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Significant Differences in Hourly Rates and Billing Practices of a Tribunal

Friday, January 31, 2025 6:24 AM | Anonymous


Do you see it as a problem when there is a significant difference in the hourly rates and/or higher amount of billing hours among Tribunal members on the same arbitration case? Does this have an impact on the process and how counsel and parties view arbitration in general? If you deem it to be a problem, what is the solution?

What are your thoughts?

Comments

  • Sunday, February 02, 2025 8:17 AM | Michael A. Levy
    Where there are significant differences in billing rates on a panel of arbitrators, you have to wonder if the parties are wondering whether compensation is related to competence and are "playing" to the higher paid panel member(s). After all, why does Jane Doe get $750/hr. and John Doe gets $400. How can they be equal in ADR skills? Certainly, these kinds of differences must play into arbitrator selection in the first place. If someone is as good and ADR professional as it gets, but charges $250/hr because s/he believes in providing a public service, the likelihood of being selected to serve is clearly diminished. It's a problem to which I'm not sure there's a good answer except perhaps something like taking the average of three rates to get a blended rate for the panel and each arbitrator receives the same compensation.
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    • Sunday, February 02, 2025 8:48 AM | Steven Gerber
      I recently was privileged to serve on a three member panel in a relatively complex AAA Employment Rules arbitration (not involving discrimination or retaliation claims but rather alleged breach of an employment and related shareholder agreements. There was a modest disparity in our three hourly rates.

      I do not think it made a difference to the parties’ counsel. Our Panel Chair did the lion’s share of the drafting of our lengthy award, although I drafted our rulings on a number of prehearing issues and discovery disputes. So I know that the Chair billed the most time, I billed the next highest amount and our third member less than me.

      I don’t think the modest disparity in our respective hourly rates resulted in any different approach by the parties’ counsel.
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    • Sunday, February 02, 2025 9:15 AM | Denise Hammond
      The difference in rates is fine; the parties knew the rates when they made their selection. The parties should understand why panel members bill for a different number of hours. One panelist may write the Award - that's usually the reason for any disparity.
      Usually, the pre-hearing and hearing times are fairly similar. Another issue is when one panel member wants to do independent legal research on an issue. I think the parties should be given a chance to brief on the issue first, as they are likely more intimate with the legal issues and the legal factual interface. It just seems more efficient, and lets the parties control the costs. If additional fees will be incurred, the parties need to know ahead of time. Whenever I chair a panel, I like to track the fees and deposits to make sure the parties don't get a surprise.
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    • Sunday, February 02, 2025 12:21 PM | Antonio García Padilla
      I agree with Mr Levy. The differences in rates does project aspects that might not relate to competence, including public service commitments. The averaging could be a solution.
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    • Sunday, February 02, 2025 12:54 PM | Raoul Drapeau
      Having a mixture of widely-different rates on a panel surely must be confusing to a party in the process. In a big case, they might expect a difference due to extensive experience of an arbitrator in a particular field, but a 3:1 ratio is harder to justify in a smaller case. The Association does have types of arbitration that have pre-set rates, and as Michael Levy suggests, would give those arbitrators who participate for public service reasons, a better chance of being selected. Perhaps one way to address the issue is to have the Association recommend rates for certain kinds of middle-value cases.
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    • Sunday, February 02, 2025 1:57 PM | George’ Cavallo
      There should be a fix rate somewhere between $450 to $550
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    • Sunday, February 02, 2025 2:19 PM | Ruth Samas
      This is an interesting question. I just was selected for a panel where I make significantly less per day/hour than the other two panel members. I like your idea of blending the rates in a situation like this. I do wonder what the parties think.
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      • Sunday, February 02, 2025 4:36 PM | Mark Painter
        I once was on a panel in a case that involved testimony of CEOs. I realized that I was the lowest paid person in the room. I raised my rates for the next case.

