Contracts: Arbitration Clauses

[Cajungaltx]

This is my job - on a daily basis - I coordinate legal disputes across the country using ADR (Alternative Dispute Resolution) methods for a national company. I work non-stop with attorneys, adjusters, and judges... and a whole bunch of other folks.

I love what I do.... amazingly enough... I've been doing it for 9 years now, which to a 35 year old, seems like a LONG time!

There are all types of ways to resolve disputes without going to court. Most of them will have you hiring an attorney, but they can reduce the time/cost/etc that it takes to resolve the dispute.

Because it's what I know, when I created my contract for clients - I put in an arbitration clause.

It states that if there is a dispute between the parties they agree to use binding arbitration to resolve the issue... if you do weddings, (out of state stuff) you'd need to include a jurisdiction as well. Cause you'd hate to have to arb a case in NY when your in TX...

I had one of the attorneys I work with look it over... and make sure it couldn't bite me in the butt later... Cause the devil is in the details unfortunately...

Did you work with an attorney for your contracts, or did you borrow it from here and there?

Do you use an arb clause to keep your legal costs down?

[CaptainTom]

Here and there.

NO arb clause, but you've got me thinking about one.

[w9ctm]

Interesting point of interest Donna. Been thinking about revamping contract. Certainly one to investigate for inclusion. Thank you for the 'heads up'...

[Jeff Lane]

Would you rather buy an ounce of prevention or a pound of cure?

It's a dirty little secret that litigators love the guys who patch their contracts together using a clause borrowed here, a term lifted there, and a couple of "hereins" and "wheretofores" thrown in for good measure, because it means that when things fall apart, there's going to be LOTS of legal fees fighting about it.

It's okay (even a good thing, for the most part) to take the first stab at drafting your contract, because otherwise a transaction lawyer's going to charge you big bucks to try to figure out what it is you think you want. HOWEVER, while I really love taking pictures on my own, when my Sweet Baby Girl (hereinafter, "SBG") gets married, I'm going to hire a professional photographer to record the event. Why? BECAUSE SBG'S WEDDING IS THAT IMPORTANT TO ME!!! (Sorry for shouting.)

If your business is important to you, find a good small business lawyer who will charge you a reasonable rate to review your contracts. Because "multi multa, nemo omnia novit." [See Donna's signature, supra.] (Sorry for the legalese -- it's an occupational hazard.)

[Cajungaltx]

Originally Posted by Jeff Lane

Would you rather buy an ounce of prevention or a pound of cure?

It's a dirty little secret that litigators love the guys who patch their contracts together using a clause borrowed here, a term lifted there, and a couple of "hereins" and "wheretofores" thrown in for good measure, because it means that when things fall apart, there's going to be LOTS of legal fees fighting about it.

It's okay (even a good thing, for the most part) to take the first stab at drafting your contract, because otherwise a transaction lawyer's going to charge you big bucks to try to figure out what it is you think you want. HOWEVER, while I really love taking pictures on my own, when my Sweet Baby Girl (hereinafter, "SBG") gets married, I'm going to hire a professional photographer to record the event. Why? BECAUSE SBG'S WEDDING IS THAT IMPORTANT TO ME!!! (Sorry for shouting.)

If your business is important to you, find a good small business lawyer who will charge you a reasonable rate to review your contracts. Because "multi multa, nemo omnia novit." [See Donna's signature, supra.] (Sorry for the legalese -- it's an occupational hazard.)

Jeff,
You are SUCH an attorney.... lol...
Donna

[Jeff Lane]

You are SUCH an attorney

I tried a 12-step program for that once, but I stumbled after about a step and a half, and haven't managed to sober up yet. At least I'm admitting I have a problem -- that's a start, right?

[Steelsun]

Kind of like Jeff noted: I wrote/assembled mine and then had an attorney look it over. He made a few changes and voila.
Did the same for my consulting/investigations business (where the contract was about 6 full pages).

Well worth the effort, and the attorney is also a client.

[ronocnikral]

we are currently working on our contracts now. I am drafting them, then I am going to have a friend who does contracts for a living and is a lawyer look over them, then I am going to have my cousin who is a lawyer look over them, then we are going to pay a lawyer to help finalize them.

but arbitration is an excellent point. something I will add. So question, and you don't have to give the legal disclaimer if you respond, but is arbitration handled just at a state level or would it help to specify a city also??

my feeling is that if someone has a dispute with me in new york and I am here in texas and I don't feel ethically bound to resolve whatever issue it is, I would tell them to get bent. maybe not wise...

[Cajungaltx]

Conor -
Based on my experience, and I'm not an attorney, I don't have a law degree so please consult your own attorney before you do anything based on the crap I'm going to type next - speak with an attorney.

Got that? TALK TO AN ATTORNEY! ;-)

If someone has a dispute with you in New York, and you have an arbitration clause that says the arbitration must be done in Texas... then they must resolve the issue based on laws in Texas. State laws are different... just ask anyone who has a license to practice in Louisiana... lol.

So definitely include a city. Plus, it's advantageous to you - if you live in Austin, you don't want to have to go to Houston to do your arbitration.

