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Arbitrator Cancellation Fees - What are your thoughts?

Should arbitrators have cancellation fees? If yes, consider:

(i) What is a reasonable time period for parties to incur the cancellation fee?

(ii) If the parties reach settlement on a matter within the cancellation period and have several weeks of hearings scheduled, should an arbitrator bill for all hearing dates scheduled?

Please provide your thoughts/comments below.

Comments (15)

Paul Nicolai:


If the cancellation is inside of 72 hours of any full day of hearing.

Cancellation is 1/2 day fo 1 day, 1 day for more than 1 day.

It helps the parties plan. They can avoid the fee by settling more than 72 hours ahead.

1.30 to 45 days

2. He should be able to since he blocked out his time. But if he can still take on something else at that time and bill then he should reduce the time for the hearings accordingly.

Michael Orfield:

I had a 24 hour cancellation fee. A senior partner in a major firm encouraged me to expand it to two weeks as a means to get parties talking resolution at least 2 weeks out. Now the discussion becomes what exactly is the penalty? I think half of what would have been earned is appropriate.

Hon William G. Bassler:

This question is a tough one for me.
For years I never had a cancellation fee and felt no loss as I never had really any down time and welcomed the " leisure " time afforded me by the cancellation.

Then more experienced arbitrators convinced me that not having a cancellation fee telegraphs the message that you don't consider yourself that valuable.

So I put in a cancellation fee.
I am busy and can fill the time with other reading in preparation for other arbitrations I will waive it.
I consider 60 days to be reasonable.


Interesting question which I have been considering -

I have not had a cancellation policy / which I believe was initially based a recommendation from the AAA for new arbitrators .

But in a recent case where parties had reserved 2 weeks of hearing time and have repeatedly advised the panel of settlement discussions ...I have been reconsidering whether to have a cancellation policy .

Without a cancellation policy it seems they will drag at the negotiations as long as possible ..and the panel ( especially those with no cancellation policy ) will be required to keep the hearing dates open ...

What percentage of AAA arbitrators have cancellation policies ? What is the typical policy?


You need to approach this like a business. This is an opportunity lost. Unless it is a last minute emergency parties should be expected to compensate the arbitrator.


To date I have not responded on your questions. This one triggered me to ask: What are AAA's "thoughts" on arbitrators double and, worse, triple booking for one day, holding abbreviated hearings for each on the same day and charging the full per diem to each?

Sure, it's what the parties are willing to tolerate, but should AAA be a party to such gouging? The ethical consideration of upholding the integrity of the process, for one, comes to mind. Without AAA taking a stand, it is condoned by AAA. And unnecessary, as there are other qualified arbitrators who can give the parties a full hearing day for their money.

As an arbitrator, I have never charged a cancellation fee because I would never want to deter the parties from settling or penalize them for doing so. The ability to save on arbitrator fees may function as an incentive to settlement.

Lou Coffey:

I previously had a cancellation fee that escalated as time to hearings shortened. I always waived the fee if the case settled, no matter how close to the hearings. I also used my discretion as to whether or not to impose some or all of the fee, depending on circumstances. The opportunities to impose the cancellation fee were infrequent.

A AAA VP advised me that having a cancellation fee discourages selection. I eliminated the cancellation fee. I have not seen any difference in my frequency of selection.

Stephen A. Hochman:

I agree with Lisa and would never charge a cancellation fee. we should applaud when the parties settle, whether it is the day before the hearing or on the first or second day. We should be paid for the time spent not for the time or business lost.

This is one of the toughest issues an arbitrator faces. On the one hand we want to encourage the parties to settle but on the other a last minute cancellation of an arbitration, especially one booked for many days, can cause significant economic hardship to an arbitrator.

Let me give a real-life example. Last year I had an arbitration booked for four weeks of hearings. In the month before that arbitration was to start, I turned down 3 meditations due to the upcoming time commitment. The hearings began and at the end of day 2, the parties announced a settlement. Thus 18 days that were booked were now lost ( as well as those meditations that had been sent elsewhere). I did have a cancellation policy but felt bad and charged the parties a nominal amount ( one week of lost hearing days).

I have since adopted the following policy: if a hearing is scheduled for more than 3 days and if a cancellation occurs (not an adjournment) on less than three weeks notice, then the cancellation fee is 60% for each day cancelled, assuming each day would have been 8 hours. If the hearing is scheduled for 3 days or less, there is no cancellation fee.

I have it on good authority that a major ADR provider (not AAA) has a policy that any arbitration cancelled on less than 60 days notice is charged at "full freight" for all of the arbitrators' time.

When I appear for the first (or later) day of an arbitration hearing, and then first learn that day of the hearing's cancellation I expect to be paid only for the full day or the days I actually appeared. I don't charge anything more for the other days previously reserved beyond the day or days of my appearance or appearances.

Pamela L Hemminger:

Do I recall correctly that AAA has a policy disallowing cancellation fees except under limited circumstances?

The history here is interesting. In the 1990's, the AAA highly discouraged cancellation fees on arbitrator resumes for many of the reasons that are mentioned by other posters on this chain. In the last ten years, it seemed the pendulum switched the other way for the other reasons mentioned above. My own feeling is that the arbitrator could have a cancellation fee that is reasonable (if cancellation is on less than a few days' notice). But the arbitrator also has the ability and discretion to waive that fee should circumstances so warrant.

Dani Schwartz:

It may be helpful to note that FINRA imposes cancellation/adjournment fees, as well as heightened "last minute" adjournment/cancellation fees. However, these fees are small compared to the cancellation fees generally charged by individual arbitrators, at their own discretion.

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