        More recently, I billed less than half the number of hours than one member, though I couldn’t see how he worked less. I guess Big Law counts hours differently.
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    • Sunday, February 02, 2025 4:23 PM | Anonymous
      Excessive rates are contrary to the core philosophy of arbitration. Efficient resolution of a dispute is at reasonable cost. But the parties are free to choose who they want. I am not one to interfere with market decisions.
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    • Monday, February 03, 2025 9:46 AM | Allan Marain
      Is it a problem? Not sure. If the parties "play to" any particular panel member, they risk "losing" the other panel members. I am unable to say whether this is a problem.
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    • Monday, February 03, 2025 4:44 PM | David W Slaughter
      The parties are aware of the rates as part of the selection process. Where there are significant disparities in the rates, averaging may be an option, although (again) the rates disclosed in an arbitrator's CV are the rates to which he/she is entitled to receive -and averaging toys with both the disclosure and accounting.
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    • Tuesday, February 04, 2025 5:00 PM | John M. Delehanty
      The best solution is for the arbitrators to agree upon a uniform rate. It is unseemly for there to be different rates among the arbitrators and may give the erroneous impression that some arbitrators are more qualified than others. It also may breed some dissension among the panel members. Use a uniform rate.
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    • Tuesday, February 04, 2025 5:01 PM | John M. Delehanty
      The best solution is for the arbitrators to agree upon a uniform rate. It is unseemly for there to be different rates among the arbitrators and may give the erroneous impression that some arbitrators are more qualified than others. It also may breed some dissension among the panel members. Use a uniform rate.
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  • Sunday, February 02, 2025 8:40 AM | Dustin Hecker
    It is odd to have a case in which there is a large disparity among the arbitrators’ rates. But, that’s not an issue for me. The parties made their choices based on whatever criteria they believed appropriate. Maybe cost was a big issue. Maybe it was a small issue. I’ve never thought the parties looked at the members of the panel differently based on price. Maybe experience level, which sometimes equates to a difference in rates. To me the bigger issue is a disparity in the amount of hours billed for the same tasks. That’s something I would hope the administrators keep on top of, for the good of the parties and the arbitration system generally.
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  • Sunday, February 02, 2025 9:08 AM | Tom G., Chicago
    It is not uncommon to have arbitrators serving on a panel with different levels of experience, thus different hourly rates. This alone will produce a disparity in billing among panel members. Parties will be aware of each arbitrator's hourly before selection so this kind of difference in billing should not come as a surprise or seem inappropriate. You may also have one arbitrator who did more of the "first draft" on a motion or award and thus will have logged more hours. Panel members tend to like to speak with one voice, when there is consensus, and don't usually share who wrote what part of an opinion. The parties will not know this and be confused when one panel member has a substantially higher billing. Of course, these are only a few ways panel members might bill differently. I do think it becomes more problematic when arbitrators define their time differently. Some, for example, might charge a fixed increment for any time a file is opened while another might charge less. As long as panel members make clear their billing practices, which I don't think they always do on the more granular level, the parties are provided with adequate notice. Despite all of this, I'm sure parties often shake their heads when they see different billing from arbitrators on the same panel. The best we can do, in my view, is to be as transparent as possible before we are selected to serve.
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  • Sunday, February 02, 2025 9:12 AM | Jessica Block
    I have heard, as Michael Levy suggests below, that charging higher rates can give the arbitrator a patina of higher competence and expertise. Therefore, at least in a complex case or where the litigants have a bigger budget and more to lose, perhaps, ironically, the parties may be more inclined to choose the more expensive arbitrator. We all do this in other aspects of life -- thinking the more expensive brand means better quality. The parties may try to "mix and match" to make their own blended rate. As we all see each others' resumes, the rate difference may be more of an issue and surprise for the lower billing arbitrator than for the parties and counsel!
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  • Sunday, February 02, 2025 10:27 AM | Anonymous
    Different arbitrators charge at different rates and, depending on how they approach their analysis, take and bill different amounts of time. In demand arbitrators may charge more. Newer arbitrators may charge less. If parties want an in demand arbitrator, they may pay more. If cost is a significant consideration, they may pick a lower-priced neutral. These are simply normal market forces operating. AAA does the parties a service by offering a range of people and prices. Shaping rosters to limit those choices may be seen as anti-competitive and attract the attention of the FTC, as happened to the NAA several years ago.
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    • Sunday, February 02, 2025 11:09 AM | Lisa Renee Pomerantz
      Geography is also a factor in setting rates. Typically neutrals with city offices charge more than their suburban counterparts. I think it would be helpful to share party feedback about neutrals with the parties so they don't have to speculate as to what higher or lower rates may mean.
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  • Sunday, February 02, 2025 10:46 AM | Nasri H Barakat
    Arbitrators and chair persons of a tribunal charge various rates based on the market (geographical area), their years of practice and their expertise. These rates vary significantly amongst practitioners. However, it is rare that one arbitrator becomes aware of their co panelists' rates. I imagine that aside from the rates of the chair, each attorney is aware of his arbitrator's rates but not the other arbitrator's rates. This is why this has not been an issue in my thirty years of practice. In the case of a panel chosen from the AAA/ICDR roaster the rates of the neutrals are available on the site and easily accessible. Still, I have not seen this variation of the rates to be a problem. New arbitrators' rates are generally lower than long time practitioners. It is the nature of the practice. The rates charged by an arbitrator is a matter to be agreed between the arbitrator and the party that appointed them. The ICC for example decides the fees for the entire panel as a percentage of the case. It also decides the rates of the distribution between the arbitrators and the president of the tribunal. This maybe an alternative but it may not be practical in the AAA/ICDR cases because the panel maybe composed of members listed in the Roaster of Neutral and others from outside of the Roaster.
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  • Sunday, February 02, 2025 11:06 AM | Flip J.C. Petillion, FCIArb
    Parties and counsel knowingly appoint arbitrators with different rates, but once the case is underway, psychological factors come into play. A party that picked the "cheaper" arbitrator may start doubting their choice, especially if the higher-paid arbitrator takes a leading role. Conversely, the party with the "expensive" arbitrator may feel reassured, even without real influence on the outcome. Counsel may adjust their strategy, playing to perceived authority. After the award, fee disparities might fuel fairness concerns, even if unfounded. Transparency in workload distribution and clear communication upfront can help manage these perceptions.
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  • Sunday, February 02, 2025 11:06 AM | Louis Coffey
    Of course there’s differences. You have heard the phrase, “price fixing” ? AAA should not even consider it.

