were had in only 156 cases, which amounts to 9.6 percent of all appeals, or 2.5 percent of all Awards decided; or only 1.5 percent of all cases assigned to the arbitration system.

The total cost of arbitrators' fees, which are paid out of county funds, has averaged $50.97 per case instead of the scheduled $110 per case, due to the large number of settlements without fee and due to the recapture of the fees paid in the cases appealed. There are, of course, additional costs for the salary of the Arbitration Commissioner and other indirect and overhead costs. The cost is deemed modest in view of the fact that the arbitration system handled 14.1 percent of the Civil Docket at the $5,000 maximum limit, and will handle considerably more than that with the new maximum limit of $10,000.

The system described was instituted by the County Court in Cuyahoga County, which comprises the Cleveland metropolitan area-the most populous and litigious district in the State. The early results were so successful that the Supreme Court of Ohio promulgated a Rule of Superintendence specifically authorizing any County Court in the state to adopt a similar plan. The Rule ended any question as to the power of the Cuyahoga County Court to continue its plan. Since that time the plan has been adopted in Hamilton County, which is the Cincinnati area, beginning in 1972. Results have been quite similar in percentage, although the total number of cases is a lesser amount in all categories. The plan is also in effect in some of the smaller counties, such as Richland and Stark, which include the cities of Mansfield and Canton respectively. In general, the plan was adopted to reduce delay in congested docket areas, and it has produced the intended effect of reducing congestion. Why does the plan work? There is no magic in it, and no great compulsion. It works because of some easily identifiable human factors. First of all, it is the lawyers for the parties who settle cases. They are busy, and constricted with crowded and conflicting schedules. They do not meet to concentrate on the same file and appraise its value until some scheduled event occurs to make them work on the same case at the same time. The pre-trial hearing in which the case is assigned gives them notice the case has to be attended to in the immediate future; and the hearing date of the Arbitration Panel puts a final date before which preparation, evaluation, client consent, and settlement discussion has to occur.

The arbitrators themselves are experienced men who possess and exercise a trained judgment in making their nonconclusive award. It is rather surprising to observe that in Arbitration Panels plaintiffs' lawyers seem to be less demanding than they are in evaluating their own individual cases, and defendants' lawyers seem more generous in awarding damages and in finding liability than they tend to be in the defense of their individual clients. The independent judgment of the Panel has considerable persuasive effect.

There is another factor. Many claimants want desperately to be heard. They want someone in the community to know what they have suffered, and they want the defendant to answer in public for his wrong. The arbitration hearing is formal enough to satisfy the need for public knowledge and public concern. An important feature of the system is that there are three arbitrators, and not a single auditor. Group decisions tend to be less erratic, and more moderate, than individual decisions.

The arbitration system co-exists within the jury trial system, and the arbitrators are continually attuned to prevailing jury attitudes on both liability and damage factors. Arbitration awards parallel the current jury averages, without the extremes. There may be additional benefit to the plan in the fact that the roles of arbitrator and advocate for a party are reversed from time to time. The arbitrator lives and works within the adversary trial system, and his judgment must be influenced by his repetitive experience. Whatever the reason, the hearings are held with mutual dignity and respect, and a minimum of showmanship.

The plan commands the support it receives because it does not threaten any of the lawyer participants with the elimination of their profession, and does not threaten the party with deprivation of constitutional rights. It could not function so smoothly and well if the Awards were final and conclusive or if they were to be laid in evidence before a subsequent jury.

How would this system work with the Federal District Court framework? It is, by nature, intended to apply chiefly to tort cases where the damages are not large. There is no reason to believe that the size of the Award is a necessary

limiting factor. Most trial lawyers can evaluate an injury worth $100,000 as readily as an injury worth $1,500. The arbitration plan could work in Jones Act, FELA, and Diversity tort cases without respect to dollar amount, if the arbitrators were chosen from the trial lawyers in the federal bar who have experience in those matters. It could work equally well in Federal Tort Claims Act cases, as a preliminary to Judge trial rather than jury trial.

The 1976 Annual Report of the Director of the Administrative Office of the United States Courts gives statistics, in table I-30, of the dispositions in the Calendar year 1976 of all categories of cases. There are separate columns showing the manner of disposition, classified as No Court Action; Before Pre-trial; During or After Pre-trial, and Trial. In cases classified as Federal Question cases and as Tort Action cases, the subheads are FELA, Marine Personal Injury, Other Personal Injury, and Other Torts. In this total group 7,264 cases were disposed of, with 645 dispositions by trial-about 9 percent. The cases classified as Diversity-Tort include Marine, Motor Vehicle, Other Personal Injury, and other Tort. In the total of 14,030 dispositions, some 2,081, or 14.8 percent, were terminated by Trial.

