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As a young executive (which you can read as “many, many, years ago”) at the American Arbitration Association I recall making a presentation to a law firm on why they should recommend to clients that they include arbitration agreements in their contacts. I enthusiastically extolled the many benefits of arbitration, such as speed and simplicity. When I was done, a senior partner said “Son, we are litigation attorneys. We bill on an hourly basis. Surely you’re not suggesting that we recommend a fast, simple process to our clients?” I recall being taken aback at what I perceived to be a clear ethical breach of an attorney’s obligation to do what’s in the client’s best interests. I don’t remember my retort, but it wasn’t very effective. Today, my answer in an instant would be “Because it’s good business and your clients will insist on it. And don’t call me Shirley.”[1]

  

Good for the Goose

A recent Miami Herald article “Arbitration Cases a Growing Revenue Stream for Law Firms”noted that “Twenty years ago, arbitration was considered a niche area of the law. Today, hundreds of local attorneys practice arbitration.” The story stated that the growth in arbitration’s acceptance at law firms was fueled by growing court dockets and delays, as well as high local turnover in the judiciary. Added to this is client familiarity with arbitration. In other words, it’s good business for law firms to embrace arbitration, rather than fear it.

 
Good for the Gander

Another sign of growing acceptance of arbitration by law firms is that they now use arbitration to resolve disputes among themselves. Earlier this month two former partners of Milberg LLP brought a motion to compel arbitration in New York of a compensation dispute they have with the firm following their departure (see Kartalopoulos and Pollack v. Milberg LLP, No. 650359/2014 (Sup. Ct., NY Cty., Feb. 3, 2014)). The arbitration arose from arbitration clauses contained in both the employment and partnership agreements used by the firm.

The case also highlights a point I’ve made many times before in this blog, that the Federal Arbitration Act, state arbitration laws, and the courts are in synch on promoting the goal of arbitration speed. Here the petitioners invoked article 75, section 7503(c) of New York’s Civil Practice Law and Rules, which requires that “unless the party served applies to stay the arbitration within twenty days after such service he shall thereafter be precluded from objecting that a valid agreement was not made or has not been complied with and from asserting in court the bar of a limitation of time.” And, this part of New York’s arbitration law has been held to be a statute of limitations.[1] In other words, “If you get served with a demand for arbitration, and you want to move in court to stay arbitration on the grounds that there is no arbitration agreement, or the arbitration agreement has not been complied with, or that the statute of limitations has expired, you’ve got twenty days to do so.”

 

Just Good Business

Much has changed since I started out in the arbitration field back in the day. The most compelling change in my view has been the mainstreaming of arbitration by business, the courts, the legislative branch, and society in general. On the other hand, some things are still the same, so don’t call me Shirley!


[1] Apologies to the Airplane! movie, which first used this line.

[2] See Woodcrest Fabrics, Inc. v. Taritex, Inc., 92 A.D.2d 52 (App. Div., 2d Dept. 1983).

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