Costs clarity is the way forward for arbitration
An engineer changed my approach to arbitration. I was acting for a party and asked him for an expert report. He wanted to know first the limits of cost and time. He’d complete the work to whatever level of sophistication was possible within those parameters. That may not sound radical, but it was different from what many lawyers were doing. In setting out, for example, to investigate every issue, or process every document, they could run out of time or over budget.
Lawyers have never before been under so much pressure on costs, particularly in shipbuilding and energy disputes. Take, for example, delay and disruption in maritime or energy construction projects, and complex claims in offshore exploration and production. By the time I left my former firm almost three years ago, we’d adopted a project management approach. Because it’s hard to predict how disputes will unfold, any total cost projection is speculative. Instead, we’d identify stages with target dates, list the likely activities, and recommend a budget for each stage. That budget was reviewed regularly, the frequency depending on the level of activity, sometimes weekly. We alerted the clients if it might be exceeded. This enabled us to consult them about whether to increase the provision or revise our plan.
From what I hear anecdotally among London lawyers, such planning has to be more rigorous than ever. Firms are looking at alternatives to straight hourly rates, and are often agreeing fixed fees for a scope of work. If this is what clients are demanding of lawyers, tribunals must help them achieve this. We should keep control of procedure so that, where reasonably practicable, costs aren’t wasted and are predictable.
I liked clarity; it was helpful if the tribunal described its approach at the outset. This might entail, for example, detailed pleadings supported by documents. The key is to encourage an early focus on the issues that matter: to identify where the money is. A pleading might be supported by initial expert evidence, for example as to scheduling in delay claims. Although it’s important to avoid unnecessary frontloading of costs, simultaneous exchange later can mean that issues remain undefined for too long. There may be regular meetings between experts, from an early stage, with reports limited to issues that can’t be agreed. It’s not unusual to require disclosure of documents relied on by each party, followed by targeted requests of the other. With the proliferation of electronic documents, we must also help parties in devising a process of search and preparation that balances proportionality with justice, and in defining search terms. In these cases, tribunals should take their lead from courts such as the TCC, where tight but realistic timetables are adhered to. The aim at the earliest possible stage is to set a hearing date and construct a timetable by reference to it.
These are personal reflections, based on experience of handling shipbuilding and energy cases as a solicitor. I offer them as a contribution to wider debate about how arbitration can be used, within current legislation and rules, to help people put disputes behind them and get on with their business. There must always be a balance between this and a fair hearing. If tribunals start from the assumption that lawyers are working to stringent plans and budgets, that will inform how the balance is struck.
David Steward, arbitrator with Arbitrators at 10 Fleet Street