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Arbitration and Litigation, Where the Rubber Meets the Road
By: Stephen D. Harrison
I. WHEN TO ARBITRATE - WHEN TO SUE:
The best answer is never to do either. Good businessmen should actively avoid legal controversies. The cost for legal services to minimize misunderstandings is a small fraction of the cost spent in resolving conflicts. Conflict resolution costs can also be limited by actively attempting to resolve problems before they become legal controversies. This takes patience, reasonableness, and most of all, the ability to evaluate the problem from the other party's view point. If you are active in both (i) incorporating legal advice in your practices, policies, and contractual relationships, and (ii) pursuing timely resolutions of potential conflicts, you should substantially reduce litigation or arbitration costs.
Unfortunately, avoidance of legal disputes is not always possible. Frequently, businessmen are too busy to review their policies and procedures to assure compliance with the current state of the law. Also, businessmen are hesitant to make changes in contracts they have used since the inception of their business. Many wrongly believe that if they ignore a nagging problem, it will work itself out. All of these habits assure that a judge, a jury, or an arbitrator will eventually resolve the problem.
There are only two methods for ultimately resolving a dispute that the parties do not resolve themselves. First is by utilizing the traditional judicial system and the second is by arbitration. Resolution utilizing the judicial system may be either before a judge or before a jury. It may be either in the state judicial system or the federal judicial system, depending upon the court's jurisdiction over the parties and over the subject matter. If either party requests a jury, trial will be before a jury. Usually construction disputes will be before a jury in state court. Jurisdiction in a federal court may be established either when the dispute involves some federal statute (such as the Miller Act requiring bonds on federal projects), or involves diversity matters (all of the defendants are residents of another state and the amount in controversy is greater than $75,000.00).
Arbitration, in lieu of litigation, may be selected to resolve disputes either in the original agreement between the parties, or alternatively, in an agreement after the dispute arises. The arbitration may be conducted pursuant to specific requirements of the parties' agreement, or by standard rules, such as the construction industry rules of the American Arbitration Association ("AAA Rules"). The standard AIA general conditions (1) provide for resolution of all controversy related to the construction contract to be settled in accordance with the AAA Rules. Many state agencies utilize a dispute resolution board, which is a modified form of arbitration in which the arbitrators are employed by the state as administrative judges or hearing examiners.
B. Advantages of Arbitration
There are four primary advantages to arbitration: (i) decrease in the litigation costs, (ii) experience of the arbitrators with construction-related matters, (iii) speed of resolution, and (iv) finality of the arbitration award. On very large, complex matters, decrease in litigation costs is not as substantial as on smaller, more direct controversies. With large cases, the participation of legal counsel will be almost the same in arbitration as in trial. The time expended for pre-hearing discovery, preparation of witnesses, preparation of experts, and preparation of hearing exhibits, will be very similar in arbitration proceedings as in judicial proceedings. There will be savings in legal costs, even on large cases, that directly result from avoiding jury selection, preparation of jury questions, and objections to evidence that could prejudice the jury. In disputes having a limited amount in controversy, these savings are a substantial portion of the legal expenses. When the amounts in controversy are very small, both parties may elect to arbitrate the matter without legal counsel and save all legal expenses. Without legal counsel, however, the potential for an inequitable result is increased.
The second advantage to arbitration is the selection of a trier of fact that is familiar with construction. One benefit of using the AAA Rules is the utilization of the Association's list of arbitrators. A broad spectrum of capable architects, engineers, contractors, and construction lawyers, serve as arbitrators. From the list provided by AAA, the parties to the dispute select an arbitrator (or arbitrators) that are competent to deal with the complex issues of construction matters. The ultimate verdict will not rely on lay jury persons with limited construction experience.
The third advantage of arbitration is the speed of resolution. The time of resolution for cases tried before a jury will vary based upon the age of the docket in the particular court in which the case is filed. Normally, the time of resolution for a case varies from 18 months to two years. There are rare exceptions in which an arbitration proceeding may last as long as a suit in court. Normally, however, an arbitration proceeding will be set and heard within three to nine months after the claim is filed. For claims or counterclaims that do not exceed $75,000.00, the American Arbitration Association has established an expedited procedure. When the amount in controversy is above $75,000.00, the parties may also agree to use the expedited procedures.
