Discovery often comes with a high price tag, even in supposedly lower-cost arbitration proceedings. Discovery is how parties gain access to information related to the claims and defenses. The primary components include interrogatories (written questions), requests for the production of documents, requests for admissions of fact, and depositions of lay witnesses and expert witnesses.

To curb the scope of discovery, an arbitration clause should regulate the number of interrogatories and written requests each party is allowed to issue and the number of depositions each party is allowed to take. The clause can be written to vary the limits depending on the size of the amount in controversy. Smaller cases under $100,000 could be limited to an exchange of relevant project files. Cases between $100,000 and $1,000,000 could provide for more discovery, and larger cases could limit parties to 10 interrogatories, 10 requests for production of documents, 10 requests for admission and four depositions (excluding expert depositions). Any discovery beyond those limits should require the consent of both parties.

Limit Electronically Stored Information
Another mechanism for restricting discovery is to limit the type and number of documents that need to be produced, specifically electronically stored information (ESI). In today’s world, electronic data is created, exchanged and stored at astronomical rates. Costs related to document production alone can easily reach six figures. Documents in a construction dispute can be placed into two broad categories: project files and emails. A request for all project files can encompass hundreds of thousands of pages of documents. The required document production should have been limited to party-specific documents (contracts and change orders between the parties, formal notices sent between the parties, pay requisitions, etc.) and commonly stored project files that are likely to be relevant in most construction disputes, such as bid schedules and as-built schedules, bid specifications and as-built drawings, daily reports, meeting minutes, cost reports, certificates of completion and occupancy, and punch lists.

That list can be expanded or reduced based on a general contractor’s own document management practices, but anything beyond those project files, such as reports to the owner or inspection reports, should require exigent circumstances and approval from the arbitrator.

Narrow Scope for Email Production
Perhaps the best way to curb discovery costs is to define a more narrow scope for email production. Assuming a project manager sends and receives roughly 500 emails related to a project that lasts one year, which is a conservative estimate, that employee may have 26,000 project-related emails in his or her email account. To collect, process and review those emails would easily cost several thousands of dollars. But there are ways to alleviate that burden.

To begin, an efficient arbitration clause for larger cases should require the parties to create a search term list to locate potentially relevant emails. That list should be limited to perhaps no more than 10 terms per side, unless the parties agree otherwise. The number of custodians whose email accounts will be searched by both parties also should be limited. Five custodians per side is appropriate in most cases. These steps could drastically reduce the number of emails that each party has to collect, process, review and produce. The costs associated with that process directly correlate to the size of the data set, so any reduction in gigabytes results in savings.

In addition to reining in the scope of discovery, the arbitration clause should contain a cost-shifting provision. The standard American rule requires each party to bear its own litigation costs, including discovery costs, unless the parties agree otherwise. A well-crafted cost-shifting provision can require the requesting party to split the costs of any email collection. That forces counsel for the requesting party to be more mindful of the documents it seeks.

Get Creative
Finally, because arbitration clauses are, at their core, contractual agreements, the parties can be creative when crafting them. For example, an arbitration clause could permit one or both parties to demand mediation based on briefings and position statements, with a deadline for resolution set at 60 days. If the mediation is unsuccessful in resolving the matter, the clause could then require the mediator to immediately assume the role of arbitrator.

Next, within a short time period identified in the clause, each party would submit its final offer or demand, and the arbitrator would be directed to issue its award by adopting one of the parties’ offers without modification. Of course, other options are available, but be aware that an arbitration clause need not be limited to conventional rules and processes.

Good facts win cases, and parties to a dispute should have the ability to collect the relevant evidence for a fair airing of genuine issues. However, arbitration is premised on using arbitrators with knowledge of the subject matter to conduct more efficient proceedings. A lot of the uncertainty and expense can be eliminated with a well-crafted arbitration clause. 


Josh Levy and Brennen Soval are partners at Husch Blackwell and Leslie Gutierrez is an associate. For more information, visit huschblackwell.com.