Taking the Arbitration Route: Advantage or Disadvantage?

We should start by saying there are several ways a personal injury case can typically be settled – by negotiation between the disputing parties and their attorneys prior to a case going to trial; via mediation using the services of a neutral third party to aid in resolving the issue; by both sides agreeing to use the services of an arbitrator to come up with a legally binding decision that permanently settles the dispute; or ultimately through formal litigation in a courtroom setting. Mediation and arbitration fall into a category often referred to as “alternative dispute resolution” (ADR) tools. Both options offer clients cost-effective and relatively quick means to settle disputes without the stress and pressure of having to face a judge or jury in a court of law. In fact, the State Bar of Michigan has noted that “more than 80% of litigation is resolved by mediation and arbitration, not trial.” Which makes it essential for us to consider putting these methods to work in virtually any personal injury case we are handling.

In an article we published here last spring, we discussed the value of mediation in settling personal injury cases. As we said, if it turns out that we need to take the litigation route to get you a fair and just settlement in your personal injury case, we’re ready, willing to fight things out in a courtroom. But there are times when less combative ADR methods like mediation and arbitration can be quite helpful to our clients, so we don’t ever want to depend entirely on our usual courtroom success to determine the best way to help you settle your case.

This article will discuss the potential benefits (and possible pitfalls) of arbitration, and how that specific method might be effectively used to determine the outcome of your personal injury case if you wish to avoid the risks of litigation – which could include the (we hope unlikely!) potential of losing your case; the chance of a decision favorable to you being successfully appealed and reversed by a higher court; or the very real likelihood that you might have to wait months or even years before your case is resolved through the labyrinth of Michigan’s legal system. Not to mention other possible negative outcomes including delays in litigating those cases that are eventually appealed. For example, while most cases that go to appeals courts in Michigan are usually decided in less than 18 months, that process may further extend the timeline before settlements are received.

Let’s take some time to cover how arbitration works, the rules Michigan courts have put in place to define the arbitration process, the kinds of people who serve as arbitrators in Michigan, and a few tips on using this ADR method to your best advantage.

What’s Arbitration, and Why Is It Important in Personal Injury Cases?

Like mediation (which we discussed at greater length here), arbitration can often provide disputing parties with a time-saving, money-saving shortcut to resolve their differences without having to go to court. In fact, some courts (including the United States District Court for the Eastern District of Michigan, the federal court with jurisdiction over the eastern half of the Lower Peninsula) go so far as to formally state that they favor having plaintiffs and defendants use alternative dispute resolution methods like arbitration rather than taking cases to trial. Specifically, in its “Local Rules” document, that court says ADRs offer “litigants a more informal, less expensive, and less adversarial method for resolving their disputes than is afforded by traditional litigation procedures.”

Michigan Courts further define arbitration as follows:

“Arbitration [MCL 600.5001-600.5035; MCR 3.602] … typically is a private, voluntary process in which a neutral third-party, usually with specialized subject expertise, is selected by the parties to render a decision that is binding. Each party has the opportunity to present proofs and arguments at the arbitration hearing. Unlike case evaluation, awards are often supported by a reasoned opinion. The role of the neutral (a.k.a. the arbitrator) to render a decision and the absence of facilitated settlement discussions between the parties differentiate this process from mediation.”

In other words, while a mediator can encourage and assist plaintiffs and defendants in jointly resolving cases, the arbitrator simply looks at the facts of the specific case and makes a final determination on its outcome at the end of the arbitration hearing. Case closed!

Because of that element of finality, it’s important to carefully consider whether you wish to enter into an agreement to accept arbitration to resolve your personal injury case. While arbitration can save you time and money, along with more quickly resolving the conflict in a less adversarial manner, doing so could also permanently close the door on your case, leaving you no recourse if you disagree with the arbitrator’s decision.

How Does Arbitration Work?

