NAF: Facilitating Just, Efficient And Inexpensive ADR

Sunday, August 1, 2004 - 01:00

The editor interviews Susan K. Wiens, Director of Arbitration, The National Arbitration Forum (NAF).

Editor: How did you come to work in the ADR profession?

Wiens: I spent many years in litigation and finally concluded that my clients (and all parties involved in lawsuits) were expending far too many resources on the process.In addition, it is hard to conclude that the litigation process generates dependable, rational results.If you believe, as I do and as Justice Holmes stated that justice is the result of "known rules, consistently applied," you have to conclude that the litigation process is unlikely to lead to justice.

All of this led me to support arbitration of most claims and disputes and, ultimately, to work in the area.

Editor:Is arbitration really that much different from litigation?After all, you have the same parties trying to resolve the same disputes.

Wiens: Anyone who has worked in the litigation arena can attest to the incentives for the participants to engage in the most inefficient parts of the litigation process.The parties' lawyers have financial incentives to draw out the litigation process.The arbitration process removes most of the incentives that make resolving disputes inefficient.The simpler we can make the process, the less likely it is that the interest of the client and the lawyer will diverge.This is what NAF does - it facilitates a just, efficient, and inexpensive process to resolve civil disputes.

Editor:What is the National Arbitration Forum?

Wiens: The National Arbitration Forum, or NAF as we are often referred to, is among the three largest providers of ADR services in the United States.We distinguish ourselves in that the NAF Code of Procedure - our procedural rules - requires that arbitrators follow the substantive law in making decisions.Historically, one of the principle concerns of legal and business professionals in using ADR to resolve disputes was the unpredictability of the arbitration results.The NAF has responded to this concern by requiring not only that the arbitrators handling cases apply the applicable substantive law, but that they also be seasoned litigation professionals.Many people (even sophisticated attorneys) are surprised to learn that all arbitrators do not necessarily follow the law in making decisions.

As a result of this requirement, all NAF arbitrators are senior attorneys or former judges, who are qualified to determine and apply the correct standard of law in each case.NAF's 1,500 mediators and arbitrators are located in all 50 states and 17 other countries.

As a neutral administrator, NAF also provides a set of procedural rules and case management services designed to ensure that claims are resolved efficiently and cost-effectively.Our case managers make sure that notices are communicated properly, neutrals are assigned according to the parties' agreement, and hearings are scheduled and conducted expeditiously.

Editor:Arbitration systems seem relatively the same, so can parties really see a difference in how cases are managed?

Wiens: Actually, yes they can.You may have noticed in our literature that we say, "all arbitration is not the same."That's because NAF differs in some very important ways from other national ADR providers.

Probably the most significant difference, and certainly the one that attorneys tell us is most important to them and their clients, is that NAF arbitrators are all attorneys with twenty or more years of litigation experience or are former judges or special masters.They are required by our Code of Procedure to apply substantive law whenever making decisions and rendering awards.

Users of our services tell us that this results in more rational decisions than some systems where the decision maker is allowed to do "whatever seems fair under the circumstances."It is significant to users of arbitration that courts have held that when an arbitrator's authority is limited by a requirement to apply substantive law, arbitral awards are more readily confirmed in court.

Another key difference between NAF and other national providers is that our Code of Procedure and fees are designed to preserve fairness and due process while at the same time maximizing the benefits and advantages that arbitration is designed to provide in the first place - rational decisions at lower cost and with less delay than those associated with lawsuits.For instance, in an NAF arbitration, parties can agree on the extent and schedule for discovery, but absent such an agreement, the Code sets forth a default schedule that is streamlined, ensuring ample opportunity for discovery without the abuses that can be present in traditional litigation.

Additionally, NAF's ability to leverage technology and the efficiencies that result has allowed us to avoid high administrative and claims management costs.These savings are passed on to end users in the form of lower fees.

Editor: NAF is known for its use of leading-edge technology in ADR; can you tell us what is new in this area?

Wiens: NAF applies modern technology to every aspect of dispute resolution.We continually seek ways to maximize the efficiencies that technology provides, not only for us as an administrator, but also to the parties, who expect and deserve easy, efficient access to dispute resolution services.A recent example of this is the automated case management processes we introduced when we began administering New Jersey's no-fault automobile dispute resolution program in April of this year.The annual caseload exceeds 20,000 claims, so efficiency is imperative.

Nearly every facet of the NAF New Jersey process is automated. It is calculated that the resultant efficiencies will save end users more than $4 million dollars over three years.Parties can file claims and responses on-line, view arbitrator qualifications on-line, monitor the status of their case on-line, and view decisions on-line.They can even pay fees electronically.

One of our most significant innovations is the ability of our New Jersey Dispute Resolution Professionals to obtain and view on-line their cases and all documents associated with those cases.We no longer send paper files to the DRPs, thereby reducing paper costs, storage costs and administrative handling costs.From an administrative end, our internal processes in New Jersey are also automated.

Our proprietary software allows our case coordinators to view schedules and assign arbitrators on line, and alerts the case coordinators of important deadlines and the status of each case.Detailed automated reports are generated for internal use and for the State of New Jersey officials to maximize performance measurement and system enhancement.

Another very exciting development is the introduction of our on-line mediation tool that allows parties to negotiate their case to a conclusion without actually meeting or disclosing to the other party what their demand or offer is.It's "e-mediation," if you will.This initiative helps parties to keep negotiations alive and moving forward, without the scheduling necessities that interfere with so many negotiations.

Editor:What is the mix of the cases administered by NAF?

