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Pros and Cons of Using Industry Professionals as Arbitrators Instead of Attorneys


January 9, 2013 11:19 AM | Posted by Admin | Print this page

I recently arbitrated two construction cases using two very different arbitrators. In one case, the parties agreed to use an industry professional as the arbitrator and in the other case we used an attorney as the arbitrator. By way of background, both of cases involved a manufacturer of construction materials. The cases focused on construction methods, and legal theories were not driving portions of either case. In the case that used an industry professional as arbitrator, the parties both hired experts and in the other case the parties relied on testimony from the owner, contractors, and manufacturer representatives. 

After arbitrating both cases, my position is that using an industry professional or a construction law attorney as an arbitrator is a choice that should be driven by the facts of the case. Before deciding on an arbitrator, you should ask yourself if the case hinges on legal theories or on methods of construction.

In cases driven heavily by legal theories (i.e. breach of contract, equitable estoppel, quantum meruit, negligence, or some other type of tort), I would recommend that the parties use a construction law attorney as the arbitrator. It may be difficult to bring an industry professional up to speed on the intricacies of the legal theories involved in such cases. A construction law attorney will have some familiarity of the standard practices within the industry and will know the law within the given jurisdiction. One thing to consider in these types of cases is that the time spent educating a non-lawyer arbitrator on legal points may outweigh the benefit of having someone that understands the mechanics of the construction project.

In cases that mostly concern the mechanics of the construction project (i.e. whether or not someone deviated from the plans and specs), I would recommend using an industry professional as the arbitrator. From my experience, you spend far less time educating the industry professional about the mechanics of the construction project than you will an attorney. This is true even with a knowledgeable construction law attorney acting as the arbitrator. In addition, the industry professional will have a far better understanding of the opinions offered by any experts testifying during the arbitration. 

Now, what about cases that involve complex construction issues and legal theories? In those situations, I recommend using a three-party panel consisting of two industry professionals and an experienced construction law attorney.  There is more expense in using such a panel, but ultimately the parties will find they have the right combination of industry expertise and legal knowledge to arrive at a fair and reasonable decision.