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These Arbitration Myths Will Surprise Contractors

When it comes to resolving disputes in the construction industry, there’s a lot of conflicting information about which process is the “best.” Let’s be clear, each and every type of dispute resolution has pros and cons, whether it’s litigation, arbitration, mediation, or something else entirely. During your career as a contractor, you’ll more than likely take part in several types of dispute resolution methods, which is important because you need to get familiar — construction disputes are extremely common. 

In this editorial, a Nashville construction dispute lawyer will be discussing one type of dispute resolution method in particular: arbitration. More specifically, we’re going to help dispel some common myths that cause contractors to seek out other forms of dispute resolution when arbitration could offer the most compelling benefits. During our deep dive, we’ll examine a bevy of statistics from the American Arbitration Association (AAA), a not-for-profit organization with the goal of improving ethical standards, fairness, and impartiality in alternative dispute resolution (ADR) proceedings.

The lawyers at our Nashville construction law firm are well-versed in ADR and can represent contractors during the arbitration process. With our help, you can decrease the amount of time and money you spend resolving disputes, so you can get back to work on the project site.

Myth: Arbitration Is as Time-Consuming as Litigation

On average, arbitration cases take significantly less time to resolve than litigation cases. Federal court statistics show that the median length of a trial for civil cases is approximately 27.2 months. In other words, disputes take upwards of two years to resolve. By comparison, arbitration cases administered by the AAA averaged 232 days in length, or around eight months. There’s a positive correlation between the amount of time it takes to resolve a case and the amount of money tied to a claim or counterclaim, so the more money is at stake, the longer it’s going to take to resolve your dispute. The following figures compare claim value and case duration to help illustrate this point:

  • Claims/Counterclaims < $100,000 — 146 Days
  • Claims/Counterclaims > $500,000 — 482 Days
  • Claims/Counterclaims > $1,000,000 — 509 Days
  • Claims/Counterclaims > $5,000,000 — 642 Days
  • Claims/Counterclaims > $10,000,000 — 657 Days

Myth: Arbitration Costs More Than Litigation

In the construction industry, keeping costs low is integral to maintaining profitability. Therefore, contractors are often keen to utilize the most fairly priced dispute resolution method at their disposal. For contractors who require a binding verdict, options are limited to arbitration and litigation, but which is more affordable?

It varies on a case-by-case basis, but many contractors find that the lack of unlimited discovery and other judicial procedures helps arbitration proceed more quickly. Arbitration utilizes a limited discovery process that involves significantly fewer document exchanges and depositions. The less time you spend resolving a dispute, the less it will cost you. For this reason alone, arbitration is oftentimes a less expensive option. Other problems inherent to litigation are the lack of privacy and scheduling autonomy. When you consult a Nashville construction dispute lawyer, they can help you decide whether litigation or arbitration is the best option to handle your dispute.

If you would like to speak with a Nashville construction dispute attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.