Binding arbitration is typically the result of a contractual agreement between the parties providing that any disputes between the parties will be resolved in binding arbitration. Under the Federal Arbitration Act (“FAA”) and its state law counterparts, such agreements are presumptively valid and enforceable. Generally speaking, if you sign a contract that contains an arbitration provision, you will be bound by that agreement and forced to resolve any disputes through arbitration. In other words, by entering into an agreement containing an arbitration provision, you are waiving your right to address any disputes through traditional litigation in a court of law.

The most commonly cited benefits of binding arbitration mirror the most commonly cited negatives associated with litigation: faster resolution and reduced expense. There is no denying that traditional litigation takes too long and is very expensive. Arbitration is substantially faster than litigation in the overwhelming majority of cases (often less than 6 months with no mechanism for appeal compared to 1.5 to 2 years through trial in traditional litigation, with the possibility of several additional years if the case goes to appeal). Arbitration can also be substantially less expensive than traditional litigation, although not in every case. Depending on the arbitration agreement and the rules of the organization conducting the arbitration, discovery is likely to be substantially limited, which significantly reduces both the cost and invasiveness of traditional litigation.

Despite the benefits of arbitration, there are still many cases in which it is not the best option. First, arbitration of claims involving larger amounts often requires payment of substantial upfront fees. While court fees are typically a flat fee of a few hundred dollars, a large dollar case in front of AAA, for example, can require the payment of $15,000 – $20,000 in administrative fees to AAA prior to any award by the arbitrator. Moreover, the benefits associated with limited discovery are only beneficial in cases in which the parties are able to obtain the necessary evidence to prove their case. Discovery is often considered critical in litigation, and the significant limitations on discovery in arbitration may prevent a party from obtaining critical evidence. Finally, in our experience, there are fewer opportunities for dispositive motions, and dispositive motions are less likely to be granted, in the arbitration context. In those circumstances in which a client is likely to have strong legal defenses and a reasonable probability of success on a dispositive motion, the client may well be better off in traditional litigation with an opportunity for appeal if the decision at the trial court level goes the other way.

The attorneys at Dioguardi Flynn have extensive experience in both arbitration and litigation, and can assist clients in determining which approach is in their best interests in their specific situation.

Most attorneys and clients intuitively understand the importance of good communication from the attorney to the client in keeping the client apprised of developments in the matter in which the attorney is providing legal services, even if some attorneys sometimes fail to live up to this requirement in practice.   There is no denying that such communications are a critical part of the attorney-client relationship, and are an area of focus in our firm.  Indeed, probably ninety percent of potential clients that come in looking for new counsel because they are dissatisfied with their current or prior counsel indicate that poor communication and/or a lack of up-to-date information from their attorney is the reason that they are looking for a change.

With that said, however, candid, open communications from the client regarding all aspects of a legal engagement are of equally critical importance in developing and maintaining the attorney-client relationship and achieving the results that the client seeks to achieve.   We value our client relationships and will aggressively move to achieve our clients’ desired results, but without candid and open communications from the client as to the desired objective, counsel’s actions may fail to achieve the desired results.  Below are some suggestions for clients that will help ensure that you and your attorneys are on the same page, thereby maximizing the likelihood of the desired outcome. 

Setting the Goal 

Before your attorney can take action to achieve your desired objective, you must first determine what that desired objective is.  Spend some time thinking on your own about what you actually want to accomplish in the legal engagement, and then discuss that goal with your counsel.  This is not to say that the ultimate goal for the engagement should be set without the advice of counsel.  To the contrary, the only reasonable way to set a realistic, achievable goal for a legal engagement is to engage in a candid, open discussion with your attorney regarding your desired outcome, other possible outcomes and scenarios, legal issues, and financial considerations.  Listen to your attorney, and be realistic in setting your goals and expectations.

Be Candid About Financial Considerations

It is a simple fact of life, particularly in these difficult economic times, that legal services are expensive and that financial considerations will play a significant, if not decisive, role in setting the goal for the engagement and determining an effective strategy for achieving that goal.  For example, litigators by nature have an inherent desire to “win” the case.  But if “winning” a lawsuit costs the client more than it can afford or, worse, more than is obtained in a “victory,” then the result for the client is not a “win” at all.  Attorneys must be candid with clients regarding the costs of an engagement, and clients must be candid with their attorneys regarding their financial circumstances and ability to pay.  While many clients enter into litigation in “battle mode” believing that they want to move forward as aggressively as they can to “win” the case, that approach will result in large legal bills early in the case.  Arizona litigation clients should also be cognizant of the fact that Arizona’s up-front disclosure requirements are such that discovery expenses are substantially front-loaded in the early part of a litigation matter.

Don’t be Afraid to Ask Questions

The old adage that the only stupid question is the one that goes unasked is particularly true in the context of the attorney-client relationship.  While we attempt to anticipate as many of our clients’ questions as possible, it is still important for our clients to feel comfortable enough to ask any questions they may have.  While your attorneys have the advantage of understanding the legal issues, you (the client) will always have a far better understanding of your personal or business circumstances and those circumstances may be critical in determining the appropriate strategy for your engagement.  We are here to answer your questions and client questions often have a way of leading to critical information that may lead to a better strategy or a change in the ultimate goal.

The Attorney-Client Privilege Exists for a Reason

Remember that essentially anything that you tell your attorneys (with the possible exception of a present intention to commit a felony in the near future) is privileged and confidential, and will not be disclosed under any circumstance.  The reason that the attorney-client privilege exists and is enforced by our courts is that the legal system recognizes that candid, open, and forthright communication between attorney and client is absolutely critical.  In the litigation context, when “bad” facts are disclosed to your attorneys, we can plan around those facts and create a strategy for minimizing any damage to your case that may result from those facts.  On the other hand, withholding “bad” facts from your attorneys is a recipe for disaster as the likely result is that the opposing party will find out about those facts and use them at the most inopportune moment, catching your attorneys off guard. 

On those occasions over the years when I have learned about “bad” facts that were not disclosed to me by my clients, the clients often were “afraid” or “embarrassed” to disclose bad facts because they were afraid that the “bad” facts would be unnecessarily disclosed and hurt their case, or that I would think less of them as a result of my knowledge of the “bad” facts.  As to the first reason, parties in litigation are all required to play by the same set of rules.  We play by those rules and will disclose information that is required to be disclosed.  It is universally true, however, that the failure to disclose required information always turns out worse than making the required disclosure and implementing a strategy to minimize any damage resulting from that disclosure.  With respect to the second concern that I may think less of my client as a result of the disclosure of “bad” facts, my job is to solve my clients’ problems, not to “judge” their actions under difficult circumstances.  Clients should always disclose all pertinent information to their attorneys.