    The panel chair should always accrue significantly more time than wings because of administrative duties.

    Differences in experience, expertise and wisdom justify different rates.

    It's called reality.
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  • Sunday, February 02, 2025 11:07 AM | John Feerick
    The subject interested me because of how I consider, and approached, ADR billing. I considered as a lawyer, serving as a mediator or arbitrator, to be a form of pro bono service as the field sends out the message that, among other reasons, ADR should be used as an alternative to court based resolution because it is less costly than traditional litigation. I also think about judges in the judiciary having no hourly rate, just an annual salary. I made it a practice to keep my hourly rate the same, initially 500 or 550, year after year, as an individual or panel arbitrator, while often serving on panels as a chair. I declined to deviate from that practice as years went by as arbitrators with whom I served billed at much higher rates and often encouraged me to do so. I also wrote off significant time when I had to go over time and again an exhibit or transcript or draft an award, of which I had many. There were also times I served without any billing at all, sometimes when the claimant had no ability to cover arbitration payments but had a right to arbitration and the AAA asked me how to handle. I said I would so so without charging any fee at all. I also recall a matter where the parent company was in bankruptcy and a claim against a subsidiary was allowed to go forward despite any payment from the parent as I agreed to handle without fee, and did so and issued an award. I remember when an emergency process was begun (requiring a decision within 48 hours) by the AAA maybe having the first such matter any declining to charge any fee in the circumstances. despite have to quickly adjust my schedule to do so.

    I may have some of the facts above not accurately stated. I also served as an AAA pro bono arbitrator in certain matters in and around 1963, as did others. it gave me as a young lawyer an opportunity to serve, sometimes on a panel. I wonder if this is not a subject for greater consideration. look forward to seeing you all.
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  • Sunday, February 02, 2025 11:09 AM | John Feerick
    The subject interested me because of how I consider, and approached, ADR billing. I considered as a lawyer, serving as a mediator or arbitrator, to be a form of pro bono service as the field sends out the message that, among other reasons, ADR should be used as an alternative to court based resolution because it is less costly than traditional litigation. I also think about judges in the judiciary having no hourly rate, just an annual salary. I made it a practice to keep my hourly rate the same, initially 500 or 550, year after year, as an individual or panel arbitrator, while often serving on panels as a chair. I declined to deviate from that practice as years went by as arbitrators with whom I served billed at much higher rates and often encouraged me to do so. I also wrote off significant time when I had to go over time and again an exhibit or transcript or draft an award, of which I had many. There were also times I served without any billing at all, sometimes when the claimant had no ability to cover arbitration payments but had a right to arbitration and the AAA asked me how to handle. I said I would so so without charging any fee at all. I also recall a matter where the parent company was in bankruptcy and a claim against a subsidiary was allowed to go forward despite any payment from the parent as I agreed to handle without fee, and did so and issued an award. I remember when an emergency process was begun (requiring a decision within 48 hours) by the AAA maybe having the first such matter any declining to charge any fee in the circumstances. despite have to quickly adjust my schedule to do so.