The fourth advantage of arbitration is the finality of the decision. An arbitrator's award may not be overturned unless the award is arbitrary and capricious, contains a mathematical error, or there was some fraudulent conduct associated with the proceeding or the entry of the award. Because the burden is so onerous for overturning an arbitrator's decision, the decision in arbitration is final for all practical purposes. This finality of decision, both expedites the final proceeding and saves the cost of appeal. Of course, the negative aspect of this feature is that the decision is final, even if there has been a mistake at law that would be subject to an appeal in a judicial proceeding.
C. Disadvantages of Arbitration
One primary disadvantage of arbitration is the lack of procedural rules that limit the potential abuse of a party resisting discovery prior to hearing. This can substantially delay and increase the cost of arbitration. Most parties and most attorneys involved in construction disputes, reasonably conduct discovery and reasonably work out differences related to pre-hearing matters. A party may, however, refuse to cooperate or provide mandated discovery prior to an arbitration hearing. The AAA Rules contain no provisions to govern or sanction such behavior. For matters involving construction within the State of Texas, the following supplemental condition is recommended to the arbitration clause contained in paragraph 4.5 of the AIA Document A201:
All discovery matters, controversies arising out of discovery, or other pre-hearing matters shall be conducted by the parties, and decided by the arbitrator(s), pursuant to the Texas Rules of Civil Procedure unless the parties agree in writing otherwise.
The Texas Rules of Civil Procedure are commonly known by participants in construction disputes in Texas. The Rules establish reasonable times for responses, reasonable limits for the scope of discovery, and sanctions for abuse of the discovery or pre-hearing process.
D. Misconceptions Regarding Arbitration
There are many misconceptions regarding arbitration both by parties and by attorneys unfamiliar with the process. Arbitration is very similar to a bench trial (without the jury) with slightly relaxed rules of evidence. The arbitrator is more familiar with construction-related matters, but may be less familiar with legal principles which could affect the outcome. The most common misconceptions are as follows:
(1) Arbitration can be conducted without legal costs. Only when the amount in controversy does not justify the expenditure of any legal advice will attorneys not be involved in arbitration. The time to interview and prepare witnesses, examine and prepare exhibits, and to review case law which governs the application of law to the facts, is the same in arbitration as in a court case. Lawyers are required to properly assist in each of these efforts.
(2) An Arbitrator will be more equitable and less biased than a Judge. An arbitrator, or a judge, each carries his or her own life experiences. These experiences form a subconscious basis for prejudice, however slight. The prejudice affecting the outcome of a construction dispute is not what is usually considered the basis of prejudice - race, national origin, religion, or sex. Rather, the prejudice that may affect the outcome of a construction dispute is usually whether contract terms should be enforced despite the equitable facts of the dispute; or that equitable principles should govern specific contract terms to the contrary.
(3) An Arbitrator is more likely than a Judge or jury to compromise the issues. An arbitration award is frequently somewhere between the two extremes requested by the opposing parties. Most cases have a similar result. This is usually because justice lies somewhere between the reality seen by each party.
(4) Juries will favor governmental entities. Frequently, governmental entities delete the arbitration provisions in the general conditions. The deletion of the arbitration clause is usually because either the government's attorney is unfamiliar with arbitration or because he or she feels that a jury will be more biased to the governmental entity. Most jurors do presume the neutrality and truthfulness of governmental employees. This presumption is easily overcome, however, when the governmental employee or official displays his own prejudice or unreasonableness. A juror may also link liability of the government to his or her own payment of taxes. This risk is more prominent when the jurisdictional limits of the governmental entity coincide with the jurisdictional limits of the court. On the other hand, there are many jurors who respect a party who is willing to fight "city hall" when the government is unreasonable or wrong.
