Arbitrations have been on the rise for several years, in part because of the convenience it affords the parties and the introduction of arbitration clauses into the language of almost every contract. The pandemic has sent the use of this mode of dispute resolution into overdrive, in large part because of its speed and relatively easy transition to a virtual setting. While arbitrations were already popular pre-pandemic, we expect the increased attraction of “work from home” arbitrations to continue.
We often hear from clients with arbitrations that preparing for them is easier than preparing for a jury trial. In addition to the convenience factor, the expectation is that arbitrators can often be more reliable and more analytical decision makers than juries and possibly even judges. However, a growing body of research shows that – surprise, surprise – arbitrators are human, too. We have learned from three areas of research, described below, that there are many similarities in how arbitrators, judges and jurors make decisions. What does this mean for counsel preparing for an arbitration? It means preparing for an arbitration should not look all that different from preparing for a jury or bench trial.
Arbitrators make decisions like judges do.
One way of understanding arbitrator decision-making is the most direct route – looking at their decisions and explanations for those decisions. Judicial decision-making has been the subject of more empirical research to date than arbitral decision-making. Because many arbitrators are retired judges,, judicial decisions can help to provide a useful reference point.
Comparisons of judicial and arbitral outcomes in many types of cases have produced inconsistent results, with complainants in arbitrations faring better, the same and worse than plaintiffs whose case outcomes were determined by judges. However, an analysis of the content of judicial opinions and arbitral awards in racial discrimination cases revealed notable similarities in how judges and arbitrators explained their decisions (Chew, 2011). Like judges, arbitrators relied on established legal standards and precedents, despite arbitrators not being bound by precedent. Both decision-makers also followed similar decision-making paths, in that they similarly weighed certain types of evidence and rendered comparable decisions based on those evaluations.
While this analysis was limited to racial discrimination cases, there is no reason to believe those decision-making paths would change in other types of cases. The arbitration and courtroom procedures were also quite similar (similar procedural rules, roles of counsel, discovery efforts and briefings). Arbitrations are beginning to look like trials and, as the author concluded, “arbitrators are beginning to sound, think and act like judges.” Even though the roles and rules are different between trials and arbitrations, the daylight between them is shrinking.
Arbitrators respond to arguments like jurors do.
Through a series of surveys, analyses and experiments with arbitrators, others who study and participate in arbitrations have found that additional psychological processes that heavily influence judicial and juror decisions also influence arbitral decisions (e.g., Sussman, 2013 & 2015). For example, arbitrators are also often intuitive thinkers, making decisions (and being confident in those decisions) based on what “feels” right rather than what is factually right (Franck, et al., 2017). In another example, attitude change and persuasion work the same way for arbitrators, judges, juries and pretty much any other human being. If an arbitrator has a long-standing belief about the world, simply providing information to change how they think will not be enough. Counsel will need to make them feel comfortable or, even better, motivated to change how they think.
Another critical element of arbitral decision-making is the importance of telling a good story. Many arbitration practitioners have written about the impact a good narrative can have on how an arbitrator thinks about a case (e.g., Sussman, 2013; Jhangiani, 2015). Presenting evidence in a compelling way that includes the what, where, how and why is just as important in helping arbitrators make sense of the evidence as it is for jurors and judges. This is vital for respondents, who are often tempted to focus on tearing down the complainant’s narrative. Respondents should resist that temptation and develop their own affirmative story that includes their version of the what, where, how and why. A complete, realistic, compelling story connects the dots in the way counsel believes they should be connected, and arbitrators need help making those connections like anyone else.
Arbitrators can make the same cognitive errors as everyone else.
Another important component of understanding arbitrator decision-making is being familiar with the unconscious mental shortcuts that human brains take when evaluating new information and making decisions. Psychologists call these “cognitive heuristics,” and there are a lot of them, some more relevant to legal decision-making than others. Under normal circumstances, cognitive heuristics are very useful tools – they provide valuable assistance in quickly making sense of new information. Under high stress circumstances, however, these heuristics can cause trouble.
The shortcuts, which are usually quite efficient, become more prone to error under stress and lead to poor decisions (such as how to weigh evidence, assess witness credibility, etc.). In the world of dispute resolution, this is particularly relevant to arbitrations because counsel tend to provide too much information in arbitration hearings – too many witnesses, too many exhibits, complex or compound arguments and overly long submissions. Experienced lawyers know not to overload jurors and even some judges, but they often overestimate how much information arbitrators can process in one brief or hearing day. Arbitrators who are overloaded will be more reliant on these more error-prone heuristics and simple decision-making processes. The result is suboptimal decision-making based on flawed under-reliance on some information and over-reliance on other information (Kahneman, 2011).