    I may have some of the facts above not accurately stated. I also served as an AAA pro bono arbitrator in certain matters in and around 1963, as did others. it gave me as a young lawyer an opportunity to serve, sometimes on a panel. I wonder if this is not a subject for greater consideration. look forward to seeing you all.
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  • Sunday, February 02, 2025 11:39 AM | DEAN OLSON 2/2/2025
    I have been an arbitrator for more than 30 years. In spite of my years of experience, I have kept my compensation rate low; partly because I am retired, my office is my home, and I have virtually no overhead; and also because I feel a lower rate is consistent with the goal of providing a more affordable dispute resolution process for the parties. I am somewhat surprised that my lower rate might be perceived as an indicator that I am less quaified than arbitrators that charge more for their service.
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    • Sunday, February 02, 2025 11:46 AM | Lawrence D. Berger
      No, I don't think it's important. On my first ever panel case, which stretched over several years and about 2 weeks of hearings, I happened to be the least experienced panel member and probably had the lowest rate, I wound up being the Chair, the difference in rates made no difference to me.
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  • Sunday, February 02, 2025 11:55 AM | Joseph M Matthews
    This is the first time i have posted to this forum and I am an outsider, but when my hero, Dean Feerick posted on the subject, I decided to add my thoughts. I have not been doing it as long as Dean Feerick nor do I have his well-deserved stature, but I also remember when I started serving as an arbitrator in South Florida construction cases in the late 1970s, the first day or two of service was always considered pro bono and was part of the development process for young lawyers.
    Now that it has become a clearly defined and distinct professional subspecialty, pro bono service remains an important professional obligation but it is also a great question that Jeff posed and one that the quality of the comments indicates should continue to be analyzed. I will continue to read them with interest.
    My only addition at this stage of the discussion is to point out that the AAA recently introduced a welcome initiative that could have an impact on how panel members set rates. Panel members are now informed how many lists their name has been included on and how many times a panel member has been appointed from the list, as well as the average percentage for all panel members. For the first time, it will be possible to adjust a panel member's hourly rate and receive feedback as to whether that had an impact on either being included on a list (combination of party and case manager/database process) or an impact on the percentage of times the panel member is selected from the list (party process).
    Of course there are many other factors that go into both segments of the selection process under the AAA/ICDR rules, but I applaud them for providing this additional valuable information to panel members.
    It is a little off topic, but in other settings, I have suggested that the AAA should make available information about panelists actual billing on specific cases (anonymized) and many people whose opinions I respect greatly disagreed with me that such data would be sufficiently reliable to share with parties due to the broad differences between actual cases. I understand that concern but also think that posted rates might be impacted if the marketplace had some data relating to whether there is a correlation between higher rates and higher total arbitrator compensation (after factoring in number of hours actually charged for similar services).
    Again, great topic and thanks for letting me participate.
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  • Sunday, February 02, 2025 11:56 AM | Peter Rundle
    The Panel Chair should take the lead and discuss billing practices with her or his panel colleagues at the outset of the case. When establishing compensation deposit requests, a detailed spreadsheet with each panel member's input on anticipated events and activity, with corresponding expected hours per activity or case stage, is a good starting place. Having the Chair regularly announce his or her billed time on various tasks also helps keep panelists somewhat aligned -- without any expectation that there will be a precise match on time. Lastly, I completely agree with others' comments that the providers and case administrators need to keep an eye on significant time disparities and raise the issue directly with the offending panel member when appropriate.
