San Antonio Firm Taking on Arbitration Giants

San Antonio Express-News (TX)

S.A. firm taking on arbitration giants

Author: Adolfo Pesquera STAFF  

Section: Business

Published: October 12, 2008

Five South Texas lawyers – one a judge and four in their own practices – entered a joint venture this summer with the idea that a regional arbitration group could be more competitive on cost and time than the national organizations most businesses use. Conflict Solutions of Texas, their creation, claims the distinction of being the only regional arbitration service in Texas. Local attorneys that have heard of the firm feel it is long overdue.

“What you have at work here that makes this so special is a team that commands enormous respect all over the state,” said Sam Millsap, a former Bexar County district attorney now practicing commercial and employment law.

Millsap is not a partner in the venture.

“George Brin is one of those people that can pick up the phone and call anybody in Texasand ask, ‘Will you be on my panel?’ and most people will say yes,” Millsap said. “Most lawyers can’t do that.”

Brin, the lead partner in Conflict Solutions, has been recognized three years running by Texas Monthly as one of Texas’ “Top 50 super lawyers.”

Brin, in the Brin & Brin P.C. firm’s San Antonio office, learned like many trial lawyers through years ofexperience that arbitration didn’t live up to its promises. An alternative to court litigation that came to prominence in business-to-business disputes in the 1980s, arbitration was touted as cheaper and faster.

“The concern became that arbitration was costing as much or more than litigation and was almost as time consuming,” Brin said.

The South Texas-based partners believe a regional alternative has inherent advantages in an industry long dominated by national and international organizations such as the American Arbitration Association and the Global Arbitration Mediation Association.

Conflict Solutionspromises savings on several fronts, and a key penny-pincher involves travel.

For example, San Antonio lawyer Ricardo Cedillo cited a case where he represented Hilton Hotels Corp. The company was in an arbitrated dispute over a territorial exclusivity deal with Palacio del Rio Ltd.

“In the American Arbitration Association, you end up with arbitrators from all over the country,” Cedillo said. “When you plug into that process, travel is going to be expensive.”

The arbitrator in the Hilton case was a retired federal judge living in Maryland. That required Cedillo to live in Maryland for three months.

Brin believed there was sufficient legal expertise in Texas to build a regional panel of well-respected arbitrators.

“The novelty of George’s concept,” Cedillo said, “is in bringing together a pretty good panel that can hear cases that would normally go to AAA.”

Going to arbitration can occur for many reasons between businesses. It can involve an attempt by one side to break a contract, damages caused by a failure to complete an order or fraud.

At present, most business contracts include a clause specifying an organization as arbiter. That can impede Conflict Solutions from acquiring clients.

“Many of these contract clauses require AAA,” Brin said. “Since we’re brand new, it’s never going to be us.”

About 85 percent of all arbitrations are generated by pre-dispute agreements. However, if both parties opt to use an alternative arbitrator, they may do so regardless of the contract, said San Antonian Don R. Philbin Jr., a partner in Conflict Solutions and a recognized national expert on alternative dispute methods.

The other partners are state District Judge Keith Williams in Kerr County, Donato D. Ramos in Laredo and Wade B. Shelton ofthe Shelton & Valadez P.C. law firm in San Antonio.

Brin puts a strong emphasis on the quality of the panel.

“Integrity is what we are marketing,” Brin said. “Because there is no appeal, you absolutely have to be able to assure people that the individual they select is going to be absolutely straight down the middle.”

Cedillo, while not an investor in Conflict Solutions, hopes it prospers because arbitration as practiced today has its faults, he said. Cedillo noted the distress of stockholders who get in disputes with their stockbroker firms over such issues as churning an account or disregarding an investment instruction.

“That is completely one-sided,” Cedillo said. “It’s controlled by the industry. An arbitrator in that field depends on his appointments. If he rules against the brokerage firm, he can kiss away any hope that brokerage firm will ever hire him again.”

The arbitrator of choice is built into those contracts, however, and Cedillo can only hope the day will come that Conflict Solutions will get a piece of that action.

Millsap holds the view that this will happen.

“George’s approach is exactly what is needed at this point,” Millsap said, referring to Brin. Millsap predicted that when Texas lawyers write up commercial contracts, “George’s company will be the company ofchoice in two to three years.”

Beyond being a regional alternative, Conflict Solutions will differentiate itself by not charging administrative filing fees, an expensive upfront cost that effectively prohibits many clients from pursuing a complaint. And because their contract denies them access to courts, damages never are remedied.

Other savings come through encouraging the use of summaries in lieu of dumping large volumes of documents on the arbitrator, and by limiting the number of expert witnesses.

“The advantage of our panel is they get it,” Brin said. “They don’t have to be beaten over the head with four or five experts.”

Brin’s group will push mediation at an early stage. Whether through a mediated settlement or arbitration, the goal is that most cases be resolved within nine months. Corporate disputes in a typical arbitration often drag out for several years, and that is often only an advantage to the arbitrator.

“We’re taking a bit of a gamble here,” Brin said, “in the sense of, by not protracting the matter, obviously our arbitrators will not generate the income they would otherwise. But our philosophy is this – if we can get these disputes resolved in a fair and expedited matter, people are going to hire us again.”

Millsap said lawyers will be attracted to Brin’s emphasis on mediation versus moving straight to arbitration.

“Most cases that go to mediation settle,” Millsap said. “And settlement is always better because parties retain control; that’s going to be very important to business clients.”

Still, Millsap has reservations and is curious to see just how different Conflict Solutions will be from traditional arbitrators.

“I don’t think George’s group will hammer at this directly, but there seems to be a tendency on the part of arbitrators to split the baby rather than make a decision,” Millsap said. “Instead of saying, ‘You win. You lose’ – shoot somebody is the way I put it – they give something to both sides.

“And from what I hear, this is a pretty common complaint.”

George Brin (left) and Wade B. Shelton are two of the five partners in Conflict Solutions of Texas, a regional arbitration service. Local attorneys feel it is long overdue. PHOTO: COURTESY OF CONFLICT SOLUTIONS OF TEXAS

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