Personal injury arbitration: What is it & how does it work?

While a trial by jury or bench trial by judge is our clients’ only legal right to achieve a recovery, some cases are resolved through alternative means. Arbitration is one type of alternative dispute resolution. Arbitration is an alternative means to resolving a dispute using an impartial person (an “arbitrator”) who otherwise has no interest or involvement in the case.

In a personal injury case, the arbitrator also decides the amount of the award (that is, what amount the insurance company must pay the injured person). A personal injury lawyer can play a role in arbitration by guiding clients through the process and advocating on their behalf.

When is arbitration applicable?

Arbitration is not appropriate for every case. The decision of whether to arbitrate or not is a complicated one that should be made by you and your attorney. Even the process of agreeing to arbitrate requires a number of steps and a number of decisions. Often the process of agreeing to an arbitration and the parameters of the arbitration is a lengthy negotiation in itself. There are a lot of considerations involved, and often an arbitration does not go forward because the parties cannot agree on the structure of the arbitration.

What needs to be agreed upon before arbitration can take place?

There are several things that need to be determined before the arbitration process begins. The basic decisions for voluntary arbitration in personal injury cases are as follows:

1. All the parties must agree to arbitrate.
2. The parties must agree upon who will serve as the neutral arbitrator. An experienced attorney or retired judge is usually the arbitrator.
3. The parties must agree on who will pay the arbitrator’s fees. Usually the fees are split equally between all parties.
4. The parties must agree in advance if the arbitrator’s decision will be binding or non-binding. 
   • If the parties agree that the arbitrator’s decision is binding, then the arbitrator’s decision is final. The parties agree that there will be no appeal and no chance to change the arbitrator’s decision, and that all parties will be bound by the arbitrator’s decision.
   • In a non-binding arbitration, the arbitrator can recommend but cannot impose a decision on either party. A non-binding arbitration can still be beneficial because it can give the parties a glimpse into the adversarial proceeding and facilitate a settlement sooner rather than later. So a non-binding decision sometimes leads to an agreed settlement later. If a non-binding arbitration fails to resolve our client’s case, then we are always prepared to file a personal injury lawsuit and go forward with trial to secure the compensation to which our client is entitled.
5. The parties may decide to arbitrate only certain issues of the case.
   • For example, the parties may agree to the value of a case but disagree as to who is liable or at fault. So the parties may arbitrate only the liability issue of the case. Or the parties may agree that one party is responsible for whatever damages the other party suffered, but disagree as to the dollar amount of those damages. So the parties may agree to have the arbitrator decide only the amount of the damages, and assume liability.
6. Sometimes the parties limit the arbitrator’s decision by agreeing to a “high-low” limitation on the arbitrator’s award. Basically, the parties agree in advance on a maximum and minimum award, but the arbitrator is not told of this limitation.
   • For example, the parties may agree that the maximum award is limited to $50,000, and the minimum award is limited to $20,000. Then if the arbitrator’s decision is $65,000 to the plaintiff, the plaintiff would only receive $50,000.  If the arbitrator’s decision is $12,000 to the plaintiff, however, the plaintiff would actually receive $20,000.
7. The parties must agree in advance on how evidence will be presented to the arbitrator. Sometimes the evidence is presented to the arbitrator “on paper,” that is, by submitting documents only. Other times the evidence may include live testimony by witnesses to the arbitrator.  Sometimes there is a combination. If the arbitration evidence is submitted “on paper”, sometimes the parties agree that the plaintiff will submit first, the defendants will submit a few days after that, then the plaintiff will have the opportunity to submit “rebuttal” materials a few days afterward. Other times all parties submit their documents at the same time. Regardless of the schedule on which the materials are submitted, normally each side sends a copy of their submission to all other parties.
8. The parties must agree on what rules of evidence apply. For example, for medical evidence, shall only medical records be submitted to the arbitrator or, as at trial, does the medical evidence have to be presented either by a deposition (recorded testimony under oath) or by the doctor testifying live in person under oath? Sometimes records are submitted with an affidavit signed under oath that confirms the matters stated in the document are accurate.
9. If the arbitration is not done “on paper”, then the parties must agree on who can be present at the arbitration. Sometimes the plaintiff wants to have a family member present for “moral support.” If there is an insurance company that will pay any arbitration award made against the defendant, then the insurance company may want to have a representative attend the arbitration.
10. The parties must agree on any other conditions that should apply to the arbitration.
    • For instance, the parties may agree that the arbitrator should not take into account the “venue” where the case would be tried if it went to court. Or the parties may agree that each side is limited to a certain amount of time to present their case to the arbitrator, such as 30 minutes or an hour. There are a wide variety of restrictions or conditions that the parties may agree to.