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  • Sunday, February 02, 2025 12:02 PM | John
    I have sufficient retirement, finally own (paid off mortgage) my office building and rent the building to a couple of lawyers minus a small office for me. My wife and I have a paid in full residence and vehicles. Why charge more per hour? I use what I make for travel and my CPA. Rest goes into savings for old age or local and state charities. I have been a federal magistrate judge and an arbitrator for a total over 40 years and am on several AAA panels, FINRA, and a panel of construction arbitration company. If parties don't want me due to rate differential, not my problem. I have a sufficient docket.
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  • Sunday, February 02, 2025 12:09 PM | Jeff Dasteel
    I generally agree with the comments reflecting that parties know the rates of those they select and, therefore, are not harmed by any disparity. My only addition is to note that the way the ICC handles this is to take control of arbitrator compensation itself and not leave it to the parties or the arbitrators. On three member panels, it is usually the case that the total arbitrator compensation is split 40/30/30 (chair and then the wings) unless there are unusual circumstances. That is not necessarily a better system, but it does eliminate perception of disparity, to the extent that is a real problem.
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  • Sunday, February 02, 2025 12:15 PM | Jeffrey Pardo (jjp@pardo-adr.com)
    I echo most of the above comments. Counsel (and presumably their counsel) select the arbitrators with knowledge of their billing rates; so, that should not be an issue. On a 3-member panel, the chair may spend more time either resolving discovery disputes or writing the Award. I imagine it would be a concern to the AAA of one panel member would submit an estimate or invoice that is materially out of line with the others. If it did, then I would hope that the AAA administrators would inquire as to basis for the disparity to determine whether it was justified.
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  • Sunday, February 02, 2025 12:17 PM | Abigail J. Pessen
    Different hourly rates are not an issue, since the parties were aware of them in selecting the arbitrators.
    Significant disparities in the amount of time billed (except where the Chair has billed more, understandably) is concerning and likely gives rise to suspicions of overbilling. The Case Manager ought to gently discuss the disparity with the higher-billing arbitrator. As a preventive measure, when a motion is submitted for example, the Chair might guesstimate the number of hours he/she will need to spend on it.
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  • Sunday, February 02, 2025 12:20 PM | Bill Tucker
    I am assuming the parties have selected the three arbitrators and know what their rates are, and if that is the case, I don't think it is unfair for the arbitrators have different rates. One or more of the arbitrators may have more experience than the other arbitrator(s), making his or her higher rate not unreasonable. Also, the tribunal can give one or more of the other arbitrators a particular task that the others don't have, and in a situation like that, it would not be unusual for the one taking on that task to have a higher bill than the other arbitrator(s).
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  • Sunday, February 02, 2025 1:44 PM | Donald Black
    I have never thought it was a problem. Just as there are differences in billing rates between attorneys and expert witnesses, there are inevitably going to be differences in billing rates between panel members. These differences may be due to things such as: (1) prior judicial experience; (2) prior ADR experience; (3) geographic location; and (4) whether the panel member is a member of a "dispute resolution" firm, which typically leads to higher rates.
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  • Sunday, February 02, 2025 1:50 PM | Joe Manuel
    I have never heard any adverse comments from counsel or parties. When counsel are selecting the panel, the hourly rates are clearly available.

