California businesses know that litigating a dispute through trial can be time-consuming and expensive.  Even a relatively straightforward case can take over a year and cost tens of thousands of dollars.  In response to the increasing cost of litigation, many businesses began requiring that all disputes be submitted to binding arbitration.

Businesses (and many lawyers) believed that arbitration would provide a quick and low-cost alternative to litigation.  However, experience shows that these advantages have not been consistently borne out.  Unless there are express limitations in the arbitration agreement itself, arbitration oftentimes costs more than litigation and provides far fewer alternatives for parties unhappy with the results.  For one thing, parties to an arbitration must pay an arbitrator - as much as $5,000 per day - to hear a case, whereas parties to a court case do not pay a judge.

A recently proposed bill may provide California businesses (and others) a new alternative to standard litigation or private arbitration.

The bill, which is on the governor's desk, would allow a case to be heard on a specific, expedited date in front of a jury of eight.  Each side's case must be put on in three hours, with the goal being to wrap up cases in a single day of trial.  Six of the eight jurors would have to agree on a verdict, and the post-trial and appeal options would be limited. 

It is too early to tell whether the new bill would provide California businesses with an efficient method for resolving disputes.  One significant barrier is that both sides must agree to use the new procedures.  In most cases, it is likely that one side or the other will perceive an advantage to delaying the proceedings and increasing their overall cost.  Nevertheless, it is encouraging that an effort is being made to curb the growing costs of litigation and provide a speedy alternative to courts and private arbitration.  NB will be tracking this bill for possible inclusion in future contracts and to allow you to more accurately gauge the time and costs of future litigation.