Common Mistakes Attorneys Should Avoid in Arbitration
A recent federal court ruling held that an arbitration award would be enforced under the facts of that case, regardless of whether the parties considered the award “good, bad or ugly.” See RSM Production Corp. v. Gaz du Cameroun, S.A., 117 F.4th 707, 714 (5th Cir. 2024). As explained below, we suggest that “good, bad or ugly” can describe other aspects of arbitration.
In our combined 20-plus years of experience as arbitrators, we have been surprised and frustrated when “good” construction advocates engage in counterproductive conduct that may accurately be described as bad or even ugly. Optimistically, we offer the following suggestions to improve counsel’s performance in arbitration.
Mind your ABCs. Always be credible.
An arbitrator’s ability to rule on an issue depends, in part, on the credibility of the parties' communication of evidence and law. From initial filings to the last argument, attorneys must maintain consistent credibility.
Most obviously, counsel should not overstate or misstate accusations of an opponent’s misconduct, promises of what they intend to prove, the applicable law or the content of the record. Such inaccuracy, especially if repeated, will be obvious to the tribunal or exposed by an opponent and erode that party’s credibility on those crucial and frequent issues where the tribunal needs to make close calls.
Less obvious, but equally important, is that counsel should avoid making a bad impression on the tribunal; no one, including arbitrators, appreciates someone acting like a jerk.
The golden rule of doing unto others as you would have them do to you is honored in cultures across the globe, and for good reason. So, a tribunal wants counsel to be courteous and becomes annoyed with and doubtful of the motivations of those who engage in sharp practices. While attorneys must not allow themselves to be bullied, absent undue prejudice, they should graciously agree to cooperate, give accommodations and never engage in vituperation or personal attacks on anyone—especially witnesses—whether or not they are justified.
There is no chance such an attorney’s client will achieve a more advantageous result in the long run from such unsavory tactics. On the other hand, a tribunal is more likely to indulge a party’s need for an unforeseen accommodation when that party has treated its opponent graciously.
Be effective and economical in resolving pre-hearing and evidentiary disputes.
Too often, the promised benefits of arbitration are undermined by counsel’s needless motion practice. Construction disputes can be expensive to resolve; consequently, clients include arbitration clauses in their contracts to provide for a dispute resolution process that is more economical and efficient than litigation. Yet many attorneys engage in needless discovery disputes, doomed dispositive motions and unnecessary evidentiary wrangling, mistakenly thinking that they are advancing their client’s interests. They are not, because the benefits of such behavior are seldom worth the costs in time, expense and negative impact on the tribunal’s opinion of the advocate’s tactics.
Few motions are specifically allowed by most organizational arbitration rules. Thus, at the preliminary conference with the tribunal, ask whether emails, rather than formal motions, are the proper way to bring pre-hearing disputes to their attention. Then, before raising any procedural or discovery disputes, the parties should truly attempt to resolve their disagreements; a simple “check the box” representation of conferral is easily detected by the tribunal and reflects badly on the party seeking a ruling.
Counsel should be equally cautious when raising evidentiary disputes. Given arbitration’s relaxed evidentiary rules and a tribunal’s reasonable reluctance to preclude witnesses or categories of evidence, counsel might better tailor evidentiary objections in a common sense, targeted manner. For example, instead of asking to exclude an expert witness, counsel might seek to limit the scope of the expert’s testimony.
Similarly, counsel should hesitate before objecting to evidence on the grounds that its prejudicial effect outweighs its probative value. A tribunal of seasoned arbitrators will be able to accept “hot” evidence and weigh the extent to which any of it is probative. Arguments suggesting that the arbitrators will be confused or led astray by such evidence rarely have purchase and may appear presumptuous.
This is not a jury trial; find out what the arbitrators want, and plan hearing strategy accordingly.
It is of utmost importance for counsel to find out how the tribunal wants the parties to present their evidence, and to adhere to these preferences, because the tribunal knows what it needs for its deliberations. Too often, counsel act as they would in trial, even to the point of failing to treat seriously the tribunal’s directions on how to present their arguments, exhibits and other evidence.
In addition to following the preferences of the tribunal, because there is no jury and no judge constrained by litigation rules, there are other ways in which counsel should present their evidence that should be dramatically different than if they were in trial.
