An AAA-ICDR Innovation
AAA Alternative Fee Arrangements
For Arbitrators in Commercial Arbitrations

WHAT is this?

The AAA-ICDR^® is the first national arbitral organization to offer an alternative fee arrangement (AFA) option, adding cost savings, fee transparency, and predictability to the arbitration process.

WHY has the AAA^® implemented an AFA option?

AFAs have become widely used in the legal industry, where businesses utilize alternatives to hourly rates for their outside counsel. The AAA inaugurated the AFA option in response to current and past AAA clients who, when surveyed, expressed an interest in having an AFA for arbitrators as well.

WHEN is it available?

The Alternative Fee Arrangement option currently is available for two-party commercial and construction cases utilizing a single arbitrator, following either the regular track or large, complex case track.

HOW is it implemented?

Prior to the appointment of the arbitrator, parties can select from the two AFA options available:

Fixed Fee Arrangement: The parties and the selected arbitrator agree to a set overall fee for the case, divided into fee segments for the pre-hearing, hearing, and post-hearing phases of the arbitration.

Capped Fee Arrangement: The parties and the selected arbitrator agree to a maximum fee for the entire process; the arbitrator’s hourly rate is billed and paid until the cap is reached.

WHO are the arbitrators?

The full panel of AAA arbitrators may agree to participate on a case-by-case basis. If parties are interested in pursuing the AFA option, at the time of arbitrator selection, the AAA invites case-appropriate arbitrators to submit a fee proposal for that particular case. The case manager then advises the parties of specific arbitrator availability and their compensation expectations or budget, and the parties make their selection.

THE PROCESS

Alternative Fee Arrangement Case Information Sheet

Parties who have agreed to use the AFA option will jointly complete this form, which the case manager provides to the arbitrator candidates prior to appointment. Based upon evaluation of the information, the arbitrator proposes compensation expectations or budget for the parties’ approval. The case manager may obtain fee proposals from the arbitrator candidates prior to the parties’ final selection so that the parties may consider their compensation expectations when selecting the arbitrator.

Alternative Fee Arrangement Agreement

The parties and the arbitrator sign this form confirming the compensation arrangement. The form also addresses what happens if the case is more complicated than originally estimated.

Should this occur, the AAA may discuss with counsel ways in which to contain costs to keep the case within the original budget expectation. The arbitrator may request an increase in fees if there is a material increase in what is reasonably anticipated based on the AFA Case Information Sheet, such as an increase in the number of hearing days or significant increase in arbitrator involvement in the pre-hearing or post-hearing phases. The AAA will communicate such request to the parties.

Termination of AFA Option

Parties may agree to terminate the AFA at any time but remain responsible for any fees due prior to termination. The AAA reserves the right to remove the case from the Alternative Fee Arrangement program and revert to the arbitrator’s usual hourly or daily rate for service as indicated on the panelist’s resume if the budget expectations are materially different from the actual work required to handle the case.

For more information, please fill out the form at the upper right.