In 2022, Beazley surveyed 29 lawyers who regularly defend complex architect and engineer (“A&E”) professional liability claims involving our insureds to assess whether these lawyers prefer arbitration or litigation for commercial construction disputes and whether views have changed due to COVID-19. The resounding response from 50% of responding attorneys told us they “never” or “rarely” prefer arbitration over litigation in federal or state court, while only 13% say they usually prefer arbitration for cases against A&E firms.
Arbitration was initially marketed as a speedy, inexpensive way to resolve commercial construction disputes. In the 1990s, arbitration proponents argued that parties could obtain a timely, just result from an arbitrator with deep knowledge of commercial construction projects and avoid the expense, time and unpredictable nature of litigation in state or federal courts. The reality of the last 20 years has been quite different, with arbitration being anything but speedy, becoming extremely expensive and often before arbitrators who have no real expertise in the field.
The lawyers who say they “never” or “rarely” prefer arbitration cited three top reasons for their position.
The attorneys who responded that they “sometimes” or “rarely” prefer arbitration cited four circumstances in which they do prefer arbitration.
13% of respondents “usually” prefer arbitration over litigation. Four reasons they cited were:
Interestingly, less than 7% of lawyers’ preference regarding arbitration or litigation has changed since COVID-19 started. Those responders indicated court delays resulting from the pandemic increased their preference for arbitration.
The general consensus from our survey respondents was that while arbitration in the US can be advantageous in a few specific scenarios, they still prefer litigation to resolve most professional liability disputes against architects and engineers. COVID-19 has not significantly changed this view. There are several practical takeaways from the survey:
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