An arbitration hearing closely resembles a courtroom trial, though there are some differences we’ll touch upon in a moment. As in a regular court proceeding, evidence is presented by both sides, witnesses might be called (but there is no opportunity for cross examination), and the arbitrator acts as a judge in deciding the final outcome. Since the plaintiff and the defendant have agreed beforehand to accept the arbitrator’s word as law, there’s no recourse after the fact, unlike a trial which can be appealed. Just to be clear, with binding arbitration, there is no further debate or discussion permitted after the decision is rendered. Also, unlike a court case, where the proceedings are usually open to the public, arbitration hearings can be closed, protecting the privacy of everyone involved.

Is Everything Said During Arbitration Confidential?

Typically, yes. One of the advantages of arbitration is that unlike most courtroom trials which are open to the public, arbitration hearings are usually held behind closed doors. But you should also know that certain actions people might take in an arbitration hearing could lead to further legal complications down the road. For instance, if an arbitration hearing participant threatens to physically harm another person during proceedings, it could result in arrest or even criminal charges for assault being filed against the aggressor for making what’s known as a credible threat. So be careful what you say in any setting where angry “fighting words” might be heard by others!

Is the Arbitration Process Binding?

Unlike mediation, where cases can go on to trial without penalty if either or both of the disputing parties don’t agree to the results of the mediation process, arbitration can either be binding (meaning the decision of the arbitrator is final and must be accepted by both parties) or non-binding (where the disputing parties can decide later whether or not to accept the arbitrator’s decision). The choice of non-binding or binding arbitration must be made before the process begins. While non-binding arbitration might seem like unnecessary expenditure of time, it could still help to resolve the case before it has to go to trial, and also provides both sides with insight into how their opponents are thinking… which could perhaps lead to an earlier resolution than might otherwise occur.

How Does Someone Become an Arbitrator?

Arbitration is actually a solid career choice for some thoughtful, even-handed individuals! You can start by taking a college course designed to prepare you for a career in arbitration. Central Michigan University has an online class available, which includes the opportunity to sit for a professional certification exam after you’ve completed the coursework. But that’s not the only step in the process. Most professional arbitrators are either attorneys or retired judges (though there are some exceptions). Like their mediator peers, arbitrators in Michigan have to meet stringent criteria to successfully perform their roles, and arbitrators must adhere to rules outlined in the state’s Uniform Arbitration Act of 2012. Some work with an organization known as JAMS – an abbreviation for “Judicial Arbitration and Mediation Services” – which has an office in downtown Detroit. Others are affiliated with the American Arbitration Association, publishers of a lengthy code of ethics which its members agree to follow, or the invitation-only National Association of Distinguished Neutrals. (People who work as arbitrators are often referred to as “neutrals” – a term that describes their position as unbiased individuals who are trained to judge each case on its own merits.) Some arbitrators specialize in various fields or industries. For instance, here’s a list of arbitrators approved by the Michigan Department of Insurance and Financial Services to handle cases involving auto insurance-related health care claims.

What’s the Next Step in Learning More About Arbitration?

As you may have guessed, deciding whether arbitration is the best way to proceed based upon your circumstances is complicated. As your personal injury attorneys we can advise you on the pros and cons of seeking arbitration depending upon your specific situation, and our assessment of the likelihood you’ll receive a favorable settlement through the arbitration process. And we’ll do all that without charging a penny because we work with you on a contingency fee basis, which means you pay nothing out of pocket for arbitration services if we mutually agree to go that route.

The best way to get started is, of course, to get in touch with us to discuss the situation that led to the injuries you’ve suffered and appoint us as your legal representatives. Once you’ve made that call, we’ll get the ball rolling from there. So, dial 855-MIKE-WINS (855-645-3946) or submit an online request here to learn more about how to get all the compensation you deserve for the pain and suffering you’ve experienced.

Content checked by Mike Morse, personal injury attorney with Mike Morse Injury Law Firm. Mike Morse is the founder of Mike Morse Law Firm, the largest personal injury law firm in Michigan. Since being founded in 1995, Mike Morse Law Firm has grown to 150 employees, served 25,000 clients, and collected more than $1 billion for victims of auto, truck and motorcycle accidents. The main office is in Southfield, MI but you can also find us in Detroit, Sterling Heights and many other locations.