Mediation is non-binding, and therefore is not an ultimate dispute resolution process. It is not an alternative for a judicial proceeding or an arbitration. Mediation may supplement the means of resolution in either litigation or arbitration. Mediation is a structured form of settlement negotiations, and may supplement the means of resolution in either litigation or arbitration. The advantages to mediation are that the parties must be present with their legal counsel, and must participate in the structured settlement conference. In mediation, the parties' controversies are aired, and each party is allowed to present the strength and weakness of its case. Each party is therefore forced to confront the issues from the other party's perspective. Mediation, as well as any settlement process, has the advantage of decreasing the dispute resolution cost and reducing the risk of an adverse outcome. The same as any settlement, however, each party must compromise what it believes to be its strengths in order to reach a resolution. Under the judicial system, the Texas Rules of Civil Procedure provide for mediation. Even when the parties do not agree to a mediation, a court will normally require a mediation prior to a trial. In an arbitration proceeding, AAA will request that the parties participate in mediation as part of the arbitration process. Therefore, the mechanisms are present to solicit mediation, if the parties desire mediation. There is no necessity to supplement the standard general conditions in the AIA documents to require mediation.
II. PARTICIPATE IN THE OUTCOME OF YOUR CASE
A. How to help your attorney win
(1) Provide him all the documents. Even an experienced construction lawyer will not know your case as well as you. Start by providing him all relevant documents. These documents usually include all contracts, general conditions and special conditions, change orders, plan drawings, relevant specifications, correspondence related to the controversy, job diaries or job logs which relate to the controversy, and all other documents which may be relevant. These documents should be carefully reviewed to assure that they are within the scope of the issues in controversy. If you make your lawyer wade through five banker boxes full of documents (most of which have nothing to do with the controversy), your legal costs will be exaggerated. Most important, your attorney's focus on the major issues will be diverted while he is trying to organize relevant documents. If there is some doubt as to what is relevant, it is better to let your lawyer decide. Documents which have nothing to do with the controversy, however, should be excluded.
Finally, if you want your attorney to be your friend, you will organize his copies of the documents in chronological order, numbered, and with a summary. The documents should then be placed either in a file or a notebook for ease of reference.
(2) Tell him what your damages are. In a construction case, you must tell your attorney what your damages are. The best way to provide this information is by preparing an accounting of the project. The project accounting is a summary of the financial status of the case. The form of the accounting should be similar to the following:
|Total Contract Amount
Plus Approved Change Orders
Revised Contract Amount
Plus Extra Work
|Check dated _________
Check dated _________
Check dated _________
|Minus Joint Payments:|
|Check dated _________
Check dated _________
Minus Cost to Complete (if any)
Net Contract Balance
Behind this summary you should provide a copy of (i) all checks reflecting payments or credits, (ii) all applications for payments, and (iii) any other document which is utilized to provide the project accounting.
(3) Tell him everything. All of your lawyer's knowledge about the project must come from what you tell him. Tell him everything. The best way to tell him everything is in a narrative of facts. You should prepare this narrative before you talk to your lawyer. Give him the opportunity to review your narrative with the documents and the accounting before your meeting. His advice will then be more specific and more meaningful. Label the narrative of facts - "PRIVILEGED ATTORNEY/CLIENT COMMUNICATION". Any privileged attorney/client communication is not discoverable by the opposing party. Although you cannot mask or hide documents which are discoverable by attaching them to a privileged communication, any written communication which you have with your lawyer is privileged. You should take care not to copy, discuss, or otherwise disseminate information contained in any attorney/client privileged communication. If any information contained in a privileged communication is disseminated to third-parties, you have probably waived your privilege.
Your narrative of facts should begin with a very brief statement of the controversy. After the brief statement, you should organize the narrative so that it is a chronological statement of each relevant event that happened. You do not need to repeat the terms of the contract or the contents of letters which are in your summary of documents. You may want to reference the documents, however, in your narrative of events. The primary purpose of the narrative is to tell your attorney, in a written format, what you know about the controversy. Special attention should be taken to describe in detail conversation or events which are not contained in any of the documents, or in any of the correspondence.