    Parties might be concerned when one or more of the appointments are administrative by AAA and the particular arbitrator has a significantly higher rate than the ones chosen by the parties.
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  • Sunday, February 02, 2025 2:21 PM | Stuart Widman
    Since the parties and counsel know each Panel member's rates at the time of selection, I do not see that differential as a concern. After all, it's what they wanted.

    As for time incurred, the relative time incurred must take account of at least two things: (i) that the Panel Chair usually has expanded responsibilities, and (ii) the (reasonable but not infallible) assumption that all Panel members will do the required work to get the right outcome. As to (ii), I have actual experience (don't ask) where, in a case where I am Chair, comparing two Panel members' time to the much lower time one wing incurred is quite inapt because that one wing did not put in the necessary time or analysis to evaluate fairly the merits. (That became apparent from deliberations and other points of reference, not just later invoice tallies.) Thus, it would be improper to use that outlier wing's inadequate time as a fair benchmark against which to assess the others' more reasonable incurred time. Stated otherwise, quantities of work should be considered in the context of quality of work too.
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  • Sunday, February 02, 2025 3:14 PM | George Wood
    If the arbitrators are selected by the parties they know the rates going in and would have little to no impact on the matter. If the arbitrators are the product of random selection by say AA the establishing a blended agreed rate should be acceptable
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  • Sunday, February 02, 2025 3:28 PM | David Robbins
    We recently had to suspend an AAA commercial case because respondent would not pay anything and the invoices began to dwarf the claimed damages. The arbitrators' fees were staggering. So we went to court. I remember when AAA arbitrators didn't charge for the first day. To bring a degree of empathy for the disputing parties, I believe we arbitrators should charge flat daily fees that won't cause sticker shock to the parties.
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  • Sunday, February 02, 2025 3:47 PM | Anonymous
    Having experienced a situation where the total deposited fees fell short of completely compensating each of the three arbitrators for the time spent through the issuance of an award, principally because one of the wings billed over twice as much as either the chair or the other wing, I must agree with the comments of Peter Rundle and Ms. Pessen suggesting that some form of control over the situation is preferable to just allowing the individual arbitrators bill whatever they choose.
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    • Sunday, February 02, 2025 5:05 PM | Glenn Berman
      as long as the 3 arbitrators are in the same range i don't see an issue. if, however, one's hourly rate is (hypothetically) $850/hour
      and another's is $450 i could envision the parties asking why the large discrepancy.
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  • Sunday, February 02, 2025 5:53 PM | Anonymous
    Not a problem for me. Individual arbitrator's competence or charging preference is a hallmark of arbitration. It's parties' decision.
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  • Sunday, February 02, 2025 5:55 PM | John Allen Chalk
    Two distinct questions: (i) variable billing rates and (ii) variable billing hours. I have had no problems with variable billing rates among three-arbitrator panels. I have had only very slight concerns with variable billing hours by any three-arbitrator panel. The panel members who communicate openly and honestly, including sharing each other's arbitrator resumes from the beginning know the variable rates. The Chair's leadership should encourage open and honest communication in which both the varying rates and the varying billing hours are discussed among the Panel members. Attempts by Case Managers to make the Chair also become the financial director for the Panel almost always results in confusion and questions. The creation of the deposits for each Panel member should be encouraged to be an open exercise. Leaving the creation and communication of deposits for all Panel members as the responsibility of the Chair also creates issues. When I am a Panel Chair I discuss deposit creations with fellow Panel members and urge each Panel member to be responsible for his or her requests for deposits. This approach also encourages Panel discussions about variable billing rates and variable billing hours. I learned long ago to stay involved and knowledgable about how the arbitral institution manages deposits.
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  • Sunday, February 02, 2025 8:28 PM | Neil Brown
    Thanks for inquiring. You organisation is very good at bringing these issues to our notice and stimulating discussion.

    I have always thought it was a bit odd that three arbitrators in the one case could be charging different rates but I suppose it is market forces finding their own level.

    I could not say it was a major issue with me, but I have wondered how I would handle it if it arose. In the field of domain name arbitration, where I do a lot of work, it does not arise because all arbitrators are paid the same, although the Chair of a panel of 3 has a slightly higher fee, but also fixed.

    Unless there is a clear case made out for full disclosure to other members of the Panel, I don't think we could justify compulsory disclosure. But I will be on the look out to see if this ever arises more directly for me.

    Another issue that arises is where, sometimes, on a panel of 3, one member feels the other two or one of them, are/is not pulling their weight and doing a fair share of the work. Is there a polite but firm way of telling them this.

    Another issue, which also arises in domain name arbitration is where one feels that the Chair, who has written the first draft of the decision, has misdirected him/her self and is way off course. How do you tell them without starting an argument?

    The other thing that annoys me is where the Chair, or even a sole arbitrator, says something like "The Complainant has ( or has not) made out its case", without analyzing the evidence in detail. It is hard to tell him/her/them that the parties deserve a bit more discussion of the evidence to justify the conclusion.

    You see that you have made me think about these issues, so thank you for that.

