What does it cost for AAA, JAMS, or CPR to administer an arbitration case and how do the initial filings vary?

• Author: Leiby, Larry R.
• Position: Real Property, Probate and Trust Law

Domestic arbitration organizations such as AAA, (1) JAMS, (2) and CPR3 publish rules that the arbitration organizations use in administering construction arbitration proceedings. Arbitration organizations charge fees for arbitration administration to compensate the organization for the services provided. This article is limited to commercial and construction cases. The organizations offer different pricing for services and procedures when using expedited rules, consumer rules, employment rules, or rules for cases to be decided on documents only.

The arbitration organizations have spent considerable time to make it easy to proceed under their rules, which are fairly comprehensive. However, it is amazing how many parties and attorneys have only a foggy concept of what the administrative costs for a case will be. This is partly because of honest ignorance about the administrative fees. As the old saying goes, knowledge is what you get when you read the contracts; experience is what you get when you don't.

CPR has published rules for a non-administered, or ad hoc, arbitration. The CPR nonadministered case rules suggest that there are services that CPR can provide to aid with the arbitration (for a fee per service requested) without full CPR administration. In July 2013, CPR published an additional set of rules for arbitration in which the case is to be fully administered by CPR. A fully administered case has administration or case management fees, as would be expected when administrative case management services are being provided.

Some lawyers may choose to have their arbitration administered by an arbitration organization and utilize the case management services the organization provides. However, some lawyers choose to administer their case themselves, without an arbitration organization providing administration services. In the ad hoc (nonadministered) arbitration, the lawyers and parties provide--or to some extent the court upon motion provides--the administrative services that the arbitration organization would provide in an administered case (e.g., clerk/repository of filings and administrative papers, provider of list of vetted potential arbitrators, collector of arbitrator fees (which can be a sensitive issue), decision-maker on certain administrative issues that may come up during the case, provider of hearing room, etc.), and perhaps provide a decision on consolidation of arbitrations.

The primary reason that lawyers may choose nonadministered arbitration is to save the fees charged for the administration services. Without arbitration organization, administration judicial intervention may be invoked to address some of the services otherwise provided by an administering organization. Ad hoc administration, however, risks the expense and delay of such court intervention for tasks that would typically be within the scope of the administrative services provided by the arbitration organization. Also, it is typically faster to obtain such decisions by the arbitration organization rather than having to file suit in the midst of the arbitration process with a motion, effect service, have a judge assigned, and obtain a hearing date on the issue needing administrative decision.

One of the major publishers of form construction contract documents, ConsensusDocs, has made a change to its contract documents to allow the parties to choose among the AAA, JAMS, or another arbitration organization's rules. The new document also requires an affirmative choice by the parties as to whether one of those arbitration organizations will administer the case. Providing these choices makes the contract drafters consider these decisions. Kudos to ConsensusDocs for noting the differences.

Case Administration: Differences Between AAA, JAMS, and CPR

* AAA Rules--Rule R-2 of the AAA Construction Industry Arbitration Rules (2009) provides that the parties authorize the AAA to administer the arbitration.

* JAMS Rules--The JAMS Engineering and Construction Arbitration Rules (2009) do not require that JAMS be the administrator of...