You should attach to the narrative a list of potential witnesses with their name, address, business telephone number, and home telephone number. In addition, provide a brief statement of the role of each witness in the controversy. Your witness list needs to include adverse witnesses, as well as favorable witnesses. Although you should try to find all the information you can about a witness, you should not exclude a potentially relevant witness because you do not have complete information regarding residence or telephone numbers. Witnesses who may appear to be neutral - such as an architect, engineer or city official - are especially important. Whether favorable or unfavorable, the testimony of witnesses who appear neutral will be given great weight by a jury. Care should be taken to constantly update this list as more information becomes available.
(4) Listen to what he says. Frequently clients are so engrossed in trying to convince their lawyer of the merits of their case, they fail to listen to what he tells them. Since you are paying your attorney to give you advice, you should listen to what he says. You may disagree with what he says, and if you do, tell him. After you and your attorney have had time to discuss the information you provide, you should be agreed regarding (i) what course of action is appropriate to resolve the controversy, (ii) the range of cost that may be involved in resolving the controversy, (iii) what you consider a reasonable resolution and (iv) what immediate steps should be taken to go forward with a resolution.
You should be willing to take good business advice from your attorney. If your attorney fails to give you good business advice, seek new counsel. Good business advice does not mean that you run from every controversy. Indeed, proper management of a business requires that you do not honor frivolous claims. It is necessary, however, that you evaluate each claim to properly weigh its merits. This often means that you must personally check out the veracity of statements and circumstances told to you by your own employees. A meritorious claim should be promptly settled to avoid legal expenses. Your settlement offer should in part reflect your costs to contest the claim.
You must carefully listen to your attorney's evaluation of the legal issues involved in a controversy. You should also honor your lawyer's evaluation of your case or defense, as well as the opponent's case or defense. You must then make a decision regarding the business risks, based upon the facts which you have garnered and the advice of counsel.
The last thing a good lawyer wants to hear from his client is "I don't care about the money, it's the principle that counts." A good lawyer knows that the client will care about the money at the end of the case, after the costs have been incurred. Most of the time the client's "principle" is a euphemism for his or her "revenge". A client seeking revenge is never satisfied, especially when he realizes the cost of revenge. There certainly are times when legal expenses must be incurred which exceed the potential gain, in order to establish sound business principles. These instances are rare.
(5) Be a good witness. Although your lawyer can lose the case for you, he cannot win it for you. Whether you win or lose your case often depends upon the credibility of your own testimony. The facts as they are told by competent witness are what win lawsuits and arbitrations. There are four rules to being a good witness: (1) Listen to the question, (2) Answer the question, (3) Tell the truth, and (4) Be the nice guy.
(a) Listen to the question. Most witnesses have the most trouble with this first rule. Witnesses frequently concentrate too much on their answer and not enough on what is being asked. To complicate matters, many lawyers ask poor questions. A witness must therefore make sure that he or she knows what is really being asked. If you don't hear the question, ask that the question be repeated. If you don't understand the question, ask that the question be rephrased or clarified. You cannot possibly provide a good answer to a question if you have not properly heard it, or if you do not understand it.
(b) Answer the question. Answering only the question that is asked takes a great deal of self-discipline. Most witnesses want to answer what they believe will help them in the suit, rather than the question that is asked. Usually the self-serving response is viewed by the trier of fact as either evasive, or worse, an admission of the true question which was asked. If you try to evade or outmaneuver a direct question, you will only appear to be evasive. No brownie points are given out for being difficult, or for playing word games with opposing counsel. The last thing you want to do is appear as if you have something to hide. You do not need to argue your case to the jury during your testimony. Further, you do not need to volunteer information which will open you up for further cross-examination. Finally, you do not need to try to get ahead of opposing counsel by anticipating where he is going and trying to outmaneuver. You will usually only fall into his trap. The best policy is simply to answer the question as directly as you can.
(c) Tell the truth. A jury will disregard the entire testimony of someone caught not telling the truth. That is why many attorneys will impeach a witness on a trivial mistake in their testimony to try to convince the jury that the witness is untruthful. This trick is usually distasteful to a jury, if a witness is forthright and truthful with the jury. If the opposing lawyer is successful, however, in presenting to the jury your untruthful statement that is relevant to any issue in the case, you have probably lost your case. You therefore should avoid saying anything that is technically accurate, but which is still misleading. Such an answer will seem devious to the jury, and will have the same effect as an untruthful statement. A truthful answer includes readily admitting what is obvious. If you try to avoid or sugar coat answers to uncomfortable questions, the direct answer will be obvious to the jury. Finally, an answer of "I don't know" is proper when you do not know the answer. Guessing should always be avoided. "I don't know" should not be used, however, to stonewall or avoid a straightforward answer to something that you do know or should know. Appearing evasive or deceptive may pave the way to losing a case which should have been won.