Biased hypothesis testing is possibly the most well-known mental shortcut and has received recent attention in the popular press. We all use our pre-existing beliefs to help us quickly evaluate new information. If new information matches what we already believe, we accept it as true. If it does not match, we reject it as false. This is a powerful phenomenon that affects virtually all incoming information for each of us, and arbitrators are no exception. Arbitrators see new evidence through the lens of what they already think they know – including beliefs they may have developed about the case based on pre-hearing submissions and opening statements. Crafting a compelling and persuasive narrative early in the proceeding will have a long-lasting impact on how arbitrators will see a case, while later evidence will constantly be compared to those early but enduring opinions.
Other relevant mental shortcuts that affect arbitrator decision-making are anchoring (a reliance on other numbers – relevant or not – when trying to assess the value of something, such as a claimant’s alleged loss), hindsight bias (an increased likelihood of finding liability when a negative outcome is known than when it is not known), egocentric bias (overestimating one’s own ability compared to others in skills like evaluating witnesses, efficiency and rendering unbiased or impartial decisions) and others (Franck, et al., 2017).
What does this mean for counsel?
Does this mean arbitrations are just as unpredictable as jury or bench trials? Yes and no. To the extent that these mental shortcuts and other biases make decision-makers unpredictable, yes, arbitrators are just as unpredictable as other triers of fact or law. However, an understanding of how these triers of fact and law arrive at their decisions makes that unpredictability more manageable. But it takes some advanced planning, thinking differently about arbitrations and research to get there. Here are some tips for preparing for arbitrations:
- Get to know the arbitrators. Learn as much as possible about who they are and how they make decisions to better understand those filters and biases that will affect how they evaluate the evidence. Consider these issues much like you would approach voir dire in a jury trial. What is it about their backgrounds that may have a nexus with the issues in their case and how could that affect how they view the evidence? Such research on their background might include their political party or leanings, their previous firms and practice and current affiliations, at minimum.
- Utilize mock arbitrations. Attorneys frequently “mock” their cases before a jury trial. Mock arbitrations can similarly provide invaluable insight into how the arbitrators will likely see your case. Ideally, mock arbitrations are set up by someone other than counsel to mask the party conducting the research and include multiple mock arbitrators to maximize the perspectives gathered in the exercise.
- Prepare as though you are trying your case to an overeducated jury. With arbitrators, you can assume they’ll have more legal training than jurors will have (unless your trial is in Washington, D.C., where attorney jurors are common), but you cannot necessarily assume a more analytical decision-making style. Your arbitrators may or may not have any specialized or relevant experience but, even if they do, do not assume this will help you. Always educate before you advocate and go slowly, especially the first time through the material.
- Tell a good story. The importance of developing a compelling narrative cannot be overstated. Begin identifying, testing and refining your themes early on. Build those themes into a narrative; then, incorporate that narrative into briefs, witness statements and live testimony, opening statements and closing arguments (if permitted).
- Write, speak and show. Information is better if received multiple times, in multiple ways. Combine briefs, oral presentations and visuals to educate the arbitrators, reinforce important evidence and illustrate key themes. Make sure to prepare and use visuals at all stages of the process.
- Simplify, organize and streamline. The less cognitive stress the arbitrators are under, the more thoughtful their decisions will be. Simplify the language you use in the hearing. Steer fact and expert witnesses away from too much jargon. Utilize checklists, flow charts and decision trees to guide decision-making. Organize your briefs and arguments into sections with headers and let the arbitrators know where you’re going next. Remember that the arbitrators are learning something new in every arbitration and aren’t superhuman in their ability to do so. Help them every chance you get, and they will appreciate it.
Chew, P. (2011). Arbitral and judicial proceedings: Indistinguishable justice or justice denied? Wake Forest Law Review, 46, 185-208.
Franck, S.D., van Aaken, A., Freda, J., Guthrie, C., Rachlinski, J.J. (2017). Inside the arbitrator’s mind. Emory Law Journal, 66, 1115-1173.
Jhangiani, S (September 17, 2015). Keep it Simple. Keep it Interesting., Kluwer Arbitration Blog. http://arbitrationblog.kluwerarbitration.com/2015/09/17/keep-it-simple-keep-it-interesting/
Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux.
Sussman, E. (2015). The arbitrator survey – Practices, preferences and changes on the horizon. The American Review of International Arbitration, 26(4), 517-538.