The Expedited Jury Trials Act: An Alternative To Form Arbitration Clauses

Originally published in Business Law News.

There would be no need for contracts if parties always reached a true and complete meeting of the minds, remembered what they agreed to do, and then did what they said they were going to do. But from the perspective of the business trial lawyer, that seldom happens. This truism heightens the importance of dispute resolution clauses in contracts. And yet, little time is spent considering or drafting these clauses. After disputes have arisen, transactional lawyers all too often admit that they used the arbitration clause contained in the contract at issue because it was part of a template.

Fortunately, the California Legislature recently adopted an alternative to traditional civil litigation and arbitration that, for the right kinds of disputes, provides a roadmap to a new form of dispute resolution that is more efficient and economical for the right kinds of controversies. Although still in its infancy, the Expedited Jury Trials Act1 offers a menu of ways for seasoned transactional lawyers and trial lawyers to consider what kinds of disputes are likely to arise, and craft a dispute resolution provision that is well-suited to those disputes. The Act became effective on January 1, 2011 and codifies a set of procedures to try cases to a jury in about a day. The procedures themselves are not new, or anything that lawyers could not have agreed to before. But adopting (and following) the Act's procedures could allow parties to secure a short trial at a substantially reduced cost that, looking backward from trial, would also contain the costs of the litigation.

The Good the Bad and The Ugly of Litigation and Arbitration

Civil litigation is, like democracy, the worst form of dispute resolution except all those other forms that have been tried from time to time.2 And that's the "Good." It is often expensive and time consuming. And worst of all from the client's perspective, it is commonly unpredictable in both its process and result.

Arbitration is often no better. Sometimes it is made much worse by the obligation to pay someone to referee the squabble. The arbitrator has little incentive (other than the potential for repeat business) to lower the temperature in the dispute. And often, it seems. most would rather mediate the dispute than arbitrate it anyway. Despite the best of intentions to expeditiously resolve a dispute, parties commonly alter the procedures in arbitration once they realize what they've agreed to. This results in a litigation-like arbitration that side-steps its contemplated benefits. And there are numerous perils in blindly selecting an arbitration clause that should be well known. See, e.g., Geibelson and Conn, "Clause and Effect: Parties agreeing to standard arbitration clauses may unwittingly alter their rights," Los Angeles Lawyer (Oct. 2006) http://www.lacba.org/Files/LAL/Vol29No8/2294.pdf

The Expedited Jury Trial Act Compared

Although it has not been marketed to lawyers in this way, the Expedited Jury Trial Act's greatest benefits may be realized if transactional attorneys begin incorporating its procedures into contracts as the method by which to resolve disputes. It must be noted that, at present, "Any agreement to participate in an expedited jury trial under this chapter may be entered into only after a dispute has arisen and an action has been filed."3 However, with careful consideration in...