January 01, 2015 Dispute Resolution

Discovery: Getting It Right

John Wilkinson

When I started practicing as an arbitrator, the scope of discovery in arbitration was not an issue. More recently, however, the size of cases has increased dramatically, to the point where arbitrations involving millions of dollars are almost commonplace.

As the amounts at stake in these cases have increased, there has been an effort to include in arbitration many of the expensive, time-consuming elements of cases litigated in court, such as interrogatories, broadly worded document requests, extensive depositions, dispositive motions, and even appeals. Fortunately, this has not detracted significantly from the efficiency of arbitration. The New York Bar Association (through its Dispute Resolution Section) and providers such as the American Arbitration Association have promulgated rules and guidelines to preserve arbitration efficiency in light of expedited discovery. As a result, the length of a domestic, commercial arbitration through the final award was approximately seven months in 2011. By contrast, the median time through appeal of a case in federal district court was 30.8 months in 2011 and, in some of the busier courts, considerably longer.

This article presents some of the more important practices that help achieve limited, cost-effective, and sufficiently comprehensive discovery in arbitration.

First preliminary conference. Shortly after appointment of the arbitrator in a commercial dispute, the arbitrator typically convenes a conference with the parties for the purpose of planning the entire case. This conference is the single most important event in an arbitration; it is the engine that makes the process run and can be the foundation for a limited, cost-effective discovery program. Following the conference, the arbitrator typically drafts and circulates a procedural order that sets forth dates for everything that needs to be done between the conference and the hearing on the merits and establishes the dates for the actual hearing.

First procedural order. Assuming both sides are receptive to limiting arbitration discovery in a reasonable way, a number of measures can be included in the first procedural order to help accomplish this.

Often the parties can agree on such limitations, but if not, the arbitrator will often adopt as a reference tool the limited document discovery suggested in the New York State Bar Association’s Guidelines for the Arbitrator’s Conduct of the Pre-Hearing Phase of Domestic Commercial Arbitrations, or in the International Centre for Dispute Resolution Guidelines for Arbitrators Concerning Exchanges of Information.

E-discovery. By far the most expensive and time-consuming aspect of discovery arises from the recent growth of electronically stored information (ESI). Although it is unrealistic to expect arbitrators to be experts in the enormously complex technology of e-discovery, they should at least familiarize themselves with the kinds of technological questions that might arise. Having done that, they should ask the parties to look carefully at e-discovery issues that might potentially be in dispute and to be prepared to discuss them at the first preliminary conference.

When discussing e-discovery at the first preliminary conference, the goals of the arbitrator should include the following: (1) Limit the custodians of data whose hard drives must be searched. (2) Restrict the scope of e-discovery to matters that are directly relevant and material to the outcome of the case. (3) Narrow the number of storage devices to be searched. (4) Define a reasonable time period to be covered by the search. (5) Reduce to the extent possible the number of search terms to be used when scanning the ESI for relevant data.

The procedural order following the first preliminary conference should encourage the parties to finalize limits on e-discovery along the above lines.

Discovery disputes. If there are no ground rules at the outset concerning the presentation and resolution of discovery disputes, an arbitration can grind to a halt. To avoid such a result, the first preliminary conference should include discussion of possible disputes over discovery, and the first procedural order should contain guidelines such as the following: (1) In cases involving a three-arbitrator panel, any discovery disputes should be decided by one of the three. This should be done with agreement of the parties and with the understanding that the deciding arbitrator can consult with the other panel members if an issue appears particularly important. This approach avoids the time and expense of having three arbitrators plod through and come to agreement on every objection to every document request. And if there is to be argument, the single-arbitrator approach avoids the scheduling delays that can typically occur with three busy arbitrators. (2) Objections to document requests should be exchanged on a date certain, after which the parties should be required to engage promptly in a good-faith “meet and confer” to resolve any objections. (3) If all objections are not resolved at the meet and confer, on a specified date shortly after that gathering the parties should submit four- or five-page letter briefs succinctly explaining their discovery differences and why they think their respective positions are correct. (4) Following receipt of the letter briefs, the tribunal should render a prompt decision on the basis of the letters or quickly convene a telephone conference for the purpose of addressing the discovery issues; only in extraordinary circumstances should the tribunal take more than two weeks from the time of receipt of the letter briefs to decide the issues presented. (5) Following resolution of the discovery issues, the parties should promptly produce documents responsive to requests as to which objections were overruled; this production should be on an expedited basis, generally not later than two or three weeks following the tribunal’s decision. (6) Finally, in no event should resolution of discovery objections delay compliance with document requests as to which there was no objection.

Depositions. Traditionally, depositions have not been a part of arbitration, and that is one of the distinctions drawn as to why arbitration is so much more cost-effective and efficient than litigation. But as the use of arbitration has mushroomed and as general counsel have put increasingly complex matters into arbitration, we have seen increased use of depositions in arbitration. Although depositions have a place in complex, commercial arbitrations, they must never approach the scope of deposition discovery in court. In light of this, the procedural order following the first preliminary conference in a commercial arbitration must place meaningful limits on any depositions. For example, each side might be allocated 10, 15, or 20 hours of depositions to be taken over a four- or five-week period. Or each side might be allowed a few two-hour depositions—again, over a limited period. Either way, speaking objections should not be permitted because the lawyer defending the deposition could use up most of the allotted deposition time with objections.

Final analysis. Arbitrators and parties must strike a delicate balance in commercial arbitrations, especially in complex cases, working to ensure that the discovery will allow the case to be resolved more quickly and less expensively than it would be in litigation while at the same time providing sufficient discovery to allow for a truly fair resolution.

Achieving such a balance is no doubt challenging, but as participants have become increasingly knowledgeable and focused on the need to attain this goal, effective and efficient arbitration discovery has more and more become a reality that parties have a right to expect.

ABA Section of Dispute Resolution

This article is an abridged and edited version of one that originally appeared on page 4 of Dispute Resolution, Fall 2014 (21:1).

For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.

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John Wilkinson

John Wilkinson is on the arbitration and mediation panels of the American Arbitration Association and is immediate past chair of the Dispute Resolution Section of the New York State Bar Association.