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ADR Fees and Billing
ALTERNATIVE DISPUTE RESOLUTION FEES POLICIES, PROBLEMS AND SOLUTIONS
Ralph O. Williams III ADR Services
ADR FEES AND BILLING
Introduction: When it comes to Alternative Dispute Resolution (ADR) fees and billing policies, there are two fundamental rules:
Rule # 1: Make sure there is a clear, documented understanding among the parties and the ADR Provider about the fees and billing policies.
Rule # 2: Don’t forget rule number 1.
Most ADR Providers have well defined policies regarding billing, continuances and cancellations. These policies are found on their websites, listed in the last section of this article. Professional fees for any particular Neutral are individually set. The billing statements also contain information about payment, continuance and cancellation.
Rates: Hourly rates for ADR Neutrals range from $250 to $1,400 with most clustered between $300 and $650 per hour. Most Neutrals will quote a daily rate, which includes preparation and local travel.
Ask what the rate includes and how the following items will be charged: preparation time, travel time and expenses and administrative fees.
Administrative Fees: Administrative fees are the norm, ranging from $50 to $195 per party and/or additional fees for a discrete menu of services. Administrative fees are not negotiable and are part of the cost of the service. Ask what is covered by the administrative fee so that you understand how much is being charged for what.
Budgeting and Scheduling Hearing Time: Talk with opposing counsel about the time needed to conduct a successful hearing. When setting a mediation, consider the following: Is time required to process emotions, complex facts or complicated legal issues? Is the case well-developed, calling for minimal discussion with more time spent on negotiations? Has the preliminary work toward settlement already been done and all that's needed is a final push to close?
Because work expands to fit time allotted for completion, estimating time on the conservative side can be an impetus to an efficient hearing. Busy Neutrals often set morning and afternoon matters. If you want to push a matter to resolution, set it in the morning; the time constraint will help bring the matter to close. If you think you may need more time, set the matter in the afternoon so that the evening is available if additional time is needed.
Billing, Allocation and Payment of ADR Fees: In most cases ADR fees are pro-rated by the number of parties participating in the hearing. Any other arrangement must be expressly agreed to by the parties and documented with the ADR Provider. Bills are sent as soon as the matter is set and are due upon presentation or as stated in the bill. Longer matters and discovery references require payment well in advance to secure the block of time. Immediately review bills to make sure they are correct as to dates, time, rates and the allocation of the fees. Bring errors to the ADR Provider’s attention and follow up for prompt correction and rebilling.
Who is Responsible? Parties or Counsel: Virtually all ADR Providers state that the contract to provide ADR Services is between the ADR Provider and counsel. ADR Providers have no contact with the parties and no effective way to collect fees from the parties.
ADR Provider Remedies for Non-Payment: ADR Providers can be in a sensitive position when it comes to collecting fees. An overly aggressive collection effort will negatively impact an ongoing relationship. ADR Providers will call and/or write counsel about past due accounts. When payment arrangements are not made, ADR Providers will refuse to schedule a new matter with counsel until the old receivable is cleared. Delinquent accounts may be referred to collection agencies or small claims actions may be filed. Prior to releasing arbitration awards ADR Providers will make sure all fees due are collected.
Options When the Other Side Does Not Want to Pay: In an increasing number of situations, one side determines that its interests are best served by engaging in some ADR process and the other side, although willing to participate in the process, refuses or is unable to pay.
In the mediation context, counsel’s options include paying the entire fee, negotiating a different allocation of the fee, making the fee part of the mediation or making the payment of the fee contingent on the mediation’s outcome, i.e., if the case settles, the parties will split the fee; if the case does not settle, one side will pay the entire fee.
With arbitrations and discovery references, the contract, controlling law or Court may set ground rules for fee payment and allocation. Typically, the parties advance the fees on a pro-rata basis subject to re-allocation in the costs portion of the award or judgment.
CONTINUANCES AND CANCELLATIONS
Continuances: Policies vary by ADR Provider. Most require notice of continuance 7 to 14 days prior to the hearing, although some are as high as 45 days. If such notice is given and the hearing is re-scheduled, there is no charge for the continuance.
Cancellations: Cancellations require 14 to 45 days notice in order to secure a refund of the fees on deposit. Cancellation fees may be reduced if the Neutral is able to re-book the time.
Start Mitigation Early: Most cancellations occur following a case’s settlement. Experienced counsel can see the possibility of settlement and often fold the probability of ADR cancellation fees into the negotiation. Tell the Neutral’s case manager in writing that a settlement is in the works and that there might be a cancellation. Ask the case manager to review the Neutral’s waiting list for matters that might replace the cancelled case.
Help Fill the Time: Most busy trial lawyers have other matters they would like to get into mediation or need discovery reference work done. Check with other members of your firm for matters suited to the Neutral. If counsel work together, they increase the probability that the time is filled.
Determine the Individual Neutral’s Flexibility: Although ADR Providers have stated policies about continuances and cancellations, individual Neutrals have varying degrees of flexibility on the subject. A call directly to the Neutral to discuss the circumstances of the cancellation and alternatives for using the time booked can be very effective. Finally, Neutrals are more inclined to work with good clients who have positive attitudes.
Use Leverage Only in an Emergency. By definition, an “emergency” occurs on rare occasions. When trying to exert economic leverage to have a cancellation fee waived or modified, remember that you are asking for a favor that has a future price, either direct or indirect, with either the Neutral or the ADR Provider. Conversely, Neutrals who rely on cancellation policies for income, will find the market turning to more flexible individuals.
FEE POLICIES BY PROVIDER
Each ADR provider policy with reference to professional fees, administrative fees, continuance and cancellation are found on their websites listed below or by contacting them directly.
ADR Services: www.adrservices.com
ADR Resources: www.adrr.com
Alternative Resolution Center: www.arc4adr.com
American Arbitration Association: www.adr.org
First Mediation Corporation: www.firstmediation.com
Inland Valley Arbitration Mediation Service: www.ivams.com
JAMS: www.jamsadr.com Judicate West: www.adjudicateinc.com
Resolution Remedies, www.resolutionremedies.com