Legal Practice Tips
The 10 biggest mistakes lawyers make in arbitration
By Richard G. Spier
This is a companion to my article on 'Mediation Miscues: The ten biggest mistakes lawyers make in mediation' published in the June 1999 issue of the OSB Bulletin. I have served as arbitrator of a large number of cases, both simple and complex. In the vast majority of cases I have heard, the lawyering has been competent and professional. However, experience as arbitrator in many kinds of cases - including business, contract, employment and commercial disputes, real estate problems, construction cases and personal injury claims - suggests a number of mistakes to avoid for the lawyer who wants to most effectively represent his or her client in an arbitration proceeding. The following are the 10 biggest mistakes that I have seen.
TO COMMUNICATE WILLINGNESS AND ABILITY TO TRY EVERY CASE
Does this one sound familiar? This was the first 'mediation miscue' that I discussed in the previous article, and applies to arbitration as well. Too many lawyers have the reputation of settling most of their cases the day before trial or arbitration hearing. If you develop the reputation of being open to settlement on reasonable terms while still preparing for hearing, your clients will be better served and other lawyers will respect your efforts. The key is diligent, thorough preparation even if you expect the case to settle. Develop and convey a sense of urgency to your clients and opponents. Your clients are entitled to no less, and your opponents will take you seriously.
TO ADVISE CLIENTS OF WEAKNESSES IN A CASE
Every case has problems - legal, factual or practical (such as financial cost, delay, inconvenience, bad publicity and stress to clients). Clients deserve reasoned evaluation of the risks and benefits of pursuing or defending a case. Most clients appreciate that his or her lawyer can be absolutely loyal and appropriately aggressive while still warning about weaknesses in the case.
Just about any case can be won or lost. We all tend to like most of our clients and get enthusiastic about their positions, and this is a good thing during presentation of a hearing. The downside of this enthusiasm, however, is a failure to appreciate what can go wrong. Is the key contract provision really so clear? Is the law 100 percent on your side? Will your star witness appear credible to the arbitrator? Will your star witness appear at all? Is liability reasonably apparent, but damages questionable? Will the arbitrator think that the correct decision turns on some point you think is unimportant? I believe that in predicting the results of almost all arbitrations or trials, we are dealing not so much with probabilities as possibilities. Be sure that your client knows the risks and the costs.
TO CONDUCT A THOROUGH FACTUAL INVESTIGATION
Of course, you can't advise of weaknesses that you don't know exist. There is no substitute for thorough investigation of facts, a skill many of us were not taught in law school. It is not enough to rely on a client's characterization of what a key witness will say. If the witness is friendly, get an affidavit. If a witness is unfriendly, take a deposition, if necessary. Don't make the mistake of awaiting the eve of hearing to finally found out what the key testimony is going to be.
Be sure you have the important documents. Many lawyers tend to think that the tough part is getting discovery from the opponent and third parties, and of course professionally aggressive action is necessary. I have seen many cases, however, in which it was a lawyer's own client who failed to provide a critical paper. Usually, this seems to be due to embarrassment by the client or a lack of sense of urgency, rather than outright fraud or misconduct. Whatever the client's motive, the result at hearing can be at best troubling and at worst disastrous. There is no substitute for face-to-face instructions to your client, followed-up by written confirmation, of the need to conduct a diligent search and to provide counsel with all materials. Unofficial 'desk files' or 'working files' seem to be a major problem. Be sure your client knows that you want everything.
Tell your client that you can often take the 'sting' out of apparently bad information if you know about it early in the case, and in any event you need all information, good and bad, in order to evaluate the case. Clients need to understand that no case is perfect.
TO PROMPTLY RESPOND TO INQUIRIES AND REQUESTS FROM THE ARBITRATOR
Maybe it's because some lawyers take arbitration less seriously than court litigation (if anything, the opposite should be the case, since arbitration is almost always final), but a surprising number of lawyers need repeated reminders to provide information to the arbitrator. A common problem is failure to promptly return hearing calendars or delays in depositing the arbitrator's fee. It simply looks bad when a lawyer neglects clear and simple administrative steps.
TO CONFIRM AND COMPLY WITH PREHEARING PROCEDURES
Depending upon the procedural rules under which an arbitration is proceeding, ambiguities or uncertainties may exist concerning prehearing procedure, particularly discovery and prehearing submissions.
For example, the Rules of the Arbitration Service of Portland provide that the familiar procedures of the Oregon Rules of Civil Procedure regulate discovery. ASP Rule 19. In contrast, the Commercial Arbitration Rules of the American Arbitration Association leave discovery of documents and identification of witnesses up to the discretion of the arbitrator. AAA Comm'l Dispute Res. R-23(a).