    I trust that all goes well at AAA/ICDR
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  • Sunday, February 02, 2025 8:41 PM | Scott Link
    I served on a panel with a retired judge from California, whose billing rate was $1,000 an hour. (more than twice my rate). This didn't bother me in the least. In fact, the prevailing view among attorneys is: if your rate is low, there must be a reason. Further, the prevailing rate for partners at big firms in Houston is: $1,000/hour. In New York, they are approaching $2,000/hour. The downside to the high rates charged by arbitrators is: AAA is the alternative to the court system and boasts of being a faster and less expensive way to handle litigation.
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  • Sunday, February 02, 2025 9:09 PM | JEROME ALLAN LANDAU
    I agree with many of the comments - yet add that experience-wise my experience as an attorney (national and international)
    stands-out, and if comparison needs to be made, on the legal side I have had some clients only a few American lawyers might be able to claim. As an arbitrator and mediator, and presenter of ADR programs, I can compare with most. The topic seems to be about "fees", and I reduced and/or maintained my legal and ADR fees when Covid arose. To date, I have chosen not to raise them to what I could ordinarily charge.
    I have mediated AAA and FINRA matters and never thought about this issue - counsel (and parties) have the opportunity to review all our profiles and make their own decisions. If there is a believe that a "higher fee" means a better professional, I would then think of that as "their error, their loss."
    We are professionals - and each of us must make our own decisions.
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  • Sunday, February 02, 2025 10:44 PM | James R. Madison
    Rates, no. Difference in time, sometimes yes and sometimes not.

    As for rates, parties know what they are buying when they agree on members of a panel.

    As for time, differences may be understandable., For example, not surprising if chair has more time. Chair is likely to do more work. Similarly panel member with specially applicable expertise or experience may be called upon by other members to devote more time. On the other hand, it is useful for chair to keep an eye on time, so that disparities do not arise that will prompt parties to question billing or, if they do, they can be addressed.

    I have not had any experience with an arbitrator who seemed to be "milking" a case.

    I can only remember one case in now gong on 60 years of service in which the disparity in time created a serious problem---parties were holding up payments to all members of panel, because the charges of one wing seemed way out of proportion. Both wings were flying from out of town to site of hearings. They both traveled to the site on the first day of hearings in each week and home again after the final day. One charged for travel time door-to-door from his house to site of hearings. The other, much more modestly, added only the airport to airport time to the hearing time for the day.. In the latter case, he figured he would have incurred he surface travel even if the hearings had been in his city of residence. Even though his resume disclosed the door-to-door charge for travel, the arbitrator with the charges that were by far the larger resolved the complaint by agreeing ultimately to waive the surface travel time component of his charges.
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  • Monday, February 03, 2025 3:57 AM | Anonymous
    The answers depend on whether ad hoc or administered arbitration, how and when the arbitrators were appointed and whether all the parties have advance access to each panel member’s profile.
    First, the hourly rate. The notion that a high hourly rate is always a reflection of the arbitrator’s expertise is, in my experience, incorrect. The rate is determined by many factors, including the arbitrator’s personal need, goals and philosophy. Unfortunately, some arbitrators, especially those appointed by an institution, not directly by a party or parties, display “jackpot mentality”, charging inordinately high hourly rates and deposits.
    New arbitrators, particularly those from disadvantaged gender, regions etc might charge low rates as a market entry strategy, while some retired top brass might be looking for ways to give back to society.
    Generally, people who are carrying out the same work should be paid at the same hourly rate. Arbitrators on a panel have the same responsibility, but a loading of up to 33% on the presiding member’s rate is in order for obvious reasons.
    Ideally, the hourly rate should be deferred for discussion by the panel, first privately once the tribunal is fully constituted and later with the parties in the preliminary meeting. A prior agreement on fees and receipt of deposits prior to the preliminary meeting could lead to embarrassing disparities and scenarios.
    Sometimes parties and counsel put a lot of pressure on an arbitrator to agree on a rate at appointment prior to the constitution of the entire tribunal. In such cases, I quote a rate which is conditional to confirmation once the tribunal is fully constituted. I chaired a 5-member panel in which one party had paid its 2 appointees substantial deposit at appointment. The entire panel learnt of the payments when the final accounts were prepared after the release of the award. The other party’s counsel stated that it was “horrified” to learn of the arrangement and the fact that no disclosures had been made. Fortunately, both parties were happy with the award itself and so there were no award enforcement or set-aside proceedings, where the issue of “secret deposits” would definitely have featured.
    Lord David Hacking, an arbitration veteran based in the United Kingdom, charges fees according to the complexity of the arbitration, the amounts in dispute and other material factors. His approach is entirely flexible but he has capped his hourly rate at UK£350.00 (USD 430). He views the conduct of arbitration as a public service, according to information in his website https://www.lordhacking.com/
    I endorse Lord Hacking’s approach. That said, I declined a party appointment as the second member of what would be a 3-member panel last week because the fees, as prescribed by the administering institution, were much on the lower side.
    A lot has been said about differences in hours billed by different arbitrators in the same proceedings. Sometimes the most experienced practitioners have less billing hours because they are efficient and can see issues clearly and quickly. New arbitrators end up with many hours.

