“Prepare for Arbitration: Same as Trial”

Article Author: John C. Goetz

There is, of course, nothing mysterious about preparing a case for arbitration.  Thus, I do not believe there is a great deal to cover on this subject.  Indeed, from my discussion with other attorneys who have acted as arbitrators, I gather that the main problem, if there is one, with the manner in which some attorneys prepare cases for arbitration is that they do not follow the same careful and thorough practices they follow in preparing cases for district court trial.  There seems to be a tendency to approach the arbitration process lackadaisically, assuming that the arbitrators, because they are lawyers themselves, do not need to the same effective persuasion that a jury does in order to reach a fair determination.

This tendency, if it does exist, is dangerous.  The best method to prepare a case for arbitration is to treat it as seriously as one treats a district court trial, deviating from good trial practices only when there is a clearly rational basis for deviation and presentation of the case will not suffer as a result.

A few specific areas of preparation and presentation deserve mention.  The first is choice of arbitrators.  Arbitration will be conducted under either the rules of the American Arbitration Association or through the so-called common law method.  In either case, the attorneys have considerable influence on the choice of the arbitrator or arbitrators.  As in picking a jury, the opportunity to exercise this influence should be fully used.

Whether your arbitration is to be administered by the AAA or is to proceed under the common law system depends, of course, on the terms of the insurance policy involved.  In cases where the AAA procedure is specified, you will, after filing your claim, receive in due course from the AAA office a panel of arbitrators with instructions to strike one or more members of the panel.  The strikes are peremptory in the sense that no cause is required.  In no-fault cases the panel will always consist of three members, with one strike for each party, leaving one arbitrator.  In uninsured and underinsured motorist cases (hereinafter jointly referred to as UM cases), the number of arbitrators on the panel will depend upon the amount of damages claimed.  Section 8 of the Accident Claims Arbitration Rules of the AAA provides in part as follows:

“Cases involving claims in excess of the minimum available in the jurisdiction because of multiple policies or because of optional additional coverage, shall be heard by a panel of three arbitrators, unless local law provides otherwise.  All other cases shall be heard by a single arbitrator unless at the request of a party, the AAA, in its discretion, otherwise determines.”

 This rule also provides that an arbitrator, once designated by the AAA, can be challenged only for “reasonable cause”, within 20 days of designation.

In Minnesota the effect of this rule is, generally speaking, that the cases involving $25,000 or less, you will receive a panel of three arbitrators from which each party will be asked to strike one.  The remaining arbitrator will serve unless he or she has some conflict of interest or one or other of the parties raises some other reasonable cause for disqualification.  In the event of disqualification, the AAA will simply designate a supposedly neutral arbitrator.  That designation is, again, subject to disqualification only for reasonable cause filed within the time limit provided by the Rule.

In cases involving claims in excess of $25,000, the parties may stipulate to one arbitrator.  Otherwise, three will be used.   (The general practice in our firm is to have one arbitrator if possible.  We feel that, if the arbitrator is carefully chosen, one arbitrator is more likely to give a fully, uncompromising award of damages than a panel of three).  Absent such a stipulation, you will receive a panel of seven arbitrators and be asked to strike two and indicate your order of preference for the remaining five.  If four are stricken, the remaining three will be the designated arbitrators, with disqualification as previously described only for reasonable cause.  If more than three remain, the arbitration office will consider not only the preference indications given by the parties, but also the orientation of the members of the panel with respect to defense or plaintiff’s work.  (Each member of the panel is required to submit to the AAA a percentage estimate of the amount of his or her time spent on plaintiffs’ and defense work.)

To my knowledge, there is no specific guideline for determining what causes are reasonable for disqualification.  My practice is to interpret the term liberally, and to ask for disqualification if I have any information which suggests to me that an arbitrator might incline to be biased in favor of the defense – for example, a past relationship of any sort with any insurance company.

I am advised by Ms. Cindy Schmit, tribunal administrator of the local office of the AAA, that the procedures which I have just described are soon to be modified.  The substance of the new procedure is not yet definite, but apparently a modified common law system will be used.  There will be three arbitrators in all cases.  First, the parties will each designate one arbitrator.  Then, in a variation from the common law method (under which these two arbitrators then choose a third), the AAA will submit a panel of three from which each party will strike one, leaving a third arbitrator, subject as usual to disqualification for reasonable cause.