What is an arbitrator’s role?

The arbitrator’s role is similar to a judge’s role. The arbitrator hears or reviews the evidence, decides whether the plaintiff is entitled to recover and, if so, how much the plaintiff will recover. The process is similar to a trial but less formal. If the arbitration is done in person (and not “on paper”), then normally the plaintiff’s attorney and the defense attorney will each make a brief opening statement, call witnesses live or by video to testify, and will submit documents. Then each attorney will make a closing argument.

During the arbitration, the arbitrator may also ask the parties and witnesses questions.  After the closing arguments, the arbitrator will usually tell the parties when to expect their final decision. Most of the time the arbitrator puts their decision in writing and sends it to the parties or their attorneys. Often the arbitrator will review the reasons for their decision. Arbitration is usually faster and less expensive than trial.

What role does a personal injury lawyer play in arbitration?

Initially, personal injury lawyers help clients understand the arbitration process, the potential outcomes, and whether arbitration is a suitable option compared to court litigation in a personal injury trial.

Sometimes there is a situation of mandatory arbitration, in which case the parties are required to arbitrate their dispute. This is usually due to a legal requirement or a binding contract arbitration clause that mandates arbitration in the event of a dispute. A personal injury attorney can advise their clients if they are subject to forced arbitration.

Preparation is key, and lawyers gather evidence, interview witnesses, and prepare legal arguments to present the strongest possible case. They also assist in selecting a fair and impartial arbitrator, which is critical to ensuring a just process.

Negotiation is another important aspect, as personal injury lawyers can negotiate with the opposing party before and during arbitration to reach a favorable settlement, potentially avoiding the need for a full hearing. During arbitration hearings, lawyers represent their clients by presenting the case, questioning witnesses, and making legal arguments, similar to what they would do in a court trial. They also ensure that the process adheres to legal standards and that their client’s rights are protected throughout the proceedings.

If the arbitration decision (award) favors their client, the lawyer can help enforce it in court if the opposing party fails to comply. Overall, a personal injury lawyer provides expert legal representation and guidance throughout arbitration to achieve the best possible outcome for their client.

Why is arbitration appealing for personal injury disputes?

Arbitration almost always happens sooner than a trial date; trial dates in Virginia are often set a year to a year and a half from when the lawsuit is filed. You may still incur the same amount of litigation expenses if the parties don’t agree to arbitration until after the discovery process (answering interrogatories, depositions, and expert designation). Those litigation expenses would occur in preparation for trial.

The actual trial would likely cost more than arbitration. In arbitration you don’t have to spend money on jury research, paying your doctors and other expert witnesses to attend trial, and subpoenaing other witnesses to trial. The timing of the decision to arbitrate dictates the litigation cost savings. The arbitrator’s fee will inevitably be less than litigating the case to trial.

What are my other options?

Another form of alternative dispute resolution is mediation. Arbitration is different from mediation. In mediation, the parties decide whether to settle their case with the help of a mediator. The mediator helps to facilitate the settlement negotiations but, unlike an arbitrator, does not make a final decision.

Contact Allen & Allen for a free consultation

Your personal injury lawyer will be familiar with litigation and trial as well as the various methods of alternative dispute resolution.  An experienced attorney will evaluate the pros and cons of the various methods, and will advise when and if a method of alternative dispute resolution is appropriate for your case.  The injury lawyers at Allen and Allen routinely use litigation, trial, arbitration, and mediation to resolve cases, and will advise you of your options. As always, if you have any questions, we are here to help. Call our firm at 866-388-1307 or contact us online to schedule a consultation.