(d) Be the nice guy. A judge, arbitrator, or juror is not convinced by the witness who appears the most indignant (even if the witness believes that he is righteously indignant). The witness who has the sharpest tongue does not appear to be the most truthful. The trier of fact is trying to make sure justice is done. Justice requires the righting of a wrong. The trier of fact is therefore attempting to determine who has acted reasonably, but has been wronged by the opponent's unreasonable action. Be the nice guy. Judges and juries alike want to help a nice person who has been wronged. By the way, being the wronged party does not mean being a whiner. The jury will figure out who has been wronged by the facts of the case, not by who whines the loudest. Whiners will usually be discredited as unreasonable. Your job is to appear reasonable and honest.
D. How to help your lawyer lose
(1) Do not help him win. If you do not help your lawyer win (as explained in the prior section), it will be very difficult for him to do it on his own. If you ignore the admonitions in the prior sections, you will be helping your lawyer lose.
(2) Forget about deadlines. In both arbitration and trial proceedings, critical deadlines are imposed on all parties. Your lawyer will be handling other cases besides your case. If you wait until the last minute to respond to your lawyer's request for information, it will be difficult for him to meet a deadline. A missed deadline may mean that a valuable piece of evidence or a valuable witness cannot be introduced. A missed deadline could even mean the dismissal of your case or the dismissal of your defense. If you fail to respond to your lawyer or delay in providing him information, you will help him lose.
(3) Over-work your lawyer. If you make your lawyer dig out facts from piles of documents, which facts were readily known to you, he may miss an important aspect of your case. If you delay in responding to your lawyer's requests for help, he will be frantically working to meet critical deadlines. The over-worked lawyer will not be as effective as the well-prepared lawyer whose clients have timely provided information. If you over-work your lawyer, you will be helping him lose.
(4) Always demand immediate attention. The surest way to alienate the affection of your lawyer is to demand immediate attention even on trivial matters. The endearment of your lawyer is not necessary for his performance of his duties. But it may be necessary for his sacrifice of family time and other amenities, which sometimes are required to enhance your position in a lawsuit. If you demand his sacrifice on trivial matters, you may find yourself to be the little boy who cried wolf once too often.
(5) Starve him. A lawyer should advise you of the potential range of legal costs prior to your commitment to try the case. He will also keep you advised as these costs change. With knowledge of the costs, you should have the funds available for prompt payment. A good, competent lawyer has clients who are willing to pay for all the time he has available. If you delay payment to your lawyer, or try to haggle over what has been a fair and reasonable bill, your lawyer's priority will probably be with clients who timely honor statements. The lawyer must maintain timely cash flow in order to pay his staff, his library, his insurance, and his cost of operation. Although there may be minor fluctuations in income, a competent lawyer who is in demand is timely paid by other clients. He cannot afford to divert his attention from clients who timely pay to those who try to starve him. If you desire for your matter to get less attention than what you deem it deserves, starve your lawyer.
(6) Threaten everyone with a lawsuit. One of the worse tactics is to threaten everyone with a lawsuit. This tactic may have brought you limited success in isolated incidents. As a general rule, however, it is one of the easiest ways to lose your case. If someone threatens my client with a suit, and I believe the threat, I will immediately drop everything and file suit first. There is a significant advantage in being plaintiff. As explained in subsequent sections of this paper, the plaintiff goes first on voir dire, first on opening statement, first in presenting evidence, and first in closing argument. In addition, the plaintiff goes last on closing argument. These advantages are lost when you threaten a lawsuit and the other side has an attorney who believes your threat.
