During the late 20th century, Americans found out a way to seek relief from litigation that was expensive as well as time-consuming. The Fortune 1000 companies were the first to walk on that path. Civil litigation was affordable only for the rich, but even they didn’t want to get into that. Therefore, these leading companies decided to opt for ADR or alternative dispute resolution, especially mediation and arbitration. ADR is known for its speed, economic confidentiality, relationship preservation, and self-determination. According to a recent survey, 83% of the Fortune 1000 companies have used arbitration for the last three years. The main benefit of arbitration is cost savings. However, is it really the economic alternative to litigation? It hasn’t been unanimously accepted. Is it more expensive or less expensive? How much does it cost? Find out.
Cost Elements of Arbitration
Arbitration costs have various elements that need to be taken into account. If you want to review them most easily, you need to contact the AAA – American Arbitration Association and JAMS – Judicial Arbitration and Mediation Services. Both of these organizations are fully functional, providing all services, as well as highly successful. If one wants cheap arbitration, they need to take the help of a senior attorney.
However, you can’t expect the full range of support, like the one you can receive from a large organization that deals in arbitration services. The potential costs that need to be considered are filing fees, hearing fees, administrative expenses, administration fees, fees of the arbitrator or mediator, hearing room rent, fees of the attorneys, and discovery costs.
In cases of a court filing, the fees for filing a case are a few hundred dollars for a party and can be waived off if a party is not financially strong. Compared to that, fees regarding filing for arbitration can be a considerable amount and can differ from case to case, depending on the controversy factor.
The commercial fee in the case of the American Arbitration Association starts from an initial filing amount of $925. Plus, there is a hearing fee which usually stands at $800. These amounts can go as high as up to $7700 as filing amount and $8450 as a hearing fee, particularly for claims that are up to an amount of $10 million. Above that sum, counterclaims are not charged, but 0.01% of the claim is charged as the fee.
In comparison to that, JAMS is known to use a simpler model. It charges a filing fee of $1750 for two-party cases while a filing fee of $3000 is charged if there are three or more parties. The fee for counterclaims is $1750. Additionally, 12% of the arbitrator’s fees are charged as an administration surcharge.
Employment Arbitration and Consumer Arbitration
As far as employment arbitration is concerned, the fees are on the lower side. The filing fee that an employee bringing a claim needs to produce is $300, while the employer has to pay $1900. If an employer brings a claim, they need to shell out a fee of $2200, while the employee has to pay nothing. The way JAMS deals with employment arbitration is almost similar to the way it works on labor arbitration.
However, the AAA has a few specific rules laid out in case of grievance arbitration. According to the rules, a party needs to pay $275 as an initial administrative fee. For consumer arbitration, consumers have to shell out a filing fee of $200 for initializing their case.
In case the business happens to file the claim, they don’t have to pay a single penny. For a decision without hearing, $200 is the business filing fee. $300 is the fee for one arbitrator and $425 when there are three arbitrators. In case of no hearing, the arbitrator charges are $1500, whereas the charges increase to $2500 when there is a hearing.
What are the Charges of Arbitrators and Mediators?
As per a current survey, the arbitrators’ fee lies between $375 and $1125 for an hour. The charges usually stand at $15,000 for a day. Several arbitrators work as mediators as well and can alter the rates if they have to devote more time. Mediation rates start from $300 and can go up to $825. This is the per-hour charge. For a day, mediators can charge a fee of more than $12,000.
Coming up with an exact assessment of your arbitration expenses is tough. Your choices to preserve the speed and economy of arbitration matter the most.