Some personal injury cases may be resolved through means other than a lengthy, costly trial. Arbitration is one type of such alternative dispute resolutions.
Arbitration is a means of resolving a dispute using an impartial person (an "arbitrator") who otherwise has no interest or involvement in the case. In a personal injury case, the arbitrator also decides the amount of the award, meaning how much the insurance company must pay the injured person.
Arbitration is not appropriate for every case. The decision whether to arbitrate or not is a complicated one that should be made by you and your attorney. Even the process of agreeing to arbitrate requires a number of steps and a number of decisions.
Considerations of Arbitration
Often the process of agreeing to arbitration and its parameters is a lengthy negotiation in itself. There are many considerations involved, and often arbitration does not go forward because the parties cannot agree on the structure of the process. The basic decisions are as follows:
- All the parties must agree to arbitrate.
- The parties must agree upon who will serve as the neutral arbitrator. An experienced attorney or retired judge is usually chosen for this role.
- The parties must agree on who will pay the arbitrator's fees. Fees are typically split equally between all the parties.
- The parties must agree in advance if the arbitrator's decision will be binding or non-binding. If the parties agree that the arbitrator's decision is binding, then the arbitrator's decision is final. The parties agree that there will be no appeal and no chance to change the arbitrator's decision, and that all parties will be bound by the arbitrator's decision. In a non-binding arbitration, the arbitrator can recommend but cannot impose a decision on either party. A non-binding arbitration can still be beneficial because it can give the parties a glimpse into the adversarial proceeding and facilitate a settlement sooner rather than later. Because of this, a non-binding decision sometimes leads to an agreed settlement later.
- The parties may decide to arbitrate only certain issues of the case. For example, the parties may agree to the value of a case but disagree as to who is liable or at fault, so they may arbitrate only the liability issue of the case. Another example is the parties may agree that one party is responsible for whatever damages the other party suffered, but disagree as to the dollar amount of those damages. So the parties may wish to have the arbitrator decide only the amount of the damages.
- Sometimes the parties limit the arbitrator's decision by agreeing to a "hi-lo" limitation on the arbitrator's award. Basically, the parties agree in advance on a maximum and minimum award, but the arbitrator is not told of this limitation. For example, the parties may agree that the maximum award is limited to $50,000, and the minimum award is limited to $20,000. Then if the arbitrator's decision is $65,000 to the plaintiff, the plaintiff would only receive $50,000. If the arbitrator's decision is $12,000 to the plaintiff, however, the plaintiff would actually receive $20,000.
- The parties must agree in advance on how evidence will be presented to the arbitrator. Sometimes the evidence is presented "on paper,' that is, by submitting documents only. Other times the evidence may include live testimony by witnesses, and often there is a combination of the two. If the arbitration evidence is submitted "on paper", sometimes the parties agree that the plaintiff will submit first, while the defendants will submit a few days later. The plaintiff will then have the opportunity to submit "rebuttal" materials a few days after that. Other times, all parties submit their documents simultaneously. Regardless of the schedule on which the materials are submitted, normally each side sends a copy of their submission to all other parties.
- The parties must agree on what rules of evidence apply. For example, for medical evidence, can only medical records be submitted to the arbitrator or, as at trial, does the medical evidence have to be presented either by a deposition (recorded testimony under oath) or by the doctor testifying live in person under oath? Sometimes records are submitted with an affidavit signed under oath that confirms the matters stated in the document are accurate.
- If the arbitration is not done "on paper", then the parties must agree on who can be present at the arbitration. Sometimes the plaintiff wants to have a family member present for support. If there is an insurance company that will pay any arbitration award made against the defendant, then the insurance company may want to have a representative attend the arbitration.
- The parties must agree on any other conditions that should apply to the arbitration. For instance, the parties may agree that the arbitrator should not take into account the "venue" where the case would be tried, if it went to court. Or the parties may agree that each side is limited to a certain amount of time to present their case to the arbitrator, such has 30 minutes or an hour.
There are a wide variety of restrictions or conditions that the parties may agree to that would apply to the arbitration.
The arbitrator's role is similar to a judge's role. They hear or review the evidence, decide whether the plaintiff is entitled to recover and, if so, how much the plaintiff will recover. The process is similar to a trial but less formal. If the arbitration is done in person (and not "on paper"), then normally the plaintiff's attorney and the defense attorney will each make a brief opening statement, call witnesses live or by video to testify, and will submit documents. Each attorney will then make a "closing argument."
During the arbitration, the arbitrator may also ask the parties and witnesses questions. After the closing arguments, the arbitrator usually will tell the parties when to expect the final decision. It could take a couple of weeks, more or less. Most of the time the arbitrator puts his decision in writing and sends it to the parties or their attorneys; often the arbitrator will review the reasons for his decision. Arbitration is usually faster and less expensive than trial.
How Arbitration Could Be More Beneficial Than a Trial
Arbitration is almost always a faster process than a trial date; trial dates in Virginia are often set a year to a year and a half from when a lawsuit is filed. You may still incur the same amount of litigation expenses if the parties don't agree to arbitration until after the discovery process (answering interrogatories, depositions and expert designation) is complete. Those litigation expenses would occur in preparation for trial. The actual trial would probably cost more than arbitration. In arbitration you don't have to spend money on jury research, paying your doctors and other expert witnesses to attend trial, and subpoenaing other witnesses to trial. The timing of the decision to arbitrate dictates the litigation cost savings. The arbitrator's fee will inevitably be less than litigating the case to trial.
Arbitration vs. Mediation
Another type of alternative dispute resolution is mediation. Arbitration is different from mediation. With mediation, the parties decide whether to settle their case with the help of a mediator. The mediator helps to facilitate the settlement negotiations but, unlike an arbitrator, does not make a final decision.
Your personal injury lawyer will be familiar with litigation and trial as well as the various methods of alternative dispute resolution. An experienced attorney will evaluate the pros and cons of the various methods, and will advise when and if a method of alternative dispute resolution is appropriate for your case. The injury lawyers at Allen and Allen routinely use litigation, trial, arbitration, and mediation to resolve cases, and will advise you of your options. As always, if you have any questions, just ask. We are here to help.
 Editor's note: This article does not address the manner factors that go into a decision whether arbitration is appropriate for a particular case, but rather addresses the decisions that must be made about how to structure arbitration.
 For more information on mediation, see previous blog article at http://www.allenandallen.com/blog/is-mediation-a-process-that-may-resolve-my-personal-injury-case.html.