How Much Does Arbitration Cost? Is It Cheaper Than Litigation?
If you are facing a legal dispute, it might serve you best to resolve a legal claim through arbitration. Then again, a contract may require arbitration, or the courts may order your case to litigation if the damages at stake for both plaintiffs is under $50,000. Even if you don’t know much about arbitration, you have likely heard it’s cheaper than traditional litigation.
The truth is that although arbitration can save you time and money, it’s not a guaranteed cheaper alternative to court. As a San Diego-based attorney for many years, I’d like to provide a closer look at the cost of arbitration and how it compares with the cost of traditional litigation.
Significant Factors That Affect the Cost of Arbitration
Arbitration involves several expenses. Some of the most significant include the following.
Your Arbitrator
This person serves as a neutral third party who will ultimately make a binding or non-binding decision in your case. Private arbitrators in California can charge anywhere from $200 to $1,000 per hour. If they have to travel, you may also be obligated to pay related expenses.
The court system also has an arbitration panel, and members charge $150 for four hours, or up to $300 for a case that takes longer. Plaintiffs and defendants typically split the cost of the arbitrator. If the courts order your case to arbitration, the courts will cover the arbitrator's fees.
Your Attorney
Just as in traditional litigation, you will want to hire an attorney to present your side of the case to the arbitrator. Rates vary widely from one lawyer to another, but it’s important to bear in mind that presenting to an arbitrator is a unique skill.
Later on, we’ll take a closer look at why it never pays to try and save a buck when it comes to choosing a lawyer to represent you in arbitration.
Expert Witnesses
Having an expert witness add insight during your case can be essential to making your position heard and understood. Expert witnesses can charge hundreds per hour, depending on their experience and reputation. If the expert witness must travel, you can also expect to pay related expenses.
Hearing Room Rental
Like the cost of your arbitrator, any rental fees involved in your chosen venue are typically split between the plaintiffs.
Get Help Finding a Qualified San Diego Lawyer for Arbitration
Hoge Law Firm in San Diego can place you in contact with a lawyer who has the skills and knowledge to help you reach the best possible agreement through arbitration.
So Is Arbitration Always Cheaper Than Court?
The short answer is “no.”
Arbitration has a reputation as an alternative dispute resolution method that can help you put a legal matter behind you quickly and with much less money spent. In many cases, this is what it provides.
However, you must keep in mind that guarantees are rare when it comes to legal procedures. You need to be prepared for variables that could result in arbitration leading to greater costs than going straight to court.
The Duration of the Legal and Arbitration Process Matters
The question of whether you will save money through arbitration largely comes down to time. When you consider that arbitration can start sooner and be completed much faster than traditional litigation, you could save considerably on attorney fees. Even with the other expenses involved, an efficient arbitration process can cost far less than going to court.
Disputes Over the Arbitration Decision
What if one or both parties are dissatisfied with the resolution of the case outside of court?
There are fewer avenues of appeal when it comes to an arbitration decision, which means you may have to go to court to reach a resolution. That will involve more time, more attorney’s fees, and other expenses in addition to what you have already invested in arbitration.
Find the Right Attorney to Guide Your Legal Claim
This is just one reason why parties who have the option to go to arbitration should first consult an attorney who can weigh in on the likelihood of reaching a resolution. My law office can connect you with a San Diego lawyer who is qualified to help you make this important decision.
Business Insurance Might Cover Some Costs
If your legal dispute involves your business, you may have an insurance policy that contributes to some of the expenses related to arbitration.
If you are unsure whether this applies to you, consult a trusted attorney. Your lawyer will be able to take a look at your policy, determine exactly which expenses qualify for coverage, and even negotiate fees directly with your insurance provider. Hoge Law Firm in San Diego can help you understand exactly what your policy covers.
The Importance of Hiring the Right Attorney
Attorneys have different skill sets, expertise, and reputations. Just because an attorney has a great track record of presenting to a judge in contract dispute cases does not mean that they can achieve the same results when presenting to an arbitrator.
These are just a few reasons why it pays to hire an attorney who understands arbitration, even if their fees are higher than other attorneys you are considering.
Experienced Lawyers Often Have Key Professional Relationships
A lawyer with significant experience in arbitration likely knows many arbitrators or has colleagues who can recommend a great arbitrator for your case. Choosing an arbitrator who will understand your position is an excellent way to make sure your side of the story is heard and understood.
You Need a Lawyer Who Knows the Rules of Arbitration
Arbitration is governed by the Federal Arbitration Act (FAA). If your attorney doesn't understand the rules set forth by the FAA, you could pay avoidable costs and deal with a disappointing outcome. Hoge Law Firm in San Diego can place you in touch with a lawyer who has studied the FAA.
First Impressions Count in Arbitration
During a preliminary hearing, your arbitrator will review both your side of the story and the other party's side. Both sides have the option of submitting a claim that is either minimal or highly detailed. If your attorney has experience with arbitration and crafting a compelling claim for the preliminary hearing, it can make a good impression on the arbitrator. This favorable first impression can greatly influence the outcome of your case.
Bottom Line: The Cost of a Good Attorney Can Payoff During Arbitration
Experienced and reputable attorneys charge more than other lawyers, but this added expense can prove well worth it in the long run. Hoge Law Firm can place you in touch with the right San Diego attorney for your case.
Connect With a Skilled Lawyer
Contact Hoge Law Firm Today
If you have more questions about the cost of arbitration or any other aspect of this process, Hoge Law Firm can help you get the answers you need. Our San Diego firm has helped many clients achieve the results they need through arbitration, and we are prepared to do the same for you. To get more information, contact my law office today.
About Charles T. Hoge
Charles T. Hoge has practiced law since 1983. He opened his own firm in Downtown La Jolla in 2016. The Hoge Law Firm has been recognized by both U.S. News & World Report and Best Lawyers as a leading practice for commercial litigation and employment law.
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