This should be of interest to plaintiffs and attorneys who hope to conduct business litigation or arbitration with a contingent fee.
Homeowners hired a construction company to build an 8000 square foot house, 2000 square foot guest house, pool and pool house, tennis court, pavilion and multi-car garage on their 12 acre property. The project was to cost $11.3 million. About 2 and ½ years into the project the builder stopped work, alleging the homeowners breached their contract by failing to pay for increased construction costs due to a design change. The homeowners claimed that the builder had delayed work and overrun costs.
The homeowners wanted the case heard in court. The builder wanted to arbitrate. The case was ultimately heard by a three member arbitration panel. The homeowners were ordered to pay the construction company $5.75 million in legal fees and arbitration costs.
The homeowners believed that they would have won with a jury and that the arbitrators were biased because they had formerly represented construction companies.
Obviously, it can matter a great deal to a contingent fee plaintiff whether his case gets tried by a jury or arbitrators. In either case, however, it is very important to pick the right audience, whether they are jurors or arbitrators!