It has become a trend in many circuit courts to order cases to nonbinding arbitration, either in place of mediation or after a case reaches an impasse at mediation. Some courts use nonbinding arbitration regularly to encourage settlement and clear their dockets. Other courts use this form of alternate dispute resolution more sparingly, reserving it for dysfunctional cases wherein the lawyers are not communicating well and the case is proceeding behind the case management deadlines. Regardless of why the case gets referred to nonbinding arbitration, the referral adds an additional layer of preparation and expense to the litigation process. As such, it makes sense for lawyers to use this opportunity to develop the strengths and weaknesses of their case and posture it for resolution.

Get the Right People at the Hearing

The most effective way to turn the nonbinding arbitration into an opportunity to settle the case is to have the people making the financial decisions on the case present at the actual hearing. This might not be as easy as it seems, as generally, the persons holding the financial purse strings are busy individuals who prefer to be excused from the proceeding or send a local or subordinate representative in their place. Although the Florida rules and statute governing nonbinding arbitration require the parties to attend, they do not specifically require that a representative with financial decision-making power attend. Thus, the rules allow the dismissal of a party or party’s representative from attendance at the proceeding upon agreement by the arbitrator for good cause shown. Attorneys should think twice before requesting their clients be excused from nonbinding arbitration, because unless that client is present, the client will not be able to assess the persuasiveness and credibility of the opposing party based on their own personal knowledge.

Most Florida counties have an administrative order governing the referral of circuit court civil cases to nonbinding arbitration. The administrative orders govern that county’s referral; therefore, it is important to know the specific guidelines of the county in which your case is venued. All counties require that nonbinding arbitration be conducted under Florida Rules of Civil Procedure 1.700, 1.800, 1.810, 1.820 and Florida Statute Section 44.102. Although these Rules govern all nonbinding arbitration, it is important to read and be familiar with the specific requirements of the individual court order referring the parties to nonbinding arbitration, as different judgments have different requirements for how the nonbinding arbitrations are conducted.

Florida Rule of Civil Procedure 1.820 is titled “Hearing Procedures for Nonbinding Arbitration.” Paragraph (b)(c) of that rule provides that “Individual parties or authorized representatives of corporate parties shall attend the arbitration hearing unless excused in advance by the chief arbitrator for good cause shown.” This rule does not require that someone with settlement authority attend the nonbinding arbitration and, more specifically, does not require that a representative of a party’s insurance company with settlement authority attend the nonbinding arbitration. Florida Rule of Civil Procedure 1.820 also makes no reference to the attendance of a representative of a party’s financial decision-maker or a party’s liability insurance carrier. Rules 1.800 and 1.810 do not address attendance at an arbitration hearing.

Florida Rule of Civil Procedure 1.820(b)(3) also requires the attendance of individual parties or authorized representatives of corporate parties at the arbitration hearing unless excused in advance by the chief arbitrator for good cause shown. Under this rule, the parties can request that no one other than the attorney for a party attend the nonbinding arbitration. Likewise, Florida Statute Section 44.103 does not make any specific reference to who is required to attend a court-ordered nonbinding arbitration other than to state that court-ordered, nonbinding arbitration shall be conducted according to the rules of practice and procedure adopted by the Florida Supreme Court.

In most personal injury cases, even though the insurance company has the settlement authority, the insurance company is not a party to the lawsuit. Under Florida’s Nonjoinder Statute, Section 627.4136(1), the defendant’s insurance carrier cannot be a party to the subject lawsuit. That statute states in pertinent part:

It shall be a condition precedent to the accrual or maintenance of a cause of action against a liability insurer by a person not an insured under the terms of the liability insurance contract that such person shall first obtain a settlement or verdict against a person who is an insured under the terms of such policy for a cause of action which is covered by such policy.

Because the defendant’s insurance carrier is not and cannot be a party to the litigation unless specifically indicated in the court order referring the case to nonbinding arbitration, the insurance adjuster does not have to attend. Unless the parties, including individuals assessing and evaluating the case, attend the arbitration and hear and observe the presentations, the arbitration process will not affect or impact their case evaluation.

Request a Written Opinion of the Findings

The nonbinding arbitration proceeding limits the control a party has to the extent that the verdict is not negotiated, but rather the decision of an impartial and neutral person or a panel of three impartial and neutral persons who have assessed the evidence, the arguments and the law and make a decision on the issues of fault and damages. The arbitrator(s) render a written verdict or opinion, which the parties have 20 days to accept or request a trial de novo. Many arbitrators only submit a written verdict. However, if the parties truly want to utilize the nonbinding arbitration process to get the case settled, the parties should advise the arbitrator at the outset that they would like a written opinion of the findings. Often, both sides get tunnel vision concerning their positions on the material issues of their case. Obtaining a written opinion from the arbitrator(s) as to how they evaluated the evidence and applied the law can provide the mechanism for a re-evaluation of certain issues and help the parties move towards a middle ground that will resolve the case.

Another good reason to obtain a written opinion is to ensure the arbitrator has applied the facts and the law in arriving at the verdict. A common complaint among attorneys is that nonbinding arbitration is not effective because arbitrators just “split the baby.” Often, attorneys surmise that that arbitrator has basically found a middle ground, whether it is founded in law or fact, because the arbitrator has a thriving mediation practice and does not want to lose a mediation client based on an unfavorable arbitration decision. In writing an opinion to explain the verdict, the arbitrator not only explains the basis for the findings, thereby educating both parties as to what their potential outcome at trial would be, but they also ensure they have overseen the proceeding in a manner that is impartial and neutral to both parties.

An Informal Mini Trial

Another advantage of nonbinding arbitration is that the preparation process assists the attorneys in identifying the strengths and weaknesses of their positions with respect to the record evidence that has been gathered through discovery. Under Section 44.103(4), the arbitration proceeding is basically an informal mini trial. That section states, in part: “The hearing shall be conducted informally. Presentation of testimony and evidence shall be kept to a minimum, and matters shall be presented to arbitrators primarily through the statements and arguments of counsel.”

While it is expected that the presentation of the case will be made primarily by counsel for the parties and will be in the form of an opening and closing statement at trial, witnesses may be present and give live testimony as they would in a regular trial. If counsel for the parties opts for the abbreviated form of hearing, counsel will present only factual representations supportable by reference to discovery materials, signed statements of witnesses, stipulations and other documents. This process provides for an opportunity for both sides to reassess the positions they may have maintained since the initiation of the law suit and reconsider potential concessions that may be made that would assist in resolving the case without trial.

In conclusion, although there is not generally the opportunity to negotiate at a nonbinding arbitration hearing, the process allows for the opportunity to have a neutral third party provide an opinion, which the parties to the lawsuit can use as a starting point for settlement negotiations. Given the time and financial investment in the nonbinding arbitration, attorneys should plan and prepare for it to be utilized for what it is—an alternate dispute resolution mechanism—and not just an obstacle on the way to trial.

Reprinted with permission from the May 8, 2024 edition of Daily Business Review © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.