(7) Frequently interrupt your lawyer during the case. When you get to the courthouse, your lawyer will be thinking about legal arguments to be made to the judge, testimony to be obtained from favorable witnesses, getting documents into evidence for the jury to consider, cross-examination of hostile witnesses, wording of jury questions and instructions, points to be emphasized in closing arguments, as well as a myriad of coordination and scheduling issues. On significant cases, at least two attorneys will be required to attend to these matters. Help your attorney by not interfering with his process. Especially during cross-examination, do not interrupt his concentration on both the witnesses' answers as well as the formulation of questions to make the legal points needed. Further, the jury will notice your interruption of the case. If you believe a significant point may be overlooked, write your attorney a note. If you pull on your attorney, jab him, stomp on his foot, or otherwise distract his attention from winning your case, you will be helping him to lose.
(8) Have a faint heart. Neither litigation nor arbitration is for the faint of heart. Sometimes sizeable fortunes turn on a single piece of evidence or the credibility of a single witness. In addition to these risks, the costs are significant. The stress level is very high. Usually you will feel insulted by the allegations of the other party or the cross-examination of opposing counsel. You cannot afford to be ill-tempered, to become angry, to act indignant, or to yield to the stressful circumstances. If your faint heart will not allow for these stresses, your lawyer will be forced to compromise your position below what he believes to be the value of your case. A faint heart will help your lawyer lose.
III. WHAT TO EXPECT WHEN YOU GET THERE
A. Arbitration proceeding
After a notice of arbitration is filed, the arbitrator must be selected and the place of arbitration determined. If the arbitration provisions in the agreement specify the method of selection of an arbitrator, that method will be utilized. If no method for selection is specified, the AAA Rules are utilized. AAA will provide to each party a list of arbitrators. The parties will be able to strike the names of arbitrators objected to, and to list the remaining arbitrators in order of preference. In a single arbitrator case, each party is allowed the option of striking any three names from the list. The selected arbitrator is required to make disclosures to both parties concerning any relationships to the parties, their attorneys, or any of the witnesses. After review of the disclosures, each party may object to the selected arbitrator. AAA will disqualify the selected arbitrator only if there is a basis to challenge the arbitrator's neutrality.
After the arbitrator is selected, the location of the arbitration is determined. If the parties do not agree about the location of the arbitration, the place of arbitration is determined by weighing the following factors: (i) the place of the construction, (ii) the location of witnesses, (iii) the location of the parties, and (iv) any unusual inconvenience to a party. Soon after the arbitrator and the location are determined, the arbitrator will have a preliminary telephone conference or a preliminary hearing with the parties' attorneys to discuss the date, time and place of the hearing. Usually the parties also discuss discovery matters, such as production of documents, exchange of exhibits, identification of witnesses, and whether or not depositions are required.
An arbitration proceeding will be informally conducted in a conference room. The arbitrator will be seated at the head of the conference table. Each party, along with the party's attorney, will be seated on opposite sides of the table. The arbitrator will normally initiate the arbitration with an introduction. During the introduction, the arbitrator usually provides a brief statement of his qualifications and will state the particular rules governing the proceeding. Each party, starting first with the claimant, will then be given an opportunity to make an opening statement. The opening statement should be a brief statement of the introductory facts, the evidence which will be presented, and the party's position on the issues in controversy. The defendant in an arbitration is called the respondent. Respondent's counsel will have the option of providing an opening statement immediately following claimant's opening statement, or delaying the opening statement until the respondent presents its evidence.
After the opening statements, the claimant will present its evidence. Most of the evidence will be through testimony provided by witnesses called by the claimant. After each witness testifies, the respondent's attorney will be allowed to cross-examine the witness using leading questions. Unlike a court proceeding, there are no court reporters providing a stenographic record of the testimony. The arbitrator will often make notes of the evidence during the testimony of the witnesses. Documents are often produced during the witnesses' testimony. The rules for admissibility of documents in an arbitration will be somewhat relaxed from the rules governing a trial. Common objections to documents, such as hearsay, are seldom effective in an arbitration. If the authenticity of a document is in question, however, an arbitrator will typically rule similar to a judge. Affidavits, which are not admissible in court, will usually be admitted in an arbitration proceeding. Since affidavits do not allow cross-examination, however, the arbitrator will normally give far less weight to an affidavit than to testimony which is subject to cross-examination.
