This week’s reading begins by discussing the current similarities between arbitration and litigation. It continues by generally arguing that all parties involved in business-to-business arbitration proceedings must take proactive roles in ensuring arbitration is markedly different from litigation.
I found it interesting that this week’s reading seems to regard extensive discovery as a pestilence to arbitration proceedings. Moreover, it appears to take the position, by quoting certain in-house lawyers, that the goals of fairness, efficiency, and certainty carry equal weight in business-to-business arbitration proceedings.
I personally question the idea that fairness, efficiency, and certainty should carry equal weight in business-to-business arbitration proceedings. It appears facially problematic that fairness is not elevated above all other objectives; after all, what would the founders of our modern-day justice system think of such a sentiment? With the adoption of Lady Justice as the embodiment of the United States’ justice system, it does not appear likely that they would agree with it. After all, if efficiency and certainty are indeed so important, why does Lady Justice not wear a clock around her neck, or hold a rock in her hand? Jeers aside, Lady Justice wears a blindfold and carries a balanced scale. Both the blindfold and balanced scale symbolize principles of justice, or fairness. Symbols of efficiency and certainty are all but missing from Lady Justice’s composition. Nonethless, businesses are free to emphasize whatever objectives they so choose within their own arbitration provisions.
However, as this week’s reading briefly mentions, because of the threat of legal malpractice, some attorneys are weary of deviating from extensive discovery procedures, for the sake of efficiency. In my opinion this is a valid concern.
In Texas, to recover on a claim for legal malpractice, a plaintiff must prove the following: (1) the attorney owed the plaintiff a duty; (2) the attorney’s negligent act or omission breached that duty; (3) the breach proximately caused the plaintiff’s injury; and (4) the plaintiff suffered damages. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Dev. & Research Corp., 299 S.W.3d106, 112 (Tex. 2009).
In regard to the first element, an attorney owes his or her clients a duty. An attorney is held to the standard of care that would be exercised by a reasonably prudent attorney. Cosgrove v. Grimes, 774 S.W.2d 662, 664 (Tex. 1989).
In regard to the second element, a business burned in arbitration, because of an arbitration provision that provides for scant discovery procedures, may argue that the attorney that drafted the arbitration provision breached the aforementioned standard of care---e.g., that the attorney did not act with the diligence required under the standard of care and/or lacked the minimum degree of skill, prudence, and knowledge in regard to drafting its arbitration provision.
In regard to the third element, a business burned in arbitration, because of an arbitration provision that provides for scant discovery procedures, may argue that the foregoing breach proximately caused its injuries. In order to prove proximate cause, a plaintiff must prove both cause-in-fact and foreseeability. Rodriguez v. Klein, 960 S.W.2d 179, 184 (Tex. App.---Corpus Christi 1997, no pet.). Cause-in-fact means that the attorney’s act or omission was a substantial factor in bringing about an injury that otherwise would not have occurred. Hall v. Stephenson, 919 S.W.2d 454, 466 (Tex. App.---Fort Worth 1996, writ denied). Foreseeability means that the attorney should have anticipated the dangers his or her negligent act created. Hall, 919 S.W.2d at 466. In regard to cause-in-fact, a business burned in arbitration, because of an arbitration provision that provides for scant discovery procedures, may argue that the attorney’s drafting of such an arbitration provision was a substantial factor in bringing about the business’s loss in the arbitration proceeding. In regard to foreseeability, such a business would also argue that the attorney should have anticipated that drafting such an arbitration provision would adversely affect its interests.
In regard to the fourth element, a business burned in arbitration, because of an arbitration provision that provides for scant discovery procedures, would argue that, as a result of the drafting attorney’s negligence, it suffered damages---e.g., if an award was rendered against the business, the amount of the award.
In my opinion, the first, second, and fourth elements of a claim for legal malpractice are not too difficult to satisfy. However, the third element appears to rein in liability. As such, a claim for legal malpractice may be difficult to prove int he aforementioned scenario, but it is not impossible.
Moreover, a business burned in arbitration, because of an arbitration provision that provides for scant discovery procedures, may allege that the drafting attorney violated the Texas Disciplinary Rules of Professional Conduct. Specifically, Rule 1.01 which requires competent and diligent representation.
As an attorney, because of the threat of liability, when drafting an arbitration provision that provides for scant discovery procedures, it is highly advisable to carefully document your business client’s desire for such a clause.
Very interesting. While first completing the reading, I wasn't too struck by the potential of legal malpractice, but after reading your post, I agree that it is an important issue. Your analysis of the elements of malpractice seem spot on as well. While the 1st, 2nd, and 4th elements seem straightforward, the 3rd seems harder to satisfy by a disgruntled client. Indeed, because efficiency and economy are emphasized so much by the FAA, it wouldn't necessarily be foreseeable that an attorney should be preparing broad discovery requests, preparing every single potential witness, and turning over every single document sought by the other side. By structuring an arbitration clause that's consistent with the purposes of the FAA, it seems unlikely that a disgruntled client could establish foreseeability.
ReplyDeleteAlthough it seem strange at first that fairness, certainty, and efficiency are all given equal weight in business-to-buisiness arbitrations, after considering the potential scope of such arbitration, I think it seems fairly reasonable. Contract agreements usually cover repeat dealings. This leads me to believe that most of the repeat dealings usually don't have substantial damages attached. If this is the case, its much more clear why all three factors have equal weight in business-to-buisiness arbitration. Yes an arbitration of this type may not always be fair, but a business drafting an arbitration clause has likely factored in the unfairness level of a limited discovery agreement. Thus, they are taking their chances on the arbitration and expect that a large quantity of arbitration will eventually average itself out and provide them with the legal savings they need without causing a substantial loss of capital due to unfairness.
ReplyDeleteI think litigators' fear of legal malpractice for not conducting enough discovery is real and it is a driving factor in how they conduct arbitrations. This should to be addressed in order to create more streamlined arbitrations. I believe arbitration providers could help alleviate that fear by pointing out the differences between arbitration and discovery and providing guidelines and expectations for discovery in arbitration. The solution could also come from courts in the form of precedent that states a lawyer will not be liable for malpractice when acting in accordance with the discovery rules in a valid arbitration agreement.
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