Peacock Tales • Summer 2010


Small Claims Court: Advantages and Disadvantages

Arbitration is an aspect of the court system designed for litigation involving “smaller” monetary claims. Many people have claims that are automatically placed into arbitration, but they are unfamiliar with its features and some of its various advantages and disadvantages from “normal” litigation.

By local rule, each county sets the monetary limit for arbitration cases. In Washington County, for example, claims below $50,000 are automatically placed in arbitration. That means litigants in arbitration cannot have an award entered for, or against them, in excess of $50,000.

The most significant advantage to arbitration is often speed because there is little to no discovery; generally depositions are not taken and litigants need not respond to written questions. Some counties do not permit discovery in arbitration cases without leave of court; others allow discovery without leave, only on a limited basis. Either way, it promotes a system in which the case is decided within months of being filed. In the normal stream of litigation, cases often drag out for years in the discovery period before a trial is ever commenced. From a practical perspective, arbitration usually spares a litigant from significant legal fees that go hand-in-hand with long, drawn-out discovery.

Arbitration is also quick because of the hearing process. Cases do not involve fullblown trials with judges and juries. Rather, cases are heard by panels of three attorneys randomly chosen from the local bar association. Hearings involve testimony from witnesses and the presentation of other evidence; evidentiary rules are somewhat relaxed and allow for less formality. However, the panel is empowered to exclude evidence when appropriate. Importantly, each side is allotted a specific amount of time to present its case, so hearings usually last no more than a couple of hours. At the hearing’s conclusion, the panel immediately deliberates and enters its decision, and a copy is promptly mailed to the litigants or their attorneys.

With some cases a speedy process is not always desirable. If a case has complex facts, it can be difficult to properly present at arbitration given the time constraints. Also, because arbitration involves limited to no discovery, information is often learned for the first time at the arbitration hearing. From an attorney’s perspective, this is not ideal because it can allow for surprises. The ability to depose a witness or get answers to written discovery, may alleviate surprises.

While the arbitration panel’s decision is binding, it is also appealable. If a party does not like the panel’s decision for any reason, he/she can file an appeal. The case is then placed in the normal stream of litigation. Realistically, this means the case just tried before an arbitration panel has to be re-tried before a judge and maybe a jury. But the second time, the case is subject to regular discovery, and a trial is unlikely to happen for months, if not years, and can translate into significant legal fees.

Ultimately, arbitration offers both advantages and disadvantages, depending on the case. At the outset of your case, you should discuss these things with your attorney so an appropriate strategy, with an eye toward cost efficiency, can be formulated.


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