After the close of the claimant's evidence, the respondent will be allowed to present evidence in the same manner as the claimant. The respondent will call witnesses and introduce documents which present the respondent's side of the controversy. After the questioning of each of respondent's witnesses, the claimant's attorney will be allowed to cross-examine the witness. After the respondent has finished with presentation of its evidence, the hearing will be closed. The hearing may be reopened by the arbitrator upon request by one of the parties. This seldom happens.
The arbitrator will then ask the parties if they wish to provide a closing statement. Normally, the attorney for the claimant, and then the attorney for the respondent, will present a brief summary of the evidence. The summary will emphasize the strong points, and argue the legal position with regard to the matters in controversy. Upon completion of the closing arguments, the arbitrator will declare the hearing closed and will inform the parties that he or she will consider all of the evidence. The arbitrator's opinion will be rendered within a specified time limit. The time will usually be seven days for an expedited proceeding and 30 days for a normal arbitration proceeding. The arbitrator will not indicate at the hearing what his decision will be.
B. Court proceeding
After suit is filed, the defendant must timely file an answer to the suit within the time requirements stated on the service of process. Do not postpone or ignore service of process. If you want, you may take your chances and discard demand letters from attorneys. You cannot ignore, however, a suit served on you. You must promptly retain counsel to file an answer on your behalf. From the time the defendant answers the suit until the close of the discovery period, the parties are allowed to conduct discovery. This discovery includes mandatory disclosures, requests for admissions, interrogatories, requests for production of documents, and depositions. The discovery process may include all, any combination, or none of these discovery tools. One advantage of a court suit is that the discovery process is well defined. Lawyers know what they are required to do, even if they fail to adequately respond pursuant to the rules. The rules provide for sanctions for those lawyers and those clients who do not respond pursuant to the rules.
Another potential advantage of a lawsuit is the mechanism by which an unmeritorious matter may be eliminated, without the necessity of a trial on the merits. This mechanism is a summary judgment. If the plaintiff's case fails as a matter of law, or if the plaintiff is unable to produce any evidence on a specific element of the legal action alleged, the court has the authority to grant summary judgment. A summary judgment dismisses the plaintiff's case without a trial. Likewise, if there are no facts controverted by the defendant and the plaintiff should win as a matter of law, the plaintiff may obtain a summary judgment against the defendant. If the summary judgment disposes of all matters pled by the parties, the summary judgment will become a final judgment. A summary judgment is therefore an expedited proceeding which is far less expensive than either a trial or an arbitration. Since a summary judgment denies the losing party his or her day in court, however, summary judgments are only granted when the outcome of the suit may be determined as a matter of law.
After the completion of discovery and other pre-trial hearings (such as motions for summary judgment), the case is set on the court's docket for trial. The administration of the trial court's docket varies from county to county. Generally speaking, the priority of a particular suit on the court's docket will depend upon the age of the suit. Therefore, the likelihood of a suit being tried in a particular court, depends upon the average age of the cases within that trial court's docket. Judges of civil courts are constantly trying to decrease the age of the cases on their docket. Except for cases filed in a county court at law (which usually has limited jurisdictional limits with regard to the amount in controversy), a case will normally need to be greater than a year old before it is reached in a district court in Texas. The average age of cases which are tried to a jury in Texas probably varies between a year and six months to two years. Both sides must prepare and be ready for trial, regardless of whether the case is reached for trial.
The trial proceeding is a formal proceeding. When the judge enters the room, all persons in the courtroom are required to stand until the judge requests that they be seated. The attorneys address the judge, only after standing and waiting for the judge to acknowledge them. The parties themselves should not address the judge unless the judge asks a specific question of one of the parties. Usually the judge first addresses various pre-trial matters (such as receipt of requested jury questions from the attorneys, numbering and exchange of exhibits, and deciding pre-trial motions). After the pre-trial matters are concluded, the jury panel will be seated. The judge will usually address the jury panel, give a brief description of the type of case, and sometimes introduce the parties. After this introduction, the voir dire begins. Voir dire is the questioning process by which each side is allowed to ask questions of each potential juror to determine if they have a pre-existing prejudice with regard to the matters at issue. Both sides are given jury information sheets prior to the voir dire process which are reviewed by the attorneys. First, the plaintiff's attorney, and then the defendant's attorney, ask questions during the voir dire process.
