STRATEGY
A LEGAL VIEW
The Pros and Cons of Arbitration THIS DISPUTE-RESOLUTION METHOD MAY OR MAY NOT MAKE SENSE IN RESIDENTIAL LEASE AGREEMENTS.
Have a legal question that may affect your REI? Send questions to Think Realty’s editor at kwhite@thinkrealty.com
by Michael Johnston
C
onsidered as an alternative dispute-resolution device, arbitration is meant to resolve disputes
al. However, due to the backlog in litigation, a case may not get to trial for 18 to 24 months. The longer a case is open, the more parties typically will pay in attorneys’ fees. Therefore, there is a chance that arbitration could be cost-effective in a residential lease situation. APPEAL Typically, there is no right of appeal of an arbitra- tion award. The only way that an adverse award can be attacked is to demonstrate that the arbitrator was biased or withheld critical relevant information concerning his/ her background that would have disqualified the arbi- trator from serving. By not affording appeals, arbitration saves on appellate attorney’s fees. PRIVACY Arbitrations are private matters as opposed to lawsuits that are highly public. In today’s world, litigation is often online, where all pleadings and allegations, whether true or not, are readily accessible to anyone with a computer. It is no secret that competitors have used allegations contained in public lawsuits to launch social and media attacks. For example, if someone files a lawsuit against you and alleges fraud, that lawsuit is public record that can be referenced by anyone, including competitors. It
outside of courtroom litigation. Arbitration clauses, which have been popular in commercial contracts and are becoming prevalent in consumer and professional agreements, are now creeping into real estate agree- ments. While arbitration has many advantages, there are pitfalls to consider. EXPENSE The popular thought is that arbitration is less expensive than litigation. It certainly can be, but many times it is not. A panel of three arbitrators can result in arbitrator fees of between $10,000 and $15,000 per day. The arbitrator fees are not applicable just to the trial, but also to pre-trial issues, like reviewing briefs, and to post-hearing matters such as reviewing evidence, deliberation, and preparation of the award. It is not unusual for a complicated commer- cial arbitration to result in arbitrator fees of $75,000. And, this does not include administration fees, or the cost of the attorneys retained by the parties. On the other hand, a one-to-two-day arbitration with a single arbitrator is much less expensive but can still result in arbitration and administration fees between $5,000 and $8,000. There is no charge for the judge if a matter goes to tri-
74 | think realty magazine :: may / june 2019
Made with FlippingBook Online newsletter