The Legal Beat: Do You Really Want To Arbitrate Your Dispute?

This article will discuss the pros and cons of having your music industry dispute submitted to binding arbitration instead of a court or jury trial. In the past, I have been a big proponent of binding arbitration, but some recent experiences have led me to reconsider whether I would recommend it, depending on the circumstances.

What is a binding arbitration? It is like an informal trial usually conducted by a retired judge in an office instead of a courtroom. There are two ways a dispute ends up in a binding arbitration: Either it is required by a provision in the contract in dispute or the parties stipulate (agree) to it.

The advantages of a binding arbitration are:

• Your dispute will usually be decided sooner than with a trial. You will have more input as far as the hearing date. And you will usually have a firm date for the hearing as opposed to a trial which can often be continued.

• You will not have all the strict rules of a trial, such as certain rules of evidence. You will have a more informal atmosphere. Many times, disputes during the pendency of the arbitration can be resolved with a conference call with the arbitrator. And many communications between the arbitrator and parties can be done by email.

• You will be able to choose the arbitrator by agreement with the other side. If the parties cannot agree on an arbitrator, then the arbitration company will have procedures to choose one.

• If you win, you can recover your attorney fees and costs, as long as the contract in dispute provides for it. The vast majority of arbitration provisions in contracts do contain such a provision.

And here are some possible disadvantages of a binding arbitration:

•You have to waive your right to appeal the decision of the arbitrator, absent such things as fraud or an undisclosed conflict of interest of the arbitrator.

• The costs can be quite expensive. There is the fee of the arbitration association and the fees of the arbitrator, which can run $500 an hour or more. Conversely, the cost to file a lawsuit in L.A. County Superior Court is only $435. I have recently seen arbitration companies demand $40,000 or more before a hearing.

• You won’t have a jury to decide your case. Many attorneys feel that if they represent the plaintiff, they may get a better result with a jury, especially if they are seeking punitive damages.

• You may not get to take advantage of certain strict rules of evidence that you would with a judge or jury trial.

There are a number of popular arbitration companies such as JAMS, ADR, AAA and California Lawyers for the Arts. Before you agree on a particular arbitration company, make sure you are aware of the costs and rules that they follow. Also, be very careful when choosing an arbitrator by doing adequate research. You can usually find reviews of retired judges who conduct arbitrations.

All the factors discussed above should be carefully considered before you agree to an arbitration provision in your contract or before you stipulate to binding arbitration.

Glenn Litwak is a veteran entertainment attorney based in Santa Monica, CA. He has represented platinum selling recording artists, Grammy winning music producers, hit songwriters, management and production companies, music publishers and independent record labels.  Glenn is also a frequent speaker at music industry conferences around the country, such as South by Southwest and the Billboard Music in Film and TV Conference.  Email Litwak at [email protected] or visit glennlitwak.com.

This article is a very brief overview of the subject matter and does not constitute legal advice.