Uncertainly can also exist as to requirements for prehearing submissions to the arbitrator of witness lists, exhibits and the like.For example, ASP rules require a prehearing statement of proof similar to that required in court-annexed mandatory arbitration cases (see ASP Rule 20; UTCR 13.170), while the AAA rules provide only for exchange of exhibits. AAA Comm'l Dispute Res. R-23(b).
As a practical matter, counsel will most often agree between themselves on discovery procedures in arbitration, including depositions. Remember, arbitrators and judges dislike having to decide discovery disputes, but don't hesitate to bring a discovery problem to the attention of the arbitrator if there is no alternative.
When the applicable rules are not specific concerning timing and content of prehearing submissions, it is best to reach agreement with the opponent and the arbitrator. Then, serve and file on time! It never ceases to amaze me that a small but significant percentage of lawyers just can't seem to be able to timely present their prehearing materials, with no excuse, apology or request for extension.
TO TAKE HEARING SETTINGS SERIOUSLY
One of the advantages of arbitration over court litigation is the ability to work with your opponent and arbitrator in scheduling the hearing at a time convenient for all participants, including witnesses and clients. Most arbitrators are flexible, and will allow plenty of time for discovery, investigation and preparation prior to hearing. They are not concerned with statistics or arbitrary deadlines by which cases must be concluded.
In return, it is a much- appreciated courtesy to the arbitrator and just plain effective practice to verify availability of clients and witnesses as soon as a hearing date is proposed, and to then consider the date as firm. Develop a calendar for preparation, with allowances for unforeseen problems, and let your opponent know if the case is not sooner settled, it will indeed be heard on the date set. This will please your clients (who in most cases are anxious to get matters resolved, one way or the other), impress your partners and confound your opponents.
If a hearing postponement or any other kind of extension is absolutely necessary, please don't embarrass yourself by having your legal assistant call the arbitrator without being able to expressly confirm that yes, you spoke with your opponent who has no objection, and without several new dates that work for both sides. Of course, if a postponement is going to be necessary, the arbitrator will be very grateful if the request is made as soon as possible, not a day or two before the hearing.
TO EDUCATE THE ARBITRATOR
It is a mistake to await opening statement as the first opportunity to explain the case the arbitrator. When a lawyer has lived with a case for many months, it is easy for him or her to forget that even an experienced, sophisticated arbitrator knows none of the facts and may need reminding on the law. Be sure to educate the arbitrator on the basics. Who is suing whom? For what? Why? What are the basic contentions of fact? What kind of evidence will establish those contentions? What law supports entitlement to the relief or defense sought?
Even the smallest case justifies a prehearing memorandum on these points, whether or not the applicable rules so require. The submission should include a statement of facts and summary of applicable law, with citations (including quotations of critical statutory language and case holdings).
Most arbitrators try to apply the law as they understand it to be, without substituting personal notions of 'fairness' or 'justice' for what the law seems to require. Even though there is no effective judicial review of errors of law under most arbitration procedures, counsel should nevertheless thoroughly research and brief the law for the arbitrator. At the same time, the effective advocate knows how to show that the equities are on the side of his or her client.
Counsel's presentation will always be more efficient if the prehearing submission includes a set of prenumbered exhibits, exhibit list and witness list (with brief explanation of who the witness is and the subject matter of expected testimony). Pay attention to ease of access. Submit the exhibits in notebooks, with easy-to-read tabs. Use highlighter to draw attention to key provisions in documents (of course providing identical material to the opponent).
In a case of any complexity, demonstrative aids are as useful in an arbitration as in a jury trial. These can include blow-ups of important contract language, charts and graphs, photographs, computer-generated graphics or summaries and video presentations. Of course, all expenditures most be cost-effective, based on the amount and issue in dispute and the resources of the client. However, it is a mistake to conclude that there is no place in arbitration for creativity, clarity and bold presentation.
FAILING TO RESPECT THE FORMALITY OF THE HEARING
Yes, an arbitration hearing is not as formal as a trial, nor should it be. It's OK to drink coffee during the hearing, and to complain about the weather during recesses. Nevertheless, the proceeding is of critical importance to the parties, and they may misunderstand and indeed be angry about attending just another friendly meeting of highly-paid lawyers (including the arbitrator), filled with banter and apparently wasted and expensive time. Make sure your client sees that you take his or her case very seriously - after all, the arbitration hearing is almost always the last stop on the path to resolution.
I don't at all mind being called by my first name during a lawyer-only telephone conference, and I will use the first names of counsel when the parties are not present (unless people are getting testy with me or each other, but that's another story). After all, we are all Oregon lawyers, and we probably already know each other or else develop a hopefully respectful but friendly professional relationship early in a new case. However, out of respect for the parties, arbitrator, opponent and the system itself, formal address and last names should be used during the actual hearing.
