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December 05, 2016 Articles

The AAA's New "À La Carte Services": Gaining Access to Administrative Support Without Filing a Case

By P. Jean Baker

Parties routinely include American Arbitration Association (AAA) clauses in their contracts because they want (1) access to the AAA's domestic and international roster of experienced, qualified, and trained arbitrators; (2) a well-defined process for selecting an arbitrator or a panel; (3) a third-party administrator able to confidentially handle challenges to an arbitrator's continued service due to a potential conflict of interest; and (4) a mechanism for collecting deposits and resolving billing disputes. For the past 90 years, access to these four critical administrative functions has been reserved for those who file a case with the AAA.

With the AAA's recent introduction of its à la carte services, parties can now obtain stand-alone administrative assistance by the AAA on an as-needed basis without filing a case with the AAA.

The current menu of à la carte services consists of the following:

Arbitrator Select
Users can obtain from the AAA a list of arbitrators whose credentials best match the criteria specified by the parties. Parties can also choose to have the AAA assist with the appointment process. Parties will strike and rank arbitrators on a list provided by the AAA, which will review the rankings and appoint the highest-ranked mutually agreeable arbitrator.

Arbitrator Challenge Review Procedures
Keeping time and costs down can be challenging when a party raises an objection to the continued service of an ad hoc arbitrator. Often the only recourse is to go to court to resolve the issue. Parties to non-administered or ad hoc arbitration can now agree to submit objections or challenges to an arbitrator's continued service to the AAA's Administrative Review Council. The council is a rotating group of current and former high-level AAA executives who bring an extensive amount of experience in alternative dispute resolution and case administration to the decision-making process.

An arbitrator may be disqualified for

a) partiality or lack of independence,
b) inability or refusal to perform his or her duties with diligence and in good faith, or
c) any grounds for disqualification provided by applicable law.

In accordance with the AAA's Arbitrator Challenge Review Procedures, the council applies a four-part test in determining whether an arbitrator's disclosure, purported conflict, or other objection rises to the level of removing the arbitrator from the case. The four-part test is whether the conflict is

• direct,
• continuing,
• substantial, and
• recent.

Weighing these factors together serves as a guide as to whether the conflict is disqualifying. Ultimately, the council's administrative determination is based on whether the disclosure, purported conflict, or other objection creates, to a reasonable person, the appearance that an award would not be fairly rendered.

CaseXplorer Arbitration
Arbitration has been described as old-time litigation on steroids—limited discovery, no depositions, and decision makers who may or may not be attorneys or versed in the underlying subject matter of the dispute.

The AAA offers a new online tool designed to help attorneys anticipate some of the surprises that can arise in arbitration. CaseXplorer enables a party to receive an expert evaluation of the strengths and weaknesses of its arbitration case from a panel of three to five evaluative AAA arbitrators. In a process that is unlike traditional "mock arbitration," counsel presents his or her case online by means of written or video content; the panel is then asked to independently respond to questions submitted by counsel that are designed to elicit perceptions and opinions regarding the strengths or weaknesses of the facts, the legal arguments, videotaped testimony, and the manner of presentation.

The panel's evaluation can be either exploratory or confirmatory in scope. An exploratory evaluation examines how an arbitrator thinks—potential preconceptions, what the arbitrator needs to know in advance, what the arbitrator needs to learn during the presentation of the case, and the process the arbitrator will use to evaluate the evidence and reach a decision. In contrast, a confirmatory evaluation is focused on ascertaining the likely outcome at arbitration. The information derived in a confirmatory evaluation can be a powerful tool if a dispute is to be mediated, a client's expectations need a reality check, or presentation of the case involves revealing the existence of a "smoking gun" by your client.

Judicial Settlement Conference
A judicial settlement conference is similar to mediation, a nonbinding facilitated negotiation. But a settlement judge provides a higher degree of evaluation than may be found in a typical mediation. The AAA settlement judges are all former federal or state appellate-level or trial court judges. The judge will inform the parties of his or her assessment of the case either at a private caucus, if parties choose, or during an open session. In accordance with the AAA's Judicial Settlement Conference Procedures, a judge may comment on the strength or weakness of a case, its relative value, and the likely outcome of subsequent proceedings.

Optional Appellate Arbitration
Parties can mutually agree to engage in a streamlined, standardized, appellate arbitration process that allows for a high-level review of a reasoned arbitration award. The procedure is fair, expedited, and cost effective. The alternative is to file a motion to vacate an award in court. Typically, courts do not review awards for legal error or clearly erroneous determinations of fact. But in private appellate arbitration, the parties can mutually agree that an award may be vacated if the award is based on an error of law that is material and prejudicial or on determinations of fact that are clearly erroneous. Appeals are heard by a panel of three experienced retired appellate (state or federal court) judges or current or former practitioners with substantial experience handling appeals.

Seeking to reduce costs, parties obtain the services of arbitrators who administer their own cases. But is administration by an ad hoc arbitrator really less costly than administration by the AAA? And are there essential administrative functions provided by the AAA that parties engaged in an ad hoc arbitration might need access to? The answer to the question of cost depends on the hourly rate being charged by the ad hoc arbitrator to provide routine, time-consuming administrative services, such as scheduling calls and responding to emails. Is the total charged by an ad hoc arbitrator more or less than the up-front administrative fees charged by the AAA?

As to whether the AAA provides essential administrative services that are not available in ad hoc arbitration, consider this: What if an issue arises regarding the failure of an arbitrator to reveal a substantial conflict. Wouldn't you rather address that problem confidentially with the AAA than directly with the ad hoc arbitrator? The introduction by the AAA of its à la carte services now allows parties engaged in a non-administered ad hoc arbitration access on an as-needed basis to administrative assistance from the AAA.

Keywords: alternative dispute resolution, American Arbitration Association, administered arbitration, ad hoc arbitration, case evaluation, appeal

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