Our New Jersey courts conduct mandatory non-binding arbitration of most personal injury actions as well as book accounts, PIP claims and certain screened contract and commercial actions. Although we solicit voluntary submission of any civil claim to arbitration (R. 4:21A-1(b)), hardly anyone takes advantage of the opportunity.
Many practitioners view arbitration as a necessary but unproductive procedure which requires ticket punching on the road to resolution by settlement or trial. Although 98.5% of all civil actions are settled without trial, about 73% of all cases arbitrated in the court system are reinstated to the trial calendar by the filing of a trial de novo request along with payment of a $200 fee. Even application of the Offer of Judgment rule to arbitration results does not seem to influence the parties to resolve their cases once the arbitration award is made.
Prior to hearing, parties are to exchange their abbreviated statements of factual issues as well as documentary evidence. Arbitration procedures are held in the courthouse. Although the Evidence Rules are relaxed and presentation of information usually encompasses written reports or summaries to concisely present asserted facts and legal positions, the abbreviated procedure provides the day in court that most litigants will not otherwise see.
The arbitration process was utilized in the middle ages in major commercial markets to provide expedited resolution of mercantile disputes. Arbitration dates back at least to Aristotle, who noted: "The arbitrator looks to what is equitable, the judge to what is law, and it was for this purpose that arbitration was introduced, namely, that equity might prevail." (Aristotle, "Rhetoric", Book 1, Chapter 13).
The local culture of various vicinages has perverted the formality of this adjudication process into either a settlement conference or a quest for the compromised value of a case with best intentions of "helping parties resolve their cases".
Both plaintiffs and defendants are concerned about an extreme result because it creates a misleading expectation for either the insurer or the claimant. Since arbitration is intended by either statute or rule to substitute for the judicial process, the arbitrator must call the case as either "no cause" or "full value". To do otherwise not only demeans the process but creates a mediocre system that has no genuine affect on the qualify of resolution of claims. Because the arbitration proceeding is conducted by a lawyer who has been recognized for his or her skills as having the experience to conduct this important procedure, the parties expect and deserve a result which represents either "full value" or "no cause". Counsel are certainly able to use a real predictive arbitration outcome to settle their case even if they have actively advocated their contrary position in the proceeding.
Some have argued that the award should be presented to the lawyers outside the presence of clients. It is argued this is preferable so that the arbitrator can communicate constructive criticism to the lawyers that might be helpful for preparation of a case even though under Best Practices further formal discovery is not permitted absence exceptional circumstances, R. 4:24-1(c). Arbitrators are commended to express thoughts to the lawyers outside the presence of their clients after the clients have had the opportunity to hear the award announced.
Citizens have always been suspicious of government and, in particular, courts. Paul Newman's portrayal of a trial lawyer in "The Verdict" is the model for what many think really happens in courts. When the arbitration award, which in most cases will be the only appearance of the client in court, is made to the lawyers outside the presence of the client, suspicions abound.
Although not advocated, if the court were to sanction a settlement conference program utilizing experienced lawyers it should describe the program as such. It is extremely important that arbitrators maintain the professionalism and solemnity of an adjudicated process in order that confidence in the system does not decline even further. Mandatory non-binding arbitration will be strengthened by adherence to the adjudicative model.
This article was published in "New Jersey Lawyer" magazine in May 2003.