There were 2,113 cases in the group classified as United States cases-Tort Action, subclassified as Marine; Motor Vehicle, and Other Personal Injury and as Other Torts. A total of 314 cases, or 14.8 percent, reached disposition in Trial. The combined totals for this entire group, as described, would be: 23,407 cases disposed of; 9,595 with No Court Action; 3,717 Before Pre-trial; 7,055 During or After Pre-trial; and 3,040 by Trial. In percentages, 41 percent of the dispositions were with No Court Action; 16% were Before Pre-trial; 30 percent were During or After Pre-trial and 13 percent required Trial.

It is not clear, from the Report's captions, whether "Trial" includes both verdicts and settlements or other disposition during trial. The 13 percent Trial figure should be compared with either the 3 percent of arbitration cases which are called for trial, or with the 1.5 percent which are tried to final verdict. It is clear that if the arbitration plan worked as well in the District Court cases in the Ninth Circuit, a substantial saving in judicial time and resources could be made.

It must be observed, however, that the class of cases described are most certainly not the cause of the docket congestion that has inspired many recent demands that all Civil Tort litigation must be cast out of the Federal system. The same 1976 Annual Report shows the filings of all civil cases during the fiscal year 1976, and during each earlier year to 1966. In 1966, 70,906 total civil cases were filed. In 1976, 130,597 were filed-an increase factor of 1.84. The following table shows the filings and increase or decrease in selected categories of cases:

It would appear that the types of cases best suited to the arbitration plan described above have not increased in annual filing rate from 1966 to 1976, but have instead shown a moderate decrease. Other types of civil litigation are increasing in heavy quantities. There may be some debate whether alternative methods for dispute resolution should be imposed only on those citizens injured in body or mind in order to make room for the new litigants injured in pension rights, job rights, or civil rights. If this is necessary, the imposition of the mandatory but nonconclusive arbitration would seem to be a minimal burden on the basic rights of the victims of tortious injury.

STATEMENT OF CRAIG SPANGENBERG, ESQUIRE, CHAIRMAN, CONGRESSIONAL LIAISON, ASSOCIATION OF TRIAL LAWYERS OF AMERICA

Mr. SPANGENBERG. I hope you appreciate my difficulty. I have been on at least two different commissions for some years that have dealt with arbitration. I have much to do with the Cuyahoga County approach to arbitration. I have written and spoken independently about this. But, I am speaking to you now on a matter on which the board of directors of the Association of Trial Lawyers of America has not taken, with respect to this bill, an official position. So, I would like to distinguish between my personal opinions as an independent scholar, if I may, and official board opinions.

I have noted that in two other areas of tort law, the association formally has adopted the concept of arbitration for cases up to $25,000. I would see no problem with that limit.

With respect to the bill itself, however, I think clearly the Office For Improvements In The Administration Of Justice is relying upon the success of certain experimental plans, the Philadelphia plan, and the Ohio plan. Those plans have, indeed, been successful.

In approaching questions about the bill, I would like to address myself briefly to the reasons why, on principle, those plans have been so successful to see whether they will translate into the Federal plan. Taking the Cuyahoga County plan: Cases are referred with a cutoff date of 48 hours before the hearing after which arbitration fees must be paid. For every 100 cases referred to arbitration, 25 of the 100 will be settled by the parties before the cutoff date, and another 15 will be settled within that cutoff period, leaving a total of 40 cases settled before the arbitration hearing.

In roughly 60 cases of the 100 that go to full arbitration hearing, the findings are about 40 for the plaintiff and 20 for the defendant which is in accord with the general jury run in Cuyahoga County.

Of those 60 cases in which there is an award, either pro plaintiff, or pro defendant, in 45 the award will be accepted and 15 will be appealed.

But the appeal appears to be, to some extent, a move to delay the case further, or to state a bargaining position to create obstacles, in order to try and get a settlement below the award. Almost all of the appeals are filed by the defendant, who is insured. Of those 15 cases appealed, 12 are actually settled before trial and another one and a half during trial but before a verdict. So, the overall result is that only 112 percent of the thousands of cases that are referred to arbi

tration have gone on to trial and jury verdicts. This is a very, very high percentage of success.

Why is that so? I think it is so because of some particular features. of the plan.

First, we are dealing with cases in which the trial lawyers in the community generally have considerable knowledge, and they are the arbitrators.

