Compared to the combat of litigation, alternative dispute resolution might seem to some like a pleasant alternative. But mediations, arbitrations, and their various brethren come with pitfalls of their own that can ensnare an unwary lawyer. Whether it’s your first time working through a labour mediation or you’re a jet-setter representing global multinationals, make sure to avoid some of the most common errors that plague ADRs.
Depending on what sort of process you’re going into, you may have the option of choosing your arbitrator, or at least the chairperson of a three-person panel. In many ways, arbitrators have more power than state-appointed judges; they can’t be appealed or corrected. And what lawyer wouldn’t jump at the chance to appoint their own? Surprisingly, many pass on the opportunity. In 2012, only 7.8 per cent of the chairpersons of arbitration panels at the International Chamber of Commerce were appointed by the parties. The rest were chosen either by the co-arbitrators (52.2 per cent) or appointed by a court (40 per cent).
The reason for such a high number of deferrals is parties often feel they can’t come to a consensus with their opponents and decide to leave the decision up to others. Big mistake. Speaking at the International Arbitration Today conference in Toronto, a panel of people experienced with the arbitration process were unanimous: If you can, make the choice, even if that means getting in the muck with your opposing party.
Ulrich Hagel, senior expert dispute resolution with Bombardier Transportation GmbH in Berlin, says it’s obvious parties should choose their arbitrators. “The power to decide the case was delegated, the process is subject to party autonomy and thus, yes, the parties want to select their arbitrators, otherwise they would have chosen court litigation,” he says.
So how do you go about choosing an arbitrator or chairperson when you know your opponents are likely to shoot down names you propose? Christopher Seppälä, a construction arbitrator with White and Case LLP in Paris, recommends first negotiating what professional characteristics both parties are looking for, and then creating a shortlist of people who meet those qualifications. And make sure to consult with any co-arbiters on a panel, since their primary job will be to sway the chairperson. But be careful if they make any suggestions themselves. “You don’t want to reject a co-arbitrators suggestion because you could alienate them,” he says.
And if there are party-nominated arbitrators on a panel, José Ignacio Astigarraga, senior vice chairman of Miami-based boutique litigation firm Astigarraraga Davis, said to make sure they at least appear unbiased, otherwise they won’t have any credibility within the panel. He quoted Martin Hunter, a top U.K. arbitrator, to describe the perfect selection. “Someone with maximum pre-disposition towards my client, but with minimum appearance of bias.”
Confusing a boardroom for a courtroom
There’s a reason your client chose ADR instead of litigation, so why would you act like you’re in a courtroom? “A lot of arbitrations don’t actually capture the potential benefits because the parties and/or the arbitrator treat it as if it were just a trial but in a boardroom,” says Stephen Morrison, a Toronto-based lawyer and arbitrator with Cassels Brock & Blackwell LLP.
If you want to reach a successful outcome in an ADR proceeding, you’ll have to find ways to maximize the unique efficiencies and effectiveness of arbitration. “Arbitration really doesn’t hinge on principles of law,” says John Sanderson, co-founder of Sanlaing Dispute Resolution Ltd. in Vancouver. It’s not useful for lawyers to obsess over obscure points of law, especially in labour arbitrations or other situations where the emotional stakes are high, he says. “You’re dealing much more with raw emotion, and as lawyers, we very often get caught up in the legal aspect of that.”
Instead, Sanderson says lawyers should ask questions that might lead to the parties understanding the broader issues. How did this situation arise? What’s the background? Who said what to provoke this kind of reaction? “It’s not so much a question of a nice, clean, clear legal position,” he says. “It’s messy and difficult to work with. So your sensibilities have to be somewhat different than in the courtroom.”
Sanderson says the only way to really figure out the unique environments of ADR is through practice. “It flows naturally from the experience and knowledge that people in the dispute resolution world learn.”
Being too formal or too informal
An ADR hearing may not be as formal as a courtroom trial, but that doesn’t mean you can treat it like a high school debate society. “We still pay attention to rules of law and rules of evidence and you’ve got to know those,” says Catherine Zuck, a labour arbitrator and mediator in Saskatoon. “You just can’t wander in on your first week of law school and think you’re going to do a good job at it.” Zuck concedes when she first started working in the field, everyone would smoke and drink coffee during hearings, but times have changed.
But while some lawyers may be too informal, be careful of swinging too far in the other direction. “Coming in too formal puts the other side’s hackles up, especially if you’ve got a three-piece, navy-blue-suit-lawyer dealing with a union rep,” says Zuck. “The three-piece-suit lawyer is jumping up making all sorts of objections and the other side is getting flustered and mad.”
If you’re arguing a commercial dispute between two multinationals, it’s smart to stick to the mores of a courtroom. But if it’s a labour arbitration or a small-time mediation, it might be best to leave your best suit, along with any litigious attitudes, at home.
Not knowing your audience
Arbitrators and mediators have more varied backgrounds than judges, so it’s essential to get to know the people you’ll be presenting before. Zuck says when she used to represent clients at ADR proceedings, she become fairly familiar with the arbitrator and mediators that worked in her area. “Some of them were manly men who decided things by the seat of their pants and what their gut told them and others were really logical thinkers,” she says. “So I’d tailor my case to whichever one I had.”
And make sure you know if they are experts in the subject matter. “Sometimes the person that’s doing the hearing is not familiar with the field,” she says. “I know a lot about health care, but I don’t know how much I’d know about potash mines.”
This becomes even more crucial if the people you’re presenting in front of aren’t lawyers. “If you go in there thinking as a lawyer, and are used to conducting cases like a lawyer, that might not really work for a bunch of nurses,” says Zuck.
Not showing up
The most important piece of advice Morrison has for parties involved in ADR comes down to two words. “Show up.”
In his experience, decision-making parties not being at a hearing is the No. 1 cause of failure and why many mediations don’t result in settlements. “As the mediator, it’s enormously frustrating and makes my job substantially more difficult if I don’t have face-to-face interaction with the decision-maker on one or both sides,” says Morrison.
Arbitrators use various forms of “art and science” to bring about a resolution that would satisfy both parties, something that can’t be accomplished through a proxy. “A lot of what a good mediator does is watch and observe,” he says. “You’re watching the person, you’re watching the body language, you’re listening to the responses, you’re constantly reacting to the feedback you’re getting, both verbal and non-verbal.”
Sometimes decision-makers need a reality-check from an independent neutral third party evaluating their case, something a person’s lawyer is ill-suited to do. “There are lawyers who can tell their client exactly what their client needs to hear,” says Morrison, “but there are other lawyers who in order to maintain or preserve a relationship might be more inclined to tell their client a little more of what he wants to hear.”
Not only does it lead to worse outcomes, but Zuck says, if parties aren’t present, the proceedings take longer, costing more time and money. “That person should have been at the table making split-second decisions and we could get it finished that day,” says Zuck.
Morrison says if you can’t get the decision-maker in the room, the next best thing is to convince them to vest you with the authority to do what you think is best and make decisions on the spot.
But at the end of the day, the ultimate decision-maker actually being present is always best. “If parties are going to invest substantial amounts of money between their own lawyer’s fees and the mediator’s fees, show up.”