New arbitration fee structure to support counsel

In a move that may interest may general counsel, the American Arbitration Association (AAA) has introduced an alternative fee arrangement (AFA) option on eligible cases offering to help resolve B2B disputes through arbitration.

Progressive

he AFA option is offered as a progressive step in making costs more predictable and simplifying budgeting for eligible cases, with the hope that general counsel and other legal professionals will make more use of the AAA. The widely-praised program, which the AAA has said is the first of its kind in alternative dispute resolution services, is unveiled as an outgrowth of AAA's commitment to adding cost savings and fee transparency and predictability to the arbitral process. Parties can choose from the following two AFA options prior to the appointment of an arbitrator. One option is a fixed fee arrangement, whereby an AAA arbitration panel member proposes a fixed fee for the pre-hearing, hearing, and post-hearing phases of arbitration which must be approved by all parties. The second option is a capped fee arrangement, whereby an AAA arbitration panel member proposes a fee cap for the entire arbitral process which must be approved by all parties.

Popularity

India Johnson, President and CEO of the AAA-ICDR, says ‘alternative fee arrangements align with our mission to add cost savings and fee transparency and predictability to the arbitral process; the AAA and its roster of arbitrators  are proud to be the first arbitral institution to offer an AFA option to parties and counsel seeking to resolve their disputes through arbitration.’ The AAA-ICDR's AFA program is in line with industry trends, given that the popularity of AFAs continues to grow among corporate counsel. According to the  2017 Litigation Trends Annual Survey compiled by Norton Rose Fulbright, 96% of corporate counsel in the U.S. and other countries were satisfied with the quality of work provided under AFAs, and more than a third of the 318 survey participants stated they expect to increase their use of AFAs in 2018.