CLM’s Construction Community recently held a webinar entitled “Handling Construction Defect Cases in Arbitration: The Good and the Bad,” which discussed the differences between the trial court and arbitration settings, and why insurers and attorneys might prefer arbitration. Below are a few takeaways from the presentation.
Scott Rembold, Attorney, Rembold Hirschman
Brett Reuter, Senior Claims Examiner, Casualty Claims, Arch Insurance Group, Inc.
John Toohey, Attorney, Bremer, Whyte, Brown & O’Meara, LLP
“Our focus today is on the differences primarily between the trial court setting and the arbitration setting.”
“An arbitration…is a lawsuit without court involvement.… The parties typically agree in contract that they’re going to go forward in an arbitration setting, and usually the arbitration forum and rules are set forth either in the contract or by way in which the matter is directed [JAMS or AAA rules, for example].”
“We used to say, many years ago, that arbitration is cheaper and quicker. These days, I think we’re trending toward not-so-much cheaper and not-so-much quicker for a number of reasons.”
“One of the benefits of taking these construction matters into arbitration as opposed to the courts is, essentially, you get to pick the judge. If the parties can agree on an arbitrator, oftentimes that will be someone with knowledge of the construction industry.”
“We, as lawyers, tend to be overly cautious. In arbitration, what that generally leads to is a discovery process that isn’t that dissimilar from the discovery process in litigation.”
“Now, the arbitrators tend to allow more detailed discovery, allow depositions, and you end up having—not quite as deep a discovery process as you would in litigation, but you are taking more time in that discovery process.”
“If we feel strongly about our case; if we feel the evidence is going to show that our insured is not liable for damages, then we’d be more encouraged to take it to arbitration because, in front of an arbitrator who has knowledge about the case (and we have a say in who’s selected as the arbitrator), we’d feel more confident that the result is going to be what we want.”
“Usually, especially in construction defect, we believe the claims don’t have as much teeth, they’re not backed up by expert reports…but if put in front of a jury, you never know what’s going to happen. In front of an arbitrator, we’d often feel our own experts are going to be heard, the arbitrator is going to have knowledge about construction in general, and so we’d definitely take arbitration over a traditional trial.”