Why Arbitrators Charge Cancellation Fees

And How to Save Your Client Some Money

It's happened to every advocate. You’ve managed to settle a difficult grievance just days before arbitration. You have a free day on your calendar to catch up on work. Your client is either relieved or annoyed that the case has settled, but either way they’re glad the matter is behind them. You hit send on an email to the arbitrator letting them know the case is off calendar. But before you can sigh in relief, the arbitrator responds

“Congratulations on reaching an agreement. Please let me know how the parties will be handling my cancellation fee. Thanks for your attention to this matter.”

Ugh. Now you and opposing counsel need to talk again (Boooooo!) and you need to tell your client they’ll need to pony up several hundred dollars for the cancelled hearing.

As meddlesome as the fees may be, arbitrators charge cancellation fees for a couple good reasons. First and foremost, labor arbitrators have few, if any, alternative income sources and, without the cancellation policy, a cancelled hearing is a day’s pay lost. It might seem like a large figure for a day off but most of us don’t have hearings every day. When the case is cancelled on short notice, we can't find other work for that day. If we can, we usually don't charge the cancellation fee. The earlier we know it has been settled the more likely we are able to use the day for another case.

Another reason we have a cancellation policy is to encourage the parties to prepare their cases before the 11th hour. Poorly prepared cases are as vexing to the arbitrator as they are to the client. The sooner you prepare, the earlier you’ll know if your case is settleable.

The key to avoiding cancellation fees is to put the cancellation deadline on your calendar as soon as the arbitrator schedules a hearing date. For example, I won’t charge a fee if the matter is cancelled more than 21 days before the hearing. Other arbitrators have longer or shorter periods; it should be in the rate schedule. Then give yourself a reminder 30 days before the cancellation deadline and start working on the file then, instead of days before the case. Thirty days should be enough time to evaluate and settle a (settleable) case. Then notify the arbitrator as soon as possible to confirm that no fee will be charged. I know of one pair of parties where they send me a letter confirming both the hearing date and the cancellation date at the outside of the case. Although I get selected for half a dozen cases with them each year, I can’t recall that they’ve every paid a cancellation fee.

I always love to hear from advocates with any questions that they might have. Please send me a message if you have any questions on how to improve your labor arbitration practice.