USA Law and Practice Contributed by: John Desmond, Alexis Taitel, Alice Samberg, Mackenzie Robinson and Peter Dragovich, Dickinson Wright PLLC
5.3 Contingency Fee Arrangement Contingent fees are available in dispute resolution cases except in domestic relations matters or criminal cases. Contingent fees are regulated by the American Bar Association Model Rules of Professional Conduct, particularly Rule 1.5. These rules require that the con- tingency agreement be in writing and clearly specify how the fee will be calculated, including the percent- age the lawyer will receive, how arbitration costs are handled, and whether those costs are deducted before or after the fee is applied. Some jurisdictions impose statutory caps on contingency fees for certain cases such as medical malpractice. Arbitrators will also consider contingency fee arrangements when Insurance coverage is available in the United States for litigation, arbitration, and ADR primarily through liability policies that cover legal defence fees and set- tlements. Liability insurance policies typically apply to commercial general liability (CGL), directors and officers (D&O) and professional liability (malpractice). Coverage is often provided on a “claims made” basis, meaning the policy must be active when the claim is made. These policies typically include a “duty to defend” meaning the insurer must pay for lawyers and related costs. Coverage is tailored to specific risks and will define “claim” or “proceeding” broadly enough to include arbitration or ADR, while some policies explic- itly include arbitration or ADR, but the specific word- ing of the policy will govern which dispute resolution mechanisms are governed or not. 5.5 Costs Under the American Rule, each party pays its own legal costs, including attorneys’ fees and other dis- pute-related expenses. Parties can contractually agree to override the American Rule and allow the prevailing party to recover attorney’s fees. When the arbitration agreement is silent, the AAA gives arbitra- tors the discretion to award fees if they find it just or authorised by law. In mediation, parties generally pay for their own legal counsel and split the cost of the mediator, regardless of the outcome. When a settle- ment agreement is reached, the parties are able to negotiate who pays what and the final agreement will determine the fee allocation. allocating costs. 5.4 Insurance
5.6 Assessment of Costs Under the AAA rules, arbitrators will consider a mix of legal entitlement and fairness, such as contract terms between the parties, applicable law, who prevailed on their claims, conduct of the parties, and reasonable- ness and proportionality of the costs. Most mediation cases divide costs equally between the petitioner and respondent.
6. Interim Remedies 6.1 Availability of Interim Relief
Types of interim relief would include tribunal-ordered measures that are designed to protect a party’s inter- ests before a final award. These would include freez- ing orders (Mareva Injunctions), orders preventing a party from changing the current situation until the final decision, or ordering the safe custody of property or documents to prevent destruction of evidence. 6.2 Interim Relief to Support Arbitration and ADR Courts generally grant interim relief in support of arbi- tration or ADR so long as the arbitration agreement does not prohibit it. These interim relief measures are issued before or during arbitration or ADR to ensure that the final award is effective. 6.3 Timing of Applications for Interim Relief Applications for interim relief are petitioned for when the party needs urgent, temporary protection before the final decision is issued. If the petition is made too early, the petitioning party may lack the necessary evi- dence to be granted the interim relief by the tribunal and if the petition is made too late, the harm to be prevented by the grant of the interim relief may already have been done. 6.4 Security for Costs A party can apply for security for costs in arbitration as an interim measure to ensure that legal costs will be recovered if the opposing party fails to pay. Security for costs is generally granted when a claimant is likely unable to pay an adverse costs award and there is a high chance of non-recovery.
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