After completion of the voir dire of the jury panel, the panel is temporarily dismissed. The attorneys are allowed to object to any particular juror if the attorney can show the juror's prejudice. This process is called a challenge for cause. After individually questioning the jurors which are challenged, the judge will dismiss any juror that he finds has a preconceived prejudice which could influence the juror's decision. The parties, with their respective lawyers, will then adjourn in separate rooms to make pre-emptory strikes. Each party is granted a specific number (usually 6 with a 12 man jury) of pre-emptory strikes which allow the party to eliminate, without cause, a potential juror. The pre-emptory strike cannot be, however, for racial purposes. After the pre-emptory strikes of each party are handed to the judge, the judge will call back in the jury panel and will seat the jury which will try the case. In state district court there will be 12 jurors, 10 of which must agree on the verdict. In a state county court at law or in a federal court, there will be 6 jurors.
After the jury is seated, each party, beginning with the plaintiff, is given the opportunity to address the jury on opening statement. The opening statement is a brief statement by each party's attorney of what evidence the attorney plans to introduce during the trial. It is a story of the events which portrays each side's view of the facts. After the opening statements, the plaintiff will present its evidence through testimony and through exhibits. The process is very similar to the process described in the preceding arbitration section. After the close of the plaintiff's evidence, the defendant will be allowed to present evidence in the same manner as the plaintiff. After the defendant has finished with the presentation of its evidence, the evidence will be closed.
Following the close of evidence, the attorneys and the judge will confer to determine the jury questions which will be submitted to the jury for answering. The wording of these jury questions is very important to the case. The attorneys will each prepare what they believe is a proper question pursuant to accepted Texas law, in the light most favorable to their client. The judge will listen to the arguments of each party's attorney with regard to which jury questions and which jury instructions should be utilized. Frequently, legal briefs are prepared to support each party's position with regard to the questions and instructions to be utilized. After the judge determines the questions which will be submitted to the jury, each party's attorney is allowed to make objections to the jury charge. These objections will often form the basis for an appeal if the questions submitted are improper.
The jury will then be called back into the courtroom and seated. The plaintiff's attorney will make a closing argument to the jury. The closing argument will be a brief summary of the evidence most favorable to the plaintiff. The attorney will argue the evidence presented with regard to each specific question submitted to the jury. Some judges allow jurors to take notes during this process. Others do not. Most judges will allow the jury to have a copy of the questions prior to the final arguments, but some do not. The defendant's attorney will be allowed to make a closing statement following the plaintiff's closing statement. The plaintiff will then be allowed a short period to retort the defendant's closing statement. Upon completion of the closing arguments, the court will read to the jury the jury charge. The jury charge contains specific instructions regarding the conduct of the jury during their deliberations. Jury deliberations may be as expeditious as a couple of hours and as long as several days. Ten out of 12 jurors must agree on the same questions for their decision to become a verdict.
After the jury has reached its verdict, the judge will read the verdict aloud. The attorneys may request a poll of the jurors to confirm which jurors voted in accordance with the verdict. Following the reading of the verdict, the jury is dismissed and discharged from their jury charge. The jurors are then free to talk to the attorneys or the parties, as they so elect. Following the verdict, the attorneys prepare motions for judgment to reflect the decision of the jurors on the verdict. The judge is required to apply the law to the answers provided by the jury and to enter a judgment accordingly. Very rarely, a judge will enter a verdict notwithstanding the verdict because the judge believes that the other side should prevail as a matter of law. The judgment entered by the court will become final in 30 days if not appealed. As a general rule, factual determinations of the jury are not subject to change by the appellate court. Only matters of law are subject to appeal. These usually include mistakes in law with regard to the jury charge, the introduction of evidence, or some other matter which causes harmful error with regard to the rendition of the verdict.