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  • Neil Salters, Esq

Why Not Arbitrate?

It seems to me that just a short ago, arbitration was an equal partner of mediation in any ADR program for BI/PI claims operation. Over the years however, arbitrations seem to have fallen into disfavor for several reasons which we need not detail here. Today, I think the time is right to make binding arbitration a viable tool in any claim/litigation management arsenal. We all know that there will be a virtual tidal wave of cases rushing to resolution once the various judicial systems figure out a way to handle the current situation or we return to normalcy naturally. When that happens, everyone in our industry will be scrambling to figure out best practices. Why wait. There are many good reasons to resolve your cases now and in a very effective manner. Binding arbitrations can work for you in many ways.

First, you’ll eliminate the risk of “Nuclear Verdicts”. We in the defense community have been bemoaning the rise of what used to be called simply runaway verdicts. In fact, a verdict does not have to be in the tens of millions to qualify as runaway. We have all experienced that horrible feeling when a jury returns a multiple 6 figure verdict on a case that we just know is fraudulent (and maybe we even have the video to prove it)! That said, industry statistics clearly illustrate that juries are returning astronomically higher verdicts every year with no end in sight. These verdicts are simply company crippling and career ending. Binding arbitrations eliminate that possibility completely.

Don’t get trapped into thinking you can enter into a cap arrangement at trial, somewhere down the road. In my experience, I have found that hi/lo caps that are acceptable to plaintiff’s counsel are generally higher on the eve of trial than they would have been or were previously, in the course of the litigation. There are a variety of reasons for this, but especially if plaintiff thinks he or she has a “good” case, those caps will be much more difficult to swallow or justify to home office, if available at all. Do yourself a favor and lock them in early and lower!

Quite simply, you will stop the interest accrual. OK, so maybe your thinking that since we’re not sure when if ever, the civil jury system will be back on track and that we can simply put off having to deal with serious resolution strategy for a long period of time. Well, if you are sitting on a case where the plaintiff has already obtained summary judgment on liability, you have a very serious interest accrual problem on the horizon, particularly if you have a large litigated claim population.

Additionally, some of the best reasons to arbitrate are well known and in general can be summarized as: the ability to get all your evidence in at little or no cost, you’ll cut off defense litigation costs at a fraction of their trial prep or actual trial levels and you will be in relative control of the outcome.

If you move your files early, you will cut off negative development, eliminate litigation costs as well as the uncertainty of future medical treatments (anyone with any time in the business will tell you that one surgery often leads to another) and avoid the uncertainty of a jury verdict.

Once you decide to engage in arbitration, develop and plan a program utilizing arbitrator(s) you feel comfortable with and make sure that your ADR Program is populated with sufficient numbers to provide the most significant positive effect on your claim population. Go in with the understanding that not every case is going to turn out exactly as you wish, but it is the net effect that will drive a better bottom line for your company long term.

Remember also, that it is not always necessary to use an attorney as your arbitrator. Depending upon how you set your program up as well as your available internal talent, you can be quite successful using your own claims personnel.

If you need any assistance organizing, setting up or running your arbitration program, please consider the services of, or if you need a solid arbitrator that will seriously consider all aspects of your case, there are many good arbitrators to choose from and if you think I can be of service, please feel free to reach out to me anytime.

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