The plan requires three. The chairman is selected from a list set up by a screening committee of the court who know who the top trial lawyers are. The chairman is always a seasoned trial lawyer with a great deal of experience. The other two are taken from two other lists, one being chiefly lawyers who chiefly are found on the plaintiff's side and the other list chiefly lawyers who are found on the defendant's side. So there is, to the extent possible, a balance in bias.

The Federal plan does not require that nor does it discourage it, in that under the Federal plan the court itself can set up its own criteria for who the arbitrators will be, and how they will use the list.

Unless there is some feeling in the bar that the arbitration panel is balanced, however, you can expect resistance. A very important feature of the Ohio plan is that the arbitration and the trial by the trial lawyers are all conducted by a group who are in constant contact in the trial field. There is constant peer review, if you will, which does eliminate a lot of the posturing that might occur in a full jury trial. These men know each other. They know that everyone in the room is experienced. The arbitrations proceed, really, with an overwhelming majority of all facts stipulated, and all bills stipulated, and all medical reports stipulated. The medical reports are evaluated because some doctors have a well-deserved reputation of being overly pesimistic and others overly optimistic. But the arbitrators all know who those doctors are and know how to evaluate their reports.

So, you are dealing with a very knowledgeable and expert panel. I think that is essential to the plan, if you are going to have short arbitrations which is the whole reason we have a very modest fee. I might tell you that the fee has some historical background. In order to try the plan, since the court was without funds, we got some grants from a foundation. We were trying to spread the grant as far as we could, so we set fees accordingly, and called for recapture of fee on appeal. The recapture was simply because it was an appeal, and it was not collectible as costs. In that sense, we follow the Philadelphia system, where paying the arbitration fee does not lead to a possibility of getting the fee you have paid back if you win the case eventually. I think that, too, is a good idea.

Beyond that I do have a very serious criticism of the bill as it is drawn. I was a litle troubled to hear the constitutional aspect of the bill lightly dismissed by earlier speakers. I recognize that jury trial, although it is an absolute right, is a right which may be constricted, to a limited extent, by minor regulatory details. The Ohio plan has not been subjected to the constitutional test and it is not likely that it will be because it enjoys the universal support of the

30-434-78-8

bar and the court. We like the plan. We are not about to have it declared unconstitutional.

That will not be so in the Federal system which is a much larger plan and encompasses a greater variety of cases and much more difficult cases because of the size of your cutoff.

I do want to point out to you, and have in my formal address, that we are not dealing here with penalties that are minor. Let's assume that the plaintiff seriously believes that his case is worth at least $30,000. He arbitrates it because he doesn't get that offer. The arbitrators award him $20,000 for any one of a number of reasons. He is still dissatisfied and wants his jury trial and goes back on the docket. In some courts he will wait 2 years and in other courts even more than that for trial.

Let us assume that he gets a very conservative jury and gets an award of $20,000. The penalty then is extraordinary. He must pay interest on the award he did not get and could not use and pay it into court, almost as a fine. We are not dealing with small numbers.

Two year's interest at 6 percent on $20,000 is $2,400; plus the costs. When you get to that level of penalty, I think you have raised a serious constitutional problem. I think, really, you have destroyed the whole concept of our voluntary arbitration, which is not to make it a substitute for jury trial, but an adjunct to it. We want to get rid of the smaller cases. We know the court is burdened with them. Arbitration is a very effective way to do it. It takes time and the arbitrators are not serving for the fee which is totally inadequate. In fact, many of them have said that they feel the fee is insulting and they would rather serve for nothing. I think we would have as many arbitrators if there were no fee at all.

They are serving in friendly relationship with the court and with a very sincere desire to help the court with its burdens. At the same time there is a selfish desire to free the trial rooms for their own larger cases. So they want to see the docket moving.

But it is friendly, and it is voluntary. Once you turn it around to say that you are going to set up a penalty system, not only to make them arbitrate, but to make them accept the award, then I think you will lose that spirit of cooperation.

I might say that this is a purely personal observation, Senator. There are some members of the bar and I number myself among them, who are very uncomfortable these days wondering just how much friendship there is from the bench toward the bar. We see a great deal of public criticism. I wake up many mornings wondering which half of the bar I am in.

We see a great drive to get rid of trials, and what we consider to be time honored, and time tested, and fundamental rights, and the things for which courts were created. We now feel the Federal system wants to get rid of us so that they can go decide constitutional cases, civil rights cases, prisoner petition cases, and a host of cases of a different type than the traditional mix.

On that subject, in my ninth circuit speech, I did go through the reports of the administrative office and found what was surprising to me. I thought there had been an increase in tort cases, I had read so