    Whether I am presiding or wing, I encourage the tribunal to harmonise its entries on joint activities like the time spent on deliberations and hearings. Some of the other items are harder to rationalize, but it is not necessary to have identical billing anyway.
    The averaging of the hours logged sounds good but has some practical challenges. I do not consider it reasonable to arbitrarily either discount the hours billed by an arbitrator or to inflate the hours of another merely for appearances or perceptions. The discounting might be baseless while the inflation is an ethical issue.
    The presiding member usually logs in more hours than the wing arbitrators. However, that is correct if he or she does the drafting of the directions and awards. The internal dynamics and roles vary from one tribunal to another, depending on the respective skills and availability. Additionally, a wing arbitrator might end up spending much time on corrections if the drafts presented by the presiding member are not up to standard. When one or both wing arbitrators spend much time on or corrections, then that will definitely show in the billing hours.
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  • Monday, February 03, 2025 9:37 AM | Judge Larry Weiman
    It could be viewed as a problem at least in the perception of the parties, as to the relative qualifications, experience or weight of the decisions of the respective arbitrators on the same panel based on different hourly rates, even though different rates may not necessarily be indicative of those factors. I believe it would be preferable for the arbitrators have a private phone conference in advance to see if they can agree on a uniform rate for that particular arbitration. Thank you.
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  • Monday, February 03, 2025 11:21 AM | Chris Soffe
    I do not think it’s a problem.

    In fact, it may even seem collusive if the Tribunal members all bill at a similar rate with the same hours!
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  • Monday, February 03, 2025 12:12 PM | Kyle-Beth Hilfer
    Panel rates are transparent to parties when they select their arbitrators. Different rates may be a function of firm size, firm overhead, and policy. The rates may not be a function of level of experience, a fact that should be apparent from reviewing arbitrator bios. When serving on a panel, arbitrators should set time budgets upon joint consultation so that invoices seem essentially in line from all arbitrators. Of course, there will be some variance due to individual work habits, but a frank discussion among panel members will ensure that none goes on a tangent that drives up a bill. Chairperson will naturally have more hours. That raises an interesting question of how the chair is chosen and whether rate should be part of the selection process.
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  • Monday, February 03, 2025 12:27 PM | Angela Foster
    I agree with Lou. I can guarantee you most folks with billing rates in question would leave the AAA panel and let parties pick them directly and/or accept more ad hoc cases. As it stands now, many of us convince parties to use AAA rather than ad hoc but I can see neutrals not doing that.
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  • Monday, February 03, 2025 3:41 PM | Leo Meirose
    Because of the disclosures required of Arbitrators at the outset of the case, it would seem to me that the parties would be aware of disparities in
    both the qualifications and the requirements of each of the Arbitrators selected for a given Panel. Short of setting limits on the hourly rates charged by
    Arbitrators, however, I don’t see an easy means of achieving uniformity here. Some Arbitrators tend to charge more or less than others, whether those differences
    are justified or unjustified. I would suggest, however, that those Arbitrators who view themselves as absolutely gold-plated Arbitrators might
    need some counseling from the AAA…..
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  • Tuesday, February 04, 2025 3:57 PM | Greg Bistram
    I don't see difference in arbitrator panel hourly rates as a problem. On many panels I serve on, the panel members discuss the work load allocation re award writing when the AAA asks for deposit estimates. Some panel chairs want to do bulk of first draft work. It is more common in my experience for the award writing to be split up among panel members by issues. The allocation can result in shrinking the delta between hourly rates.
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