parties to litigate the matter in court by way of a trial de novo if either party does not agree with the arbitration award. There is a catch, however. If one of the parties does object to the arbitration award and requests a trial, if the result of the trial is not better than the award for that party, they will be responsible for the non-objecting party's attorney's fees.
The most important factor in successfully arbitrating, other than the expertise of the trial lawyer, is the choice of the arbitrator. Criteria for choosing an arbitrator include above all else someone who is fair minded and impartial. Other criteria include experience in conducting arbitrations, and in special cases, finding an arbitrator with expertise in the subject matter of the dispute.
In summary, today's trial lawyers already have expertise in mediation. However, most trial lawyers have not yet developed the same level of expertise with arbitration. Today's trial lawyers will need to become more knowledgeable about arbitration since contracts increasingly call for arbitration and because the courts have authority to order non-binding arbitration on their own initiative. Additionally, savvy trial practitioners are requesting the court to order non-binding arbitration when they believe the award of the arbitrator will be favorable to their client and the costs of litigation will be more burdensome to their client than the other party (deep pocket clients such as insurance companies).
Leonard P. Reina is President of Mediation & Arbitration Services, Inc., and is a Florida attorney certified as both a mediator and an arbitrator.