A natural tendency in designating one’s arbitrator under the common law system is to choose someone who is sure to be a zealous advocate of your position.  That is not necessarily wise policy.  A second and equally important consideration should be the ability of your arbitrator to persuade the neutral arbitrator to reach a result favorable to your client.

Once the arbitrators are chosen, your next consideration should be preparation of the evidence you will present.  In proceedings governed by the AAA rules, the relevant provisions are Sections 17, 20 and 21.   Section 17 provides that where there are more than two arbitrators, a majority vote shall be sufficient for all decisions.  Section 20 provides that the arbitrators shall be the judges of the relevancy and materiality of the evidence offered and that “conformity to legal rules of evidence shall not be necessary.”  Section 21 provides that the arbitrators may receive and consider the evidence of witnesses by affidavit, giving such evidence the weight they deem it to deserve. 

Under the common law system, the terms of the policy are the authority as to the applicable rules of evidence.  In my experience, most policies provide that the rules of evidence and procedure of the jurisdiction where the arbitration is held shall apply.  Nonetheless, arbitrators are usually willing to bend these rules as necessary for convenience and efficiency, especially if both parties agree to modification.

Thus, in preparing your case, you should first determine in what manner you want to present your evidence, and should then determine whether you can present it in the fashion you desire.  If you determine that you wish to produce particular evidence in a manner which would be objectionable in an ordinary trial, you would be well advised, even in a case being arbitrated under the AAA Rules, to obtain the agreement of opposing counsel to submission in the manner you desire, or at least to advise opposing counsel of your intention in that regard.

There is a natural tendency in an arbitration matter to want to present your evidence in the easiest manner possible.  For instance, you may decide that the medical reports in your file really contain the same information that your treating physicians would give by testimony, and thus conclude that the reports will do just as well.  In my judgment, this natural inclination to simplify and speed up the arbitration hearing can be detrimental to your case.  Even with arbitrators, live witnesses are generally more persuasive than documentary evidence (unless, of course, there is some particularly damaging cross-examination to be expected from opposing counsel).  Even though the substance of the medical report or other document may be essentially identical to the substance of the live testimony of the doctor or other witness, the live testimony will generally be more persuasive.  If it does nothing else for your case, it will show that you and your client view the case as serious enough to merit live witnesses.

One device our office has found useful in giving the arbitrators a compact and easily digested summary of the case is what we call an arbitration packet.  This is simply a booklet prepared in advance of the arbitration containing all of the documentary evidence relevant to our case:  accident report, statements, medical bills, medical records and reports, and documentation for lost wages.  These should be clearly organized in chronological order and should include an index and itemizations for the special damages.  Copies should be prepared for each arbitrator and opposing counsel and should be served and filed in advance of the arbitration.
 Likewise, if your case involves any knotty legal issues, you should brief these just as you would in a district court case, preferably serving and filing a brief in advance of the hearing.

At the hearing itself, the guiding approach, as suggested above, should be to present the case as seriously and as thoroughly as you would at trial, deviating only where you are sure the deviation will not undermine the result.  Do not let yourself become too jovial with opposing counsel and the arbitrators when your client is not in the hearing room.  Remember that you are presenting a case which is serious to your client and that the way to convey that to the arbitrators is to treat it seriously at all times.  Similarly, in examining your witnesses, bring out testimony with essentially the same care and thoroughness you would a trial.  Similarly, do not let the relative informality of the proceeding and the fact that the arbitrators are attorneys whom you probably know dissuade you from using the important persuasive devices of the opening statement and, most importantly, a closing argument.  An opening statement need be nothing more than a few remarks to make sure that the arbitrators know exactly what claims they are hearing and what issues they must decide, but a closing argument should contain, with some obvious modifications, the same persuasive points that you would make to a jury, and perhaps some additional points particularly designed to eliminate the blind spots which attorney-jurors may have.  As an illustration, I was told by an arbitrator, following is a favorable result in a recent case, that he was particularly influenced in his award of damages by my pointing out in closing that the arbitration would be my client’s only opportunity during her entire life to obtain compensation for all of her pain and suffering, both past and future.  The fact that it helped my case to remind the arbitrators of this point, which they had all undoubtedly made or heard in many closing arguments, is a telling indication that the best rule to follow in preparing and presenting an arbitration case is that it deserves the same attention and thoroughness as a jury trial.