Construction is an industry rife with legal conflict. The fluidity of changed and extra work, contractual scope disputes, and delay typically drive these conflicts, which often require lengthy (and expensive!) legal proceedings to resolve. Fortunately, there is a dispute resolution process that may be more expedient and less expensive than your typical litigation: arbitration.
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If you’re unfamiliar with arbitration, it’s quite simple in theory. Instead of going to court to resolve the matter, the parties in dispute agree to submit their case to a third-party neutral (called the arbitrator) who acts as both judge and jury. The concept is that the arbitrator – typically an experienced or now-retired construction lawyer themselves – can cut to the heart of the dispute quicker, cheaper, and with more accuracy than say, a judge who spent most of their career practicing family or criminal law.
Construction arbitration – like all arbitration – has three distinct phases: the pre-hearing phase, the evidentiary hearing phase, and the post-hearing phase. While the several days or week(s) of the evidentiary hearing itself is the core of the arbitration, the pre and post hearing phases are integral in setting up and wrapping up the presentation of your case, respectively. For this article, I am going to focus solely on the pre-hearing phase, which sets the foundation for the rest of the proceedings.
Here are three surefire ways to strengthen your case and increase the likelihood of success for the pre-hearing phase of your next arbitration proceeding.
01. Provide Quality Information in Your Statement of Claims
The statement of claims begins the arbitration process by laying out the written narrative and facts of the dispute. Oftentimes, attorneys will provide vague or limited information in this statement in order to get the process started as fast as possible. Other times, attorneys may not know the entire dollar amount of the damages, or the respondent may still be considering these details.
Mostly, the lawyers who provide limited information in the statement of claim do so because it is all that is required by the current rules of the American Arbitration Association (AAA). I have found, however, that the statement of claim is an early teaching moment of the strength and common sense of your position, and should not be wasted. Indeed, in law, like life, any chance not taken to strengthen your case only weakens it. Utilize the statement of claims as an opportunity to highlight the details of your case to the arbitrator in clear, concise language.
The statement of claim(s) should set the tone of your presentation through factual assertions, well-informed legal theories, and detailed figures when applicable. If you find yourself on the defense, always ensure that your answering statement is just as detailed – if not more – than the prosecution’s statement of claims. Of course, this requires working in tandem with your attorney to clearly articulate your claim, and to sufficiently support it with written documentation of both causation and the dollar value of your resulting damages.
02. Thoroughly Organize Your Exhibits & Core Documents
Arbitrators frequently receive cluttered document stacks with poor navigation features and far too many documents to keep track of – which usually hurts that party’s case. You must ensure that your core documents and exhibits are well organized and easily accessible.
Of course, the first order of business is to make sure you provide the key documents to your lawyer, who is your mouthpiece throughout this process. Consider your argument for relief as a bullet point narrative, with a document (electronic or paper) to support each point. In other words, nothing should be claimed without an exhibit to demonstrate the truth of that statement.
Next, organize your exhibit book by numbers, with each document in the exhibit also having a corresponding letter. For example, number your exhibits 1-50 with each document in Exhibit 1 following the hierarchy of 1A, 1B, 1C, etc. This will allow the arbitrator to easily locate the exhibits you reference, which will only make your case stronger. There are plenty of digital tools to help automate this process, as well.
Lastly, good arbitration attorneys work with the opposing counsel to remove duplicate exhibits and place them into a “core exhibit” book to optimize everyone’s time with the arbitrator. Examples of “core exhibit” materials include invoices, payroll records, and project schedules.
03. Request the Proper Form of the Award
The award of an arbitration hearing is typically categorized by either “standard awards” or “reasoned awards.” Reasoned awards may take the form of “a reasoned opinion, an abbreviated opinion, findings of fact, or conclusions of law.” By not requesting a more specific form of award, you will likely receive a “standard award,” which is typically a lump sum. While this might be all that a client wants, I have found that standard awards (which are hardly ever an all-or nothing finding, but somewhere in between the claims of both parties) often leave my clients wondering whether the arbitrator truly understood their claim or defense, In some cases, unreasoned awards may leave monetary or non-monetary assets on the table. This is because, in a standard award, the arbitrator is simply not required to enunciate their reasoning for the award, which is a key mechanics to saving time and money in the arbitration process. While a reasoned award will take more time and money to create, I believe it is worth the peace of mind to know that your claims were heard and duly considered. And, if they were not, as evidenced by a reasoned award that does not consider pertinent claims or legal theories advanced (or worse, gets them wrong!), there is an opportunity to explore appealing the award.
The form of award is a use it or lose it proposition – often, if a reasoned award is not requested at the first hearing, it is waived in favor of the “standard” award form. So, carefully discuss with your lawyer whether the extra costs are worth the reasoned award in your particular case.
Hopefully, these three brief tips will help you strengthen your case and increase the likelihood of a successful pre-hearing phase during your next arbitration proceeding. Please read my follow-up article regarding five actionable tips for a successful evidentiary and post-hearing arbitration process. Lastly, if you are personally in need of an experienced construction arbitration attorney, please contact me directly to request a free 15-minute consultation, today.