Arbitration and Attorneys’ Fees: A Pandora’s Box

Arbitration is a way to solve legal disputes without going to court. It’s favored by businesses because it’s private, saves time, and costs less. It’s used in education, employment, health care, sports, and other areas. But lawyers don’t like it because it limits legal arguments and doesn’t have as much oversight as the court system. A recent court decision may change that and give lawyers more power to challenge arbitration decisions. The Moser court made a decision about a case involving a claim against a broker and securities firm. The claimant asked for attorneys’ fees under a Florida law. The court’s decision addressed the issue of whether arbitrators have to follow a Florida law that says a party can get attorneys’ fees if they win. Moser wanted to clear up confusion about when attorneys’ fees can be awarded in arbitration. The case involved Ms. Moser, who won her case in arbitration but the panel didn’t say why. The court awarded her attorneys’ fees, but it was later reversed because the arbitration panel didn’t specify that she won on the claim that allowed her to get attorneys’ fees. Ms. Moser took her case to the Florida Supreme Court because the lower courts disagreed on a legal issue. The Supreme Court said that in arbitration cases, it’s important for the panel to explain why they made their decision when there are multiple claims. This helps the circuit court decide if the claimant should get attorney’s fees. However, the Supreme Court also said that the arbitration award doesn’t have to give all the details of how the decision was made. In a court case, it was decided that the legal basis of an arbitration award doesn’t matter when deciding if it should be changed. Another case later said that an award must explain the facts and legal reasons behind it if there’s a question of getting attorneys’ fees. So, the award needs to clearly state the basis for the decision. In the Moser case, the Florida Supreme Court sent it back to the Second District for more decisions. They said it was up to the trial court to figure out if the claimant should get attorneys’ fees and how much. The Second District set two rules for the trial court to follow:

1) The trial court could only give interest on the attorneys’ fee award starting from when the trial court first decided the claimant should get fees, not from the arbitration award.

2) The trial court couldn’t include attorneys’ fees for fighting over how much the fees should be, but they could include fees for fighting over whether the claimant should get fees.

The big issue now is how these cases might affect the final decisions of arbitration awards in both federal and state cases. It’s not clear if a panel ignoring state or federal law would be a reason to appeal an award. The Florida Supreme Court hasn’t said whether a case from the Eleventh Circuit Court of Appeals would apply to a state arbitration case. Before the Moser and Kesler decisions, arbitrators didn’t have to explain their decisions. But now, they have to give a reason for their decision when it comes to attorneys’ fees. This could lead to more appeals of arbitration cases, as attorneys can argue that the arbitrators didn’t follow the law. This change might make arbitration less appealing as a way to solve disputes. The “manifest disregard of the law doctrine” says that arbitration awards can be overturned if they ignore the law. In a case involving an employee and a brokerage firm, the court said that arbitrators have to follow the law unless the parties agreed not to. This means that even if the parties agree to arbitration, they still have to follow the law. In a court case, it was decided that errors made by arbitrators in interpreting the law or finding facts do not automatically overturn their decision. However, if arbitrators clearly ignore a well-defined legal principle, it could be considered a “manifest disregard of the law.” This doctrine was first applied in a Supreme Court case and can apply to arbitrations under both federal and state laws. But if the parties in a dispute don’t specifically agree on which law applies, arbitrators may not have to consider certain legal principles in making their decisions. In the Moser case, if the parties didn’t agree on which law applied, the arbitrators could make a decision based on fairness rather than a specific law. But the court said that in cases with multiple claims, the arbitrators have to identify the legal basis for their decision, which could make their decisions more vulnerable to legal challenges. The Florida Arbitration Code is a set of rules for resolving disputes outside of court. If someone wants to challenge an arbitration award, they can only do so if there was fraud, bias, or other misconduct involved. The courts generally give a lot of weight to arbitration awards because the parties chose to use this method to save time and money. The arbitrator’s decision is usually final and can’t be questioned by the court. In a court case, the evidence has to meet certain legal standards to win. But in arbitration, those standards aren’t as strict. So, just because the evidence might not be enough to win in court, doesn’t mean the arbitration decision can be overturned. Arbitration awards are usually final, and arbitrators don’t have to explain their decisions in detail. It’s important for lawyers and their clients to understand the differences between arbitration and court, especially since many contracts now require arbitration for disputes. If a lawyer is involved in an arbitration case, they need to know the rules and laws that will apply. They can make their own rules or agree on some, but they must be clear about what the arbitrator can decide. Lawyers should use evidence and legal arguments to support their case. They should also ask for a preliminary meeting to set up a schedule for the hearings. If they need to reschedule, they should have a good reason and provide evidence if someone is sick. Make sure to communicate any requests for a continuance in arbitration as early as possible to avoid upsetting the arbitrators. Consider hiring your own court reporter for the best quality record of the proceedings. Be aware of the arbitrators’ fees and any potential additional expenses. Understand the grounds for appealing an unfavorable arbitration award. In some cases, a court may review the arbitration decision if it seems to disregard the law or evidence, even if there’s no written explanation for the decision. This could lead to increased scrutiny of arbitration awards in the future. The decision in the Moser case will make arbitration take longer and cost more money. It will also make the arbitration process more formal, like a regular court case, which takes away the benefits of arbitration. Arbitration can be a faster and simpler way to resolve disputes. Parties can choose their own arbitrators and the process can be more informal. However, there are limited grounds for challenging an arbitration award. In some cases, such as disputes related to transportation workers, arbitration may not be required. Two lawyers, Frank Nussbaum and Meah Rothman Tell, are certified mediators and arbitrators in Florida. They are experts in resolving legal disputes and have received advanced degrees in law and business. They are also involved in teaching and contributing to legal publications.

Source: https://www.floridabar.org/the-florida-bar-journal/arbitration-and-attorneys-fees-a-pandoras-box/