The venue (where something is being litigated) can be a huge benefit to one party... there are areas of Texas where the 'venue' is known to be more liberal.... and more conservative in their awards.

I know alot of people will throw in a clause with AAA (American Arbitration Association) as the company of choice - but for small businesses - I would suggest looking at other National ADR firms. I'm not going to give a list - mainly cause I work for one of the 'other' national ADR companies. The COST of arbitration can be significant - although it's usually MUCH less than hiring attorneys, etc. Actually - the FEE's can be pretty high for a small business, so don't leave that area open for impact on your bottom line. To give you an idea - AAA has a $750 filing fee, plus $200 case management fee - and that's BEFORE you show up to the arbitration.

[ronocnikral]

Thanks! I hear you with the you are not an attorney, talk to a real one disclaimer. So now you can get a screen shot of this and when sue saying you gave me legal advice, you can have proof

yeah, I know arbitration can be expensive. my father-in-laws was in the 6 figure range.

[Jeff Lane]

I'm going to get out the tweezers and pick a nit.

If someone has a dispute with you in New York, and you have an arbitration clause that says the arbitration must be done in Texas... then they must resolve the issue based on laws in Texas. State laws are different... just ask anyone who has a license to practice in Louisiana... lol.

There is a difference between choice of venue clauses (that tell the parties they have to litigate in a particular place) and choice of law clauses (that tell the parties to use a particular forum's substantive law).

For example, you could draft a contract that says, "The parties must litigate all disputes in a court of competent in Gotebo, Oklahoma, and such dispute shall be governed by the laws of Lithuania without giving respect to Lituania's conflicts of laws rules." You'd be hard pressed to find a judge in Gotebo willing to learn Lithuanian law, but that's another story.

The real advantage to litigating in your hometown (assuming you're pretty nice to your neighbors and not reputed to be the town drunk) is that you can use your regular lawyer, you're likely to get a little better shake in a friendly place, and you won't have to pay travel expenses, while making it more expensive for your opponent to sue you in a jurisdiction that is foreign to your opponent.

Putting the tweezers away, now.

[Cajungaltx]

Originally Posted by Jeff Lane

I'm going to get out the tweezers and pick a nit.

There is a difference between choice of venue clauses (that tell the parties they have to litigate in a particular place) and choice of law clauses (that tell the parties to use a particular forum's substantive law).

For example, you could draft a contract that says, "The parties must litigate all disputes in a court of competent in Gotebo, Oklahoma, and such dispute shall be governed by the laws of Lithuania without giving respect to Lituania's conflicts of laws rules." You'd be hard pressed to find a judge in Gotebo willing to learn Lithuanian law, but that's another story.

The real advantage to litigating in your hometown (assuming you're pretty nice to your neighbors and not reputed to be the town drunk) is that you can use your regular lawyer, you're likely to get a little better shake in a friendly place, and you won't have to pay travel expenses, while making it more expensive for your opponent to sue you in a jurisdiction that is foreign to your opponent.

Putting the tweezers away, now.

Good point to pick at with your law tweezers.... I handle ITAC, which is the intertribal arbitration counsel for several states - and you'd be amazed at how convoluted it gets at times... 'sheesh'... accident/incident occurred on business inside a reservation, which has a different set of laws, but if not, then the state laws apply, blah blah blah...PITA at times!

But your right...hopefully they'll have their lawyer look over their contracts before they have clients sign them, of course! ;-)

[Jeff Lane]

You handle intertribal arbitration agreements? Okay, this may be more of a personal question than you want to address in public, but I gotta ask: HOW IN THE HIGH HOLY HECKIE-DURN DO YOU MAINTAIN SUCH A HAPPY DEMEANER -- OR FOR THAT MATTER, ANY SANITY AT ALL?

(Ooops, my "going nutz" is coming out. Back to the medicine cabinet.)

[Cajungaltx]

Originally Posted by Jeff Lane

You handle intertribal arbitration agreements? Okay, this may be more of a personal question than you want to address in public, but I gotta ask: HOW IN THE HIGH HOLY HECKIE-DURN DO YOU MAINTAIN SUCH A HAPPY DEMEANER -- OR FOR THAT MATTER, ANY SANITY AT ALL?

(Ooops, my "going nutz" is coming out. Back to the medicine cabinet.)

I'm sick. Obviously.



I've been doing this for 9 years now - I basically 'grew up' in the ADR environment for lack of a better way to put it. I hired on as a lowly administrative support person....and slowly took over the company. *grin*

That... and I think someone forgot to tell me that it was supposed to BE complicated.

That doesn't mean I don't have bad days - cause trust me... a multi-party file, with out of state clients and adjusters who don't respond to my emails/phone calls... throw in a plaintiff attorney (who I kid you not) tells me that he wants the conference to occur on a Friday, on a weekend that he doesn't have his kids so that he can spend the weekend in where-ever the location is... is enough to annoy the hell out of me. Do I look like a freaking travel agency???



I read a saying/quote... by someone when I was in college that had a profound impact on my life...... Life is 10% action, and 90% reaction... you can't always control what is going on... but you can ALWAYS control how you react to it.