Arbitration occupies a distinct procedural space relative to litigation, and the role of the expert witness shifts accordingly – though the shift is not uniform. FINRA arbitration, AAA and JAMS commercial arbitration, and international arbitration under ICC or LCIA rules each impose different requirements on expert procedure. This discussion focuses primarily on FINRA and domestic commercial arbitration (AAA/JAMS), where expert practice is most comparable; international arbitration, governed in part by the IBA Rules on the Taking of Evidence, follows its own conventions and is not addressed here.
What is the Role of an Expert in Arbitration?
The expert’s function is to explain – not to advocate. Advocacy is the province of counsel; the expert’s obligation is to provide independent, well-supported analysis and communicate it clearly to the finders of fact. That obligation holds regardless of forum, even though the procedural form around arbitration is lighter than in courtrooms.
Under the FINRA Code of Arbitration Procedure (Rule 12000 series) and the AAA Commercial Arbitration Rules, there is typically no formal written expert report of the kind required under Federal Rules of Civil Procedure 26, and depositions of experts are frequently limited or dispensed with entirely. This reduces cost, but it also narrows counsel’s pre-hearing visibility into what the opposing expert will actually say. A well-chosen expert helps manage that uncertainty – by anticipating the range of positions a technically competent opposing expert is likely to take, so counsel is not encountering the substance of that testimony for the first time at the hearing.
The expert may also serve as a sounding board for counsel on technical matters: identifying which positions are analytically defensible and which are not, or explaining what an opposing expert’s methodology does or does not account for. This is distinct from shaping case strategy or argument – the expert clarifies the substance; counsel decides how to use it.
The expert is subject to cross-examination, as in litigation, but the exercise typically operates under relaxed evidentiary rules. Also, arbitrators demand that experts be qualified, but without the stringent Daubert-style gatekeeping that governs expert admissibility in federal court. Cross-examination in arbitration is therefore less about excluding the expert’s testimony on threshold grounds and more about testing its substance directly before the tribunal.
Selecting an Expert for Arbitration
Because arbitration removes much of the discovery scaffolding that litigation provides, the selection criteria shift. Relevant factors include: prior experience testifying in arbitration specifically (not only via deposition and courtroom), demonstrated ability to prepare a coherent opinion without a mandated report format, and comfort operating on compressed timelines. An expert accustomed to the extended preparation cycle of federal litigation may not adapt well to an arbitration hearing scheduled on shorter notice with less procedural structure.
How Can an Expert Be Effective in Arbitration?
Effectiveness turns on the expert’s ability to inform the panel accurately and efficiently. Key factors:
- Substantive rigor without over-reliance on formal process. Absent a report, the expert must present a coherent opinion through testimony and demonstratives alone.
- Calibration to the tribunal’s composition. Arbitrator panels vary in industry sophistication; counsel should assess, for example, whether a given panel includes members with direct securities, banking, or trading experience, and the expert’s explanatory approach should be calibrated accordingly.
- Effective use of demonstratives. Given compressed hearing time and the likelihood of lay arbitrators, demonstratives are not a peripheral aid – they often carry the bulk of the teaching function that would otherwise occur through a lengthy report or extended testimony.
- Efficient use of hearing time, given that arbitration hearings are typically shorter than trials.
Why Is It So Important That an Expert Can Explain Concepts in Layman’s Terms?
Arbitrators are not necessarily lawyers, and even in FINRA arbitration, they are not necessarily versed in the specific industry practices at issue – broker-dealer supervisory structures, AML/KYC protocols, or the mechanics of a particular trading strategy. Unlike a judge operating within a rules-based framework with built-in procedural safeguards, an arbitrator must often be taught the substantive business practices relevant to the dispute in order to reach a sound decision.
An expert who cannot translate technical concepts into accessible terms without sacrificing accuracy fails at the core function of the role. In arbitration, the expert operates principally as a teacher to the panel.
Cost and Efficiency Considerations
The absence of a formal report and limited deposition practice generally reduces expert hours relative to litigation, which is the primary driver of arbitration’s cost advantage. That reduction is offset in part by compressed hearing preparation, which requires the expert to consolidate analysis into a shorter window. Counsel advising clients on forum selection should weigh this net effect rather than treating arbitration as categorically cheaper.
In summary, when you’re selecting an expert for arbitration, be sure to consider these key things: a credible/Relevant expert for the given industry/matter, experienced in the arbitration setting, and able to translate complex concepts for a wide array of potential arbitrator perspectives.