A properly prepared tribunal will have read the parties’ pre-hearing submissions and have a handle on the basics. Therefore, counsel should explore with other counsel and the tribunal in advance of the hearing the possibility of stipulating to certain testimony, or at least quickly leading witnesses along in proving the preliminary aspects of their proof. For issues that are not in dispute, the parties may simply refer the tribunal to the appropriate evidence in the hearing binder rather than putting on one “ministerial” witness after another. Experienced arbitrators do not need “the show” of multiple background witnesses to understand a party’s case.
However, for contested issues, counsel should not spare or fail to use knowledgeable fact witnesses; they are indispensable to the credibility and persuasiveness of each party’s case.
Although there is no jury, arbitrators are human and need counsel to lead them through the evidence on issues of contested fact so that the arbitrators understand each side’s proof and are comfortable deciding whether they have met whatever burden of proof they may have to provide the more persuasive, greater weight of the evidence on their respective claims or affirmative defenses. Arbitrators get presented with huge swaths of information during a hearing. Crisp, focused examinations and cross-examinations can carry the day.
Additionally, too many attorneys develop great materials prior to the arbitration that are not used effectively during the hearing. Photos and demonstrative evidence such as chronologies, graphs, charts and reconstructions can pack as much of a punch with arbitrators as with a jury. But counsel err when they simply put such exhibits in evidence via a thumb drive or notebook of documents, or do no more than cite them in an expert’s report or post-hearing brief. Counsel need to explain the relevance and importance of key exhibits with knowledgeable fact witnesses in real time. While Hollywood-type antics are inappropriate in front of a tribunal, counsel never should forget to keep the tribunal engaged. Arbitrators always welcome hearing from witnesses who know what they are talking about via careful, non-leading questioning on the cores issues in dispute.
Expert testimony is another area of proof where counsel are too often ineffective. They would be wise to seek the direction of the tribunal on how and when experts should testify. Counsel need not lead expert witnesses through a mind-numbing exposition of their education and experience or the foundational assumptions for their opinions. With agreement from opposing counsel and the tribunal, experts’ CVs and reports should be placed in evidence, with the focus of the experts’ oral testimony on the factual basis for and expert analysis of the issues that the tribunal and the parties know are relevant and in controversy.
The tribunal also should be asked whether they would prefer that experts on the same issue testify back to back at the end of the hearing after all factual evidence relevant to the experts’ opinions is in the record. Also, the tribunal may prefer that such experts meet, confer and then prepare and provide the tribunal and parties with a joint report in advance of the hearing, highlighting their areas of agreement and disagreement and identifying the evidentiary bases for their disagreement.
Provide sufficient proof and explanation of damages claims and defenses.
We agree with the often-stated observations that “the weakest part of most hearing presentations in a complex construction case concerns damages” and that experienced construction counsel repeatedly “fall flat” in proving or refuting the cause and effect and quantum of the claimed losses.[1]
Counsel must remember that it is not enough to establish or raise concerns about issues of liability; they must also prove—or defend against—causation and quantum of damages. Arbitrators are unlikely to award damages if they cannot understand how or in what amount those damages were caused by the opposing party.
Consequently, we cannot stress enough how crucial it is that the tribunal be provided proof of a party’s damages arguments via evidence that is factually based on live testimony and documents that clearly support their damages claims and defenses.
In meeting these important burdens of proof, parties should not default to demonstrative PowerPoints or thick exhibit notebooks containing documents that are neither substantiated by direct testimony of fact witnesses nor tested by cross-examination or rebuttal testimony. Parties also should understand that often the summary testimony of hired experts alone will not be sufficient to carry their burden of proof on damages. The tribunal may want to question the fact witnesses and experts about their damages analyses and calculations, and they cannot do so if they do not have knowledgeable and competent witnesses to question.
Reserve enough time for the hearing.
Often parties realize, too late, that they have run out of hearing time to put on their cases effectively, especially in large, complicated disputes. When reserving hearing time months in advance of when they actually know what their proof and rebuttal evidence will be, parties should consider reserving a reasonable amount of time in addition to what they think they will need. Factual, legal and procedural issues often arise during a hearing that cause delays, and neither counsel nor the arbitrators should be rushed in addressing legal issues, examining the witnesses and reviewing exhibits as they are offered. Parties should not default into thinking they can make up for missing hearing time by filling in evidentiary gaps in post-hearing briefs.
Good is better.
In summary, while we cannot guarantee that a given arbitration will be good, we hope that this guidance will help keep an outcome from being bad or ugly.
[1] Construction Arbitration – The Advocates Practical Guide, 184 (A. Ness and J Foust, Eds, ABA 2023).
