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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Steve Marino
June - July 2006

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Weigh both sides before including arbitration clause

Although arbitration can provide significant benefits, it also has some drawbacks. To intelligently decide whether to arbitrate legal disputes in a particular setting, decision-makers should be aware of the pros and cons.

Pros of arbitration
Privacy. Arbitration is a private process to resolve disputes process in which the parties make their claims and defenses to one or more neutral third parties who decide the dispute outside of court. In contrast, lawsuits in the court system normally are open to public and news media scrutiny. This includes court files, records and hearings.

Arbitration is preferable for parties who don’t want unfavorable publicity or who want to preserve their confidential and proprietary business information, trade secrets or other details of their dealings.

Speed. Court resources haven’t kept pace with the continually growing number of state and federal lawsuits. Although Minnesota state and federal courts are high-quality and generally are diligent in processing their dockets, civil cases usually take about a year or more to reach trial or disposition and often take even longer in courts outside of Minnesota.

Arbitration often is faster than litigation because it is more informal and streamlined. The parties can choose from more arbitrators and hearing locations than there are judges and courtrooms.

Cost. Even though filing fees and hearing costs may be higher in arbitration than in a lawsuit, overall the arbitration process may be cheaper than litigation because of the often faster, more streamlined and informal nature of arbitration, which usually has stricter limits on discovery.

Discovery is the pre-trial information-sharing and evidence-gathering process between parties. It accounts for most of the costs and delays of civil suits. Arbitration also avoids the time and expense of jury selection.

Choice of neutrals. Parties can select arbitrators with extensive experience and knowledge about the relevant industry while a judge assigned to handle a particular lawsuit may not have relevant business experience. Repeat players may prefer arbitration after finding arbitrators with whom they are comfortable.

Avoids jury unpredictability and time. Jury trial results sometimes are hard to predict, and jury trials usually take longer than arbitrations.

Preserving relationships. Due to its private, informal nature, arbitration usually is a less hostile and less adversarial setting than a lawsuit. This is important if the parties want to preserve their relationship.

Cons of arbitration
Virtually non-appealable. For policy reasons, state and federal standards usually uphold arbitration decisions, whether right or wrong, as long as the arbitrators didn’t act corruptly. Indeed, even if clearly wrong, arbitration decisions seldom are overturned by courts. In contrast, appellate courts are more willing to reverse erroneous trial court decisions and jury verdicts.

Decisions don’t necessarily follow the law. Since a meaningful appeal is virtually nonexistent in arbitration, arbitrators needn’t and often don’t follow the law. Also, some arbitrators are not lawyers.

Arbitrators are more likely to reach compromise results based on their notion of fairness instead of ruling based only on the facts and the law. For these reasons, it is harder to win on legal or technical grounds or at an early stage in arbitration as compared to litigation. A party who is unsympathetic but very strong on the facts and law actually may be better off in court than in arbitration.

Need for public precedent or emergency relief. Another consideration is that arbitration usually is less desirable than litigation when a party wants a clear, public precedent to guide future conduct and influence other non-parties.

Likewise, litigation may be a better avenue where a party needs quick relief such as an emergency injunction to stop an adversary from doing something harmful. Minnesota courts usually quickly address time-sensitive matters.

Lack of knowledge about potential arbitrator biases. Another downside with arbitration is that arbitrators with extensive business or legal backgrounds may have prior but undisclosed dealings with an adversary or adversary’s attorneys. It can be difficult to know the potential biases of arbitrators that may rise from their personal relationships.

In contrast, judges are less likely to have had any recent direct dealings with most business parties or their lawyers. Since arbitration is private, it can be difficult to find out how a particular arbitrator previously decided similar disputes compared to judges, whose decisions are in the public record.

Lack of discovery. The streamlined nature of arbitration and its strict limits on discovery (often an advantage) may be a big disadvantage for a party where an adversary (such as a large competitor) controls most of the relevant information and witnesses.

Scheduling. Because arbitrators are well-paid by the hour, once an arbitration hearing starts in a complex case, arbitrators have less incentive than courts do to finish quickly. Likewise, arbitrators may be more tolerant of a party’s delaying tactics.

Courts usually have busy calendars and are paid no more for spending more time on a matter and thus once trials start, judges ensure that they proceed expeditiously.

All business owners should carefully consider the pros and cons of arbitration before deciding when to use it to resolve disputes. It is wise to think carefully before including an arbitration clause in a contract.