Arbitration Cost Sharing: "Split Equally" Is Long Island Universal

Arbitrator fees split 50/50

The arbitrator's fees (typically $3,500-$5,000 per day) are divided equally between the district and the union. Each side pays half.

AAA administrative fees

Any administrative fees charged by the American Arbitration Association (or other administering body) are split equally.

Hearing facility costs

If the arbitration is held in a paid facility, those costs are split.

Court reporter / transcripts

Costs for court reporters and transcripts are split equally (when used).

The total cost picture

For a typical Long Island arbitration:

• Arbitrator: $7,000-$10,000 (2-day hearing)
• AAA fees: $500-$1,500
• Court reporter: $1,500-$2,500
• Total: ~$10,000-$14,000

Each side pays approximately $5,000-$7,000.

The structure makes both sides bear similar costs for using arbitration. This affects the calculation of whether to settle vs. arbitrate.

Neutrality

Splitting costs equally reflects the principle that arbitration is a neutral dispute resolution mechanism. Neither side should bear disproportionate cost for using the process.

Settlement incentive

When both sides face similar arbitration costs, they have similar incentives to settle. Asymmetric cost structures could distort settlement dynamics.

Predictability

Each side can predict its arbitration costs roughly: "we'll pay half of $10,000-$14,000 per arbitration." Budget planning is straightforward.

Historical precedent

The split equally structure has been the public-sector labor arbitration default for decades. It's the established norm.

The structure

The party that loses the arbitration pays the full arbitrator costs. The winner pays nothing.

The intended effect

This is intended to discourage frivolous grievances and weak defenses. Both sides have skin in the game:

• The union won't pursue a grievance unless they believe they have a strong case
• The district won't aggressively defend unless they believe they have a strong case

The strategic complication

"Loser pays" creates strategic dynamics that the split equally structure avoids:

• A union with a weak case may decline to arbitrate to avoid the loss cost
• A district facing a weak case may settle rather than risk losing
• Both sides may engage in more pre-arbitration positioning

The structure changes the cost calculation but may not improve dispute resolution quality.

The grievance volume implication

In theory, "loser pays" should reduce grievance volume. In practice:

• Strong grievances continue to be filed (the union knows they'll win)
• Defensible cases continue to be defended (the district knows they'll win)
• Marginal cases are less likely to be pursued

Whether this is a net positive depends on what the parties want from arbitration.

The structure

When one party defaults on procedural requirements (missing deadlines, failing to appear, etc.), that party pays the costs.

The intended effect

The structure encourages procedural compliance. A party that drags out the arbitration or fails to follow procedures faces cost consequences.

The narrow application

Unlike "loser pays," this structure only applies to procedural defaults, not to losing on the merits. A party can lose substantively without paying full costs as long as they followed procedures.

This is a narrower structure that targets specific behaviors.

Direct cost split

The arbitrator and administrative fees are clearly split.

Indirect cost asymmetry

Each side bears their own:

• Attorney fees
• Time investment
• Preparation costs
• Document production

A party with a higher-priced attorney spends more total than a party with lower-priced legal representation.

The "true total cost"

For a typical arbitration:

• District: $5,000 in split costs + $20,000 in attorney fees = $25,000
• Union: $5,000 in split costs + $15,000 in attorney fees = $20,000

The split equally only applies to one component. The total costs may be asymmetric.

The "what would arbitration cost?" question

Both sides should consider arbitration costs when deciding whether to settle. A grievance worth $30,000 is different from a grievance worth $3,000.

Settlement vs. arbitration math

For a grievance worth $X:

• Settlement at $X: both sides save arbitration cost
• Arbitration won by union: union gains $X, both sides paid arbitration costs
• Arbitration won by district: union gains $0, both sides paid arbitration costs

The arbitration cost is roughly $5,000-$7,000 per side. If the grievance is worth less than this, arbitration may not be cost-effective for either party.

The grievance value question

Some grievances aren't easily quantified:

• Discipline disputes (employment value)
• Procedural grievances (process value)
• Class grievances (multi-teacher impact)

These can be worth far more than $5,000-$7,000 to one or both parties.

The structure

The losing party pays a percentage of costs based on how decisively they lost:

• 0-25% loss: each side pays 50%
• 26-50% loss: losing party pays 60%
• 51-75% loss: losing party pays 70%
• 76-100% loss: losing party pays 80%

The intended effect

This creates a graduated penalty for losing cases. Marginal losses don't trigger full penalty; decisive losses do.

The complexity

This structure is complex to implement and requires the arbitrator to specifically rule on the magnitude of the loss. It's uncommon in Long Island contracts.

The arbitrator's finding

The arbitrator can find that a grievance was "frivolous" — pursued without reasonable basis.

The cost consequence

When a grievance is found frivolous, the union may bear additional costs:

• Full arbitration costs (rather than split)
• District attorney fees
• Other costs

The rarity

Frivolous findings are rare. Arbitrators are reluctant to make this finding because it requires assessing the union's motives, which is contentious.

The provision exists primarily as deterrent rather than active mechanism.