Wiens: NAF provides mediation services throughout the country and administers a variety of dispute resolution programs for various state agencies, courts and associations.The New Jersey no-fault program that I mentioned is one example.We also administer Special Master programs in large and complex litigation.NAF is one of the two largest providers of Internet "domain name" dispute resolution services.The other major provider is the World Intellectual Property Organization, a UN agency in Geneva.

NAF also administers cases that are the result of contractual agreements, where parties agree to submit future disputes to arbitration under NAF rules.These contractual clauses are increasingly popular, as attorneys now recognize that, most often, the true cost of litigation far outweighs the value of the matter in dispute.

The types of cases we see filed and the respective proportions for each type of case closely parallel those of state court systems.An often overlooked fact of litigation is that the vast majority of claims filed in state courts are collection actions.The mix of the remaining casesvaries from jurisdiction to jurisdiction, but include employment claims, contract disputes, insurance disputes, and health care claims, to name just a few.

Employment claims occur with some regularity.We are seeing a noticeable increase in healthcare cases, probably as a result of the attention that is being given to what commentators have described as the "healthcare liability crisis."Patients, providers, and healthcare organizations are increasingly agreeing to mediation and arbitration in patient admission documents at clinics, hospitals, and long term care facilities.

Editor:What does NAF do to ensure due process in an arbitration involving, for example, a large business and an individual?

Wiens: Fairness and due process are of course vital to the health of any ADR administrator, and we are happy to have been cited by the U.S. Supreme Court as providing "a model for fair cost and fee allocation."We ensure due process and fairness on several fronts, particularly in the context of a dispute that results in an arbitration proceeding involving an individual and a large organization.

First, it is important to distinguish between the role of NAF as neutral administrator and the role of an arbitrator as independent decision-maker.NAF has no role or influence in determining the merits or outcome of a case. The arbitrators who are provided to the parties by the Forum or selected by the parties are not employees of NAF.They are independent decision makers, are subject to the NAF Code of Conduct for Arbitrators, and are solely responsible for deciding the merits of the case.

When an arbitrator is selected by the parties, he or she is required to disclose the existence of interests or relationships that are likely to affect his/her impartiality or that might reasonably create an appearance that he/she is biased against one party or favorable to another.The Code of Procedure sets out a variety of circumstances under which arbitrators will be disqualified for conflict of interest or bias.The Code of Procedure allows parties to remove and disqualify arbitrators provided to the parties by NAF, and also allows parties to select their own arbitrator without NAF's assistance.And, there is judicial oversight to ensure arbitrator impartiality.Arbitrator bias is one of the grounds for vacating an award under the Federal Arbitration Act and various state arbitration statutes.

Second, due process and fairness are embodied in the Statement of Ethical Principles for the National Arbitration Forum and the NAF Arbitration Bill of Rights.NAF staff and NAF neutrals strictly adhere to the principles and guidelines set forth in these documents.

Finally, the NAF Code of Procedure itself assures due process and fairness.An important element of the Code in the context of disputes involving consumers and businesses is the requirement that arbitrators follow the law. The requirement that NAF arbitrators follow substantive law, and that they award the prevailing party all remedies required by law, is perhaps the most fundamental safeguard of all.

Individuals can be assured that all the substantive remedies available in court are also available in arbitration, and businesses can be assured that results will conform to the law and will be reached by rational unbiased parties.And, all of this happens at a cost of approximately 30% of the cost of litigation.

Editor:Is there any hard evidence of how individuals fare in arbitration versus, say, the court system?

Wiens: Quite a lot really, and more is becoming available all the time.Much of the current data is set out in two NAF white papers on this subject, "Arbitration vs. Lawsuits: What Courts, Case Outcomes and Public Perception Show About How Contractual Arbitration, Compares to the Litigation System," and "The Case for Pre-Dispute Arbitration Agreements:Effective and Affordable Access To Justice For Consumers." These documents report the empirical findings of unbiased experts, resulting from dozens of studies.Among the findings are that individuals prevail slightly more often in arbitration than in lawsuits and receive a greater percentage of the relief they sought in arbitration than in lawsuits.And individuals think arbitration is fair.Most surveys show that over 90 percent of individuals who used arbitration found it to be fair.Likewise, businesses appreciate the speed and rationality of arbitration.

I've heard the arguments that, one, if consumers really do fare better in arbitration, the business would not choose arbitration; and two, if arbitration is fair and consumers like it, why not allow parties to choose between arbitration and litigation after the dispute arises, rather than to require that parties consent to arbitration in a contract before the dispute arises?"

For me, those arguments don't really hold water.The short answer to the first one is that it has not been our experience that businesses are using ADR to take advantage of their customers or employees.What seems more likely, is that because the process is efficient and rational, businesses spend less to handle arbitration claims, for example, as compared to litigation.As to the second assertion, the studies show that parties will rarely, if ever, agree to an alternative dispute resolution mechanism once a dispute has arisen.At that point, they are already polarized and are unlikely to agree on much of anything.Most importantly, one party may perceive a strategic advantage in litigating, such as a financial advantage or the ability to withstand protracted litigation.And the parties then remain entrenched.So in effect, the only way parties can actually realize the benefits of arbitration is to agree to it ahead of time, in contractual agreements to arbitrate any dispute that ever arises

Editor: How can one find a NAF mediator or arbitrator to help resolve a dispute?

Wiens:Our mediators and arbitrators, our staff, and our Code of Procedure and fee schedules, are easily accessed in a variety of ways.Parties can log onto our website at, or call us on our toll-free number.They will find a top-notch roster of the most highly qualified neutrals, a competent, well-trained, polite claims staff, and a set of rules and procedures designed to help parties resolve any manner of dispute, large or small, simple or complex.