Allow the arbitrator to preside. Follow the courtroom procedure of awaiting permission from the arbitrator to begin questioning. Direct all comments only to the arbitrator, not the opponent, unless permission or a recess is granted. Request permission for redirect and subsequent examinations (remembering that few cases have been won and many have been lost because of that 'one last question').
Arbitrators respect compliance with the oft-neglected ethical rule to avoid expressly arguing your personal belief in your client's position. DR7-106C(4). This is a tough balance to keep. There is a fine but important line between impermissibly arguing, 'I think the Mr. Johnson was wrong when he testified that he was at the meeting ,' and properly arguing, 'Mr. Johnson was wrong when he testified that he was at the meeting because no one else present remembers that he was there.' You don't have to say, 'The evidence shows,' which is a tip-off to the arbitrator that you don't really believe what you're saying. It's as bad as the unnecessary introduction to a jury that 'What I am about to say is not evidence.' Your tone of voice and body language can and should communicate that indeed you personally think Mr. Johnson is lying, but you just can't say it out loud.
Arbitrators expect a high degree of professionalism from counsel, including cooperation and courtesy between opponents, reasonable accommodations to requests, and avoidance of weak or unfounded theories of recovery or defense.
On the other hand, there is as much room in arbitration for assertive and enthusiastic advocacy as there is in jury trial practice. Counsel should try to communicate, by word and demeanor, commitment to the client's cause, thorough preparation and respect for the arbitrator's responsibility.
TO KEEP THE PRESENTATION FOCUSSED AND AS SHORT AS POSSIBLE
The parties have selected the arbitrator for his or her intelligence, experience and knowledge of the law. Counsel can increase the likelihood that the arbitrator will deliver a high quality product by highlighting the disputed issues of fact and law requiring the arbitrator's special insight and expertise. In other words, it is a waste of resources to require the arbitrator to unnecessarily search for these issues in a mass of unorganized documents and testimony.
Thus, prehearing agreement on undisputed facts will save time and money. When possible, the parties can submit a single, joint set of prenumbered exhibits. Counsel should provide mathematical calculations which support positions on such issues as damages, without requiring the arbitrator to search for data in the record. In this same regard, assertions of fact in briefing, argument or testimony should be backed up with specific reference to supporting exhibits or other evidence.
Even experienced and sophisticated arbitrators have attention spans that are not unlimited and have lapses of attention. Get to the point, and emphasize it. Be clear in your mind why a witness is appearing (maybe, on reflection, he or she need not be called), and be asking the critical questions after as short of a biographical introduction is possible. Don't 'beat around the bush.'
Lawyers often offer too many exhibits. In personal injury cases, the arbitrator does not need to see hundreds of pages of barely decipherable handwritten chart notes and immaterial lab results. In business cases, the arbitrator does not need to see hundreds of pages of letters and e-mails between the parties or lengthy but unimportant contract documents that create a complete, but immaterial history. Instead, it is best to pick the critical materials (being careful, of course, to offer and explain right up front anything that may be harmful to your case).
I have found that the decision after even lengthy arbitration hearings often turns on a few key pieces of testimony and a few exhibits. Background may be necessary to put the case in context, but remember that a good arbitrator wants to know what happened that makes out a claim or a defense, and the applicable law that puts the events in legal context. While there will be some surprises in any hearing, know ahead of time where you want to go, and get there as fast as possible. Then, stop talking.
TO ACHIEVE SETTLEMENT EARLIER IN THE PROCESS
No, I'm not backing off one inch on the first arbitration mistake of failing to communicate willingness and ability to try every case. Some cases have to be tried, but we all know most can and should be settled, and that aggressive but professional preparation is a key basis for favorable settlement outcomes.
The problem is that many settlements come way too late. I know that even with the best intentions and best efforts, some cases will not settle until the eve of hearing. But this happens too often. The cost is to the client. We lawyers may not always appreciate that protracted proceedings result not only in attorney fees and costs that can dwarf the amount in dispute, but even more importantly that our clients suffer severe stress and uncertainty during the process. Sometimes the opponent is just too stubborn to entertain a reasonable settlement, but more often one or both lawyers fail to keep in touch about settlement prospects.
If your opponent knows that you are prepared and willing to go to hearing, you lose no credibility whatsoever in periodically trying to discuss settlement terms. Mediation is not a panacea or necessary in most cases, but works well when there is a client control problem on either side, the opposing lawyer is unrealistic or inexperienced, or both sides recognize that an impartial outsider might help in clarifying the risks of going to hearing and the real objectives of each side. +
ABOUT THE AUTHOR
The author is a full-time mediator and arbitrator in Portland and is the former chair of the OSB Alternative Dispute Resolution Section. He can be contacted by e-mail at RSpier@spier-mediate.com.