USA Law and Practice Contributed by: John Desmond, Alexis Taitel, Alice Samberg, Mackenzie Robinson and Peter Dragovich, Dickinson Wright PLLC
court-annexed arbitration or mediation early on in the litigation process. Additionally, parties can strategi- cally choose to opt for mediation or other non-binding ADR options during or after discovery, when the pros and cons of a given dispute are clearer. It is important to note, however, resorting to ADR stat- utory timelines generally does not toll the limitations period. But certain statutes can toll the applicable limi- tations period in a given case. For example, in Wis- consin, if a claimant files a mediation request before pursuing court action, the limitations period is tolled from the date the director of state courts receives the request and remains tolled until 30 days after the last day of the mediation period. (See Wisc. Stat. 655.44 (4).) 4.5 Confidentiality Arbitration and mediation can be confidential and turn largely on the applicable rules or contract pro- visions. For example, the Uniform Mediation Rules drafted by the Uniform Law Commission, opted into by a handful of states, provides that mediation com- munications are generally confidential and privileged. (See Uniform Mediation Rules, Section 5.) In a similar vein, Rule 26 of the JAMS Comprehensive Arbitra- tion Rules and Procedures states that the arbitrator generally “shall maintain the confidential nature of the Arbitration proceeding and the award,” subject to certain exceptions. Specific court rules and statutes can also impose confidentiality restrictions. Even so, parties can lose confidentiality protections. Trying to enforce or vacate an arbitration award in court will, of course, waive any confidentiality of the award. Parties can also consent to specific disclosure requirements. 4.6 Costs Generally, neutral fees are borne by the parties equal- ly. Neutral fees include the mediator or arbitrator’s rate, fees charged by the ADR provider to manage the case, room rentals, or court reporter costs. However, parties can always choose to contract away from that default rule. Commercial contracts can pre-determine how costs will be handled should the case advance to arbitration. Because mediation is voluntary and non-binding, it is much more common to see equal fee-splitting in mediation. Conversely, because arbi- tration is often governed by a contractual provision, it
is common to see fee- and cost-shifting of arbitration expenses. 4.7 Courts and ADR In the same way US courts favour settling disputes, they also favour the use of ADR. Litigation is expen- sive and time-consuming. Using alternative methods to resolve disputes outside of the courts helps relieve the courts and the litigants of that time and finan- cial burden. Policy-wise, there is a view that forcing plaintiffs to arbitrate when there is an asymmetry of bargaining parties is unfair, and this is especially true where the party with less bargaining power has little notice of a binding arbitration clause. Still, courts in the United States largely endorse using ADR. The “American Rule” requires each party to pay its own legal costs. Legal fees are regulated through a combination of ethical rules, court oversight, and market forces rather than a single centralised system. Most states base their standards on the American Bar Association’s Model Rules of Professional Conduct, which require that attorneys charge “reasonable” fees based on factors such as the complexity of the case, time involved, and the lawyer’s experience. Courts review fees in certain cases, especially where fee-shifting statutes apply and may reduce excessive charges. Statutes and contracts, however, can shift fees to the losing party. There are additional regula- tions from laws that cap or guide fees in specific are- as, along with disclosure requirements and fee dispute arbitration. 5.2 Third-Party Funding Third-party funding is available where external financi- ers cover legal fees in exchange for a share of the final award. This practice has increased access to justice but has also raised significant concerns regarding disclosure, confidentiality, conflicts of interest, and control over proceedings. States impose limits where funding agreements appear to give the funders exces- sive control over the dispute resolution strategy. 5. Costs, Fees and Funding 5.1 Legal Fees
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