While Courts Are Backlogged, Arbitration May Be an Ideal Alternative

February 23, 2021 | Podcasts



As we approach the one-year mark of COVID-19 lockdowns, state and federal courts continue to struggle with the scheduling of civil cases – with some cases backed up to the end of 2022 and even the beginning of 2023. For parties wishing to speed up the resolution of their disputes, arbitration may be the perfect solution. Jackson Walker Labor & Employment partner Lionel M. Schooler, who serves as Chair of the Texas Chapter of the North America Branch of the Chartered Institute of Arbitrators, discusses how arbitrations work, the role of the arbitrator, how the parties can set the rules of the arbitration, and the flexibility and cost savings over a traditional court trial.

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Greg Lambert: Hi, everyone. I’m Greg Lambert and this is Jackson Walker Fast Takes. As we approach the one-year mark for COVID-19, courts in the United States are continuing to struggle with the scheduling of civil cases – with some of those cases now set for the end of 2022 and even the beginning of 2023. For those parties who wish to speed up the resolution of their disputes, arbitration may just be the perfect solution. So I asked Lonnie Schooler, Jackson Walker Labor & Employment partner as well as a certified arbitrator for nearly 30 years to come in and share his experience on how arbitration works and how it can speed up the resolution process while the court system is backlogged.

Hey, Lonnie. Thanks for taking the time to talk with me.

Lonnie Schooler: My pleasure to be with you today, Greg.

Greg Lambert: Now, you have a lot of experience both with domestic and international arbitration as well as being a fellow on the Chartered Institute of Arbitrators, and you’re currently the Chair of the Texas Chapter of the North American Branch of that institute. So I think you’re the perfect person to come in and help us understand why arbitration is a great alternative dispute resolution at the moment. But before we get too far into the topic, would you mind just giving us a bit of a primer on what arbitration is and who could use it?

Lonnie Schooler: Greg, arbitration is the process of submitting a dispute to a private arbitrator for resolution on the merits. In layman’s terms, an arbitrator really is serving as a rented judge. The arbitrator hears evidence and then makes a ruling, which is commonly called an award. Arbitration is truly called a creature of contract, which means that if parties agree, they can submit any kind of dispute to arbitration in a process that has the advantage of being tailored by the parties.

Greg Lambert: Lonnie, how does arbitration differ from the normal federal or state court procedures? For example, we were talking earlier and you were telling me about the flexibility and the way that arbitration allows for presentations on the merits.

Lonnie Schooler: That’s right. Most folks who have had experience with trials or have read about them understand that federal and state court procedures are, by definition, a set of hard-and-fast rules about how the litigation process unfolds. These rules don’t really provide very much flexibility to parties when they come to try their cases in court. By contrast, in arbitration, flexibility begins with a very first meeting with the arbitrator where the parties and their counsel meet after the arbitrator has accepted appointment and is approved by the parties. This—what we call an interim management conference, or initial management conference—usually is scheduled within two to three weeks after the arbitrator accepts appointment. At that conference, the parties can shape the pre-hearing schedule, including setting up a hearing on the merits of a commercial or an employment dispute, for example, which can occur in as little as six to nine months. In an appropriate case, also, the parties can provide for what are called interim measures to preserve the status quo, such as protecting trade secrets or proprietary information or otherwise maintaining status quo of the party’s positions until a hearing is conducted.

In addition to these features, arbitration gives flexibility to the parties in the manner in which they can present their case on the merits, unlike the formula prescribed by the Rules of Civil Procedure. For example, in an arbitration, the potential unavailability of a particular witness at a precise moment when he or she was scheduled to testify can easily be accommodated, as can multiple conflicting schedules of parties and representatives where hearing might have to be adjourned and then resumed after a period of time.

These hallmarks of arbitration definitely provide a lot more flexibility to folks who are interested in trying cases than what they would experience in court.

Greg Lambert: Is the flexibility set up through the arbitrator, or is it arranged by the parties themselves?

Lonnie Schooler: The procedures can be prescribed entirely by the parties. They could adopt rules of an organization that helps people get to arbitration, such as the American Arbitration Association (AAA), or they can just come up with their own rules for what’s called an ad hoc arbitration, where they can describe whether or not there’ll be rules of evidence that apply, what procedures apply, and how quickly the arbitrator has to make a decision. Under the AAA rules, for example, if the parties adopt those rules for an arbitration, they can include the requirement that once the hearing is concluded, the arbitrator has to make a decision within 30 days. You don’t have any such time limit at all in a trial before a judge in court. Although when you have a jury trial, it’s expected that a jury will eventually render a verdict in a civil case, although sometimes that does not happen.

Greg Lambert: Lonnie, when the arbitrator issues a decision, what’s the final result and how binding is that on the parties?

Lonnie Schooler: It’s called a final award. I, as an arbitrator, do not have the power to issue a judgment where somebody could take that judgment and then go enforce it. A party that receives an award or a party that’s unhappy with an award can then go to court and either ask the court to confirm or vacate the award. There are limited ways in which parties can challenge the award. However, it is possible at least in Texas to write language into an arbitration agreement, which provides for a so-called expanded scope of review.

Greg Lambert: This could also create an overall cost savings because of the ability to conduct virtual hearings. Is that right?

Lonnie Schooler: Well definitely, Greg. Particularly in this age of the COVID pandemic, working with parties, an arbitrator can easily set up a hearing where each participant and each attorney literally can participate from his or her home or office. As a result, and this is true in both domestic and international cases, parties can literally save thousands of dollars on travel and lodging in addition to avoiding disruptions that can occur with inclement weather. The virtual hearing usually makes the arbitration process much more efficient, and achieving time saving and money saving for the participants.

Greg Lambert:  Lonnie, if I have a civil matter waiting in the court system right now and it looks like it may be 18 to 24 months before it may be heard, what can I do to move this to an arbitration?

Lonnie Schooler: The client first has to have an agreement to arbitrate. If one existed already but the parties just decided to forego that for whatever reason, they can now resurrect the agreement and proceed with an arbitration based on the wording of the agreement. If they don’t already have an agreement, then they have to have one setting forth all of their requirements that they want to use to achieve the kind of flexibility and cost saving I was talking about before. As I said at the beginning, it’s really a creature of contract.

Greg Lambert:  Thanks, Lonnie. I appreciate you taking the time to talk with me.

Lonnie Schooler: My pleasure, and thank you for having me.

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The music is by Eve Searls.

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