Binding Arbitration Instead of Trial: What are the Benefits?

Posted in Injury Law

As discussed in an earlier blog, arbitration is one method that is commonly used by the court system to try and settle a case prior to a trial. Arbitration is a short hearing or meeting of sort between the parties to a case in front of a neutral person who will ultimately render a decision.  Testimony will be presented along with documents in support of and in defense of the claim. The neutral arbitrator ( usually a retired judge or a respected attorney who handles similar cases ) will review everything then make what they believe to be a fair decision to all parties based on the evidence presented.

This entire proceeding is normally concluded within a few hours if not less. In the courthouse setting it is nonbinding, meaning it can be rejected by the parties and then the case will proceed to a trial. But in some instances the parties to a case may benefit from what is called a binding arbitration. Binding means that the decision of the arbitrator is final and the parties cannot reject the decision. This arbitration serves as the final resolution of the case and no trial is therefore necessary. Binding arbitration must be agreed upon by all the parties involved. If this can be accomplished there are several benefits to the parties as a result of the binding arbitration.

The greatest potential benefit of a binding arbitration to all parties is certainty. A trial is never a guarantee; it is always an uncertain result. Trials for injury cases are decided by a jury of people who the parties know little about and who are given little guidance on how to reach a verdict. There is always risk associated with a jury trial. A binding arbitration on the other hand provides at least some certainty to the parties involved. This is provided in several ways. First, the parties usually agree on parameters prior to the arbitration so everyone knows the result must fall in between these set guidelines. For instance a common agreement is what is known as a high/low agreement. In this situation a minimum damages award is agreed upon in terms of dollars and a maximum award is also selected. Therefore no matter what the decision of the arbitrator there is certainty that it cannot go above or below the agreed upon figures. Second , the arbitrator is someone known to the parties and lawyers involved and someone who all the parties trust to make a fair and reasonable decision. Having some certainty of how the arbitrator will decide a case based on prior experience is a great benefit.

The other significant benefits of binding arbitration instead of trial are expense and time. A trial requires in most instances thousands of dollars in expense because all the doctors and other expert witnesses in the case must be paid for their time to appear at the trial. In addition there is great expense in preparing all the necessary exhibits and evidence that must be introduced at a trial. Arbitration reduces the expense to a minimum because usually the decision is based on medical records and other documents rather than requiring actual testimony of the experts. Also the time involved with a trial is several days and sometimes weeks as compared to several hours for most arbitrations.

Binding arbitration is not always the right choice, and sometimes is not agreeable to the parties involved, but in the right situation in can be a very beneficial process and a successful way to resolve a case. If you have questions regarding the arbirtation process, feel free to contact me here in my firm’s Marlton, New Jersey office to discuss this matter in more detail.