Jeffrey T. Zaino, Esq., is vice president of the Commercial Division of the American Arbitration Association (AAA), the leading provider of alternative dispute resolution (ADR) services for parties in commercial disputes. He oversees the administration of the large, complex commercial caseload, as well as user outreach and the panel of commercial neutrals in New York.
Russ Alan Prince: What does the American Arbitration Association do, and how is it unique in comparison to other alternative dispute resolution (ADR) institutions?
Jeffrey T. Zaino: We are a neutral resource providing an alternative to the overburdened court system. In addition to serving companies in financial services and other sectors, we also handle high-volume caseloads for state and federal government agencies.
We are unique because we are a nonprofit organization founded nearly 100 years ago dedicated to improving the dispute resolution process, expanding access to arbitration and mediation services, and educating the public about the benefits of ADR. To that end, we speak frequently at bar associations, law firms, companies and law schools around the country, and the world, about the advantages the process offers. We also organize and sponsor educational opportunities for young ADR professionals, including those from underrepresented communities.
As a nonprofit, we are primarily concerned with resolving disputes as quickly and efficiently as possible. It is not in our interest to drag cases out longer than necessary.
Because we work for the parties involved in cases, not for arbitrators, we have no hidden fees, and we don’t take any percentage of an arbitrator’s compensation. Our arbitrators are independent, and they can be removed from our panels at any point. We also disclose our administrative fee schedule upfront instead of advertising a minimal fee to file a case and then allowing the cost to increase as the case runs.
Prince: How does the organization work within the financial services space to ensure effective and fair dispute resolution?
Zaino: Our financial services caseload is one of the largest in our organization, and it continues to grow. Many of the cases we facilitate ADR services for in this sector are business-to-business disputes related to lender/debtor services, client services and banking partnerships. Several years ago, we formed a financial advisory committee with internal staff members as well as external experts from the finance space to ensure the arbitrators on our roster have the necessary backgrounds and skills to preside over cases and to make sure we, as an organization provides financial services companies the ADR services they need, given the complexities of the industry and the cases that emerge from it.
The AAA is a thought leader in the financial services space. We work with business law associations across the country, including the Loan Syndications and Trading Association, the American Bar Association’s Business Law Section, and the American Bankruptcy Association, to keep abreast of how ADR can help financial services companies and what needs we can meet for them.
We also meet with judges and officials in states around the country about how we can assist the court system with respect to financial services cases. The U.S. court system became severely backed up during the pandemic, and we were able to assist the court system during that time by offering an alternative forum to the court system for financial services and other types of cases.
Some in the court system were grateful for our help because, with the backup from the pandemic, cases could take up to two to three years to come to trial. We can help cases get resolved in months as opposed to years, and in addition to the time and money financial services companies can save by choosing arbitration, they can also benefit from ADR because they can select their own decision-makers—experts who actually understand financial services. This is a very complex and specialized area, like healthcare. Judges may not always understand all of the nuances of a financial services case, so being able to tap into the expertise and experience of neutrals who are actually in the field is a big advantage.
And, of course, confidentiality is very important in the financial services industry, and that principle applies to ADR. Arbitrators generally have the authority to declare the entire ADR process to be confidential. Parties can also declare the process confidential by agreement. We have handled corporate bankruptcy cases involving multiple parties and more than $1 billion in assets, so we are adept at ensuring the confidentiality of proceedings and the security of data and other information.
Prince: In what ways is ADR, including arbitration and mediation services, more beneficial to parties than going through a traditional court system?
Zaino: ADR saves parties time and money. We’ve conducted studies showing that arbitration can resolve cases on average in six to nine months, compared to multiple years if you go to court. Some people complain about the hourly payments to an arbitrator. Still, if you take into consideration the length of the case, including discovery, in court, you lose out because you have to pay your lawyers during that entire time as well. The speed of arbitration—up to nine months versus two to three years in court—makes a huge difference.
Also, ADR offers more flexibility than a court case. If the lawyers for the parties agree, they can deviate from certain rules, for ethical reasons obviously, to make the process faster and more informal.
In addition, many people and companies want to keep their trade secrets private, and generally, arbitration enables them to keep them confidential. In contrast, they could be exposed in a public forum.
Furthermore, contrary to a common misconception, the vast majority of arbitration cases are decided on behalf of one side or the other—and most AAA-administered cases are settled early.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.
