The CPA in Mediation and Arbitration

December 1999

ADR AND THE MASSACHUSETTS SOCIETY OF CPAS

By Christine L. Newhall

Disputes are often the result of misinterpretation or misunderstanding of intent, scope, or language. Companies, individuals, governmental agencies, and associations face issues every day that can lead to diverted time, misspent funds, unwanted publicity, and wasted energy. When a dispute or claim of harm arises out of these everyday issues, alternative dispute resolution (ADR) techniques become a viable approach to pursue. ADR encompasses a wide range of conflict management techniques such as mediation, arbitration, fact-finding, and mini-trials. Today, ADR services as provided by the American Arbitration Association (AAA) are not just an alternative to litigation but a set of options built into legal and business planning to address issues in an effective and efficient manner.

Mediation

Since 1995, I have had the pleasure of working with the Massachusetts Society of Certified Public Accountants (MSCPA), helping members learn about and develop the use of ADR methods. My initial introduction came at the time the MSCPA's ADR subcommittee was formed. The adventure continues today.

The utilization of ADR methods to resolve disputes confronting the CPA--fees or performance problems, partnership issues, breaches of contract--can help preserve business relationships by resolving issues in a private and confidential setting. In many situations, mediation is the ADR method of choice. It is designed to provide disputing parties with a forum to discuss options for settlement and a qualified mediator. Mediation, a nonbinding process, is flexible enough to meet the needs of all parties to the dispute. The mediator does not make a decision but works with the parties to facilitate communication about the issues and reach an agreeable settlement. CPAs often serve as mediators for the AAA.

Selection of the "right" mediator is crucial to making the mediation alternative work. Parties choose mediators based on expertise, qualifications, reputation, and skills. The expertise of the mediator in a specific field, such as accounting, is important to parties using the AAA. Working with local professional groups such as the MSCPA to examine qualifications and recruit mediators has enabled the AAA to form highly qualified and experienced panels for specific types of disputes.

The accounting professional is uniquely qualified to serve on the AAA roster, able to handle accounting as well as complex commercial, employment, and construction cases where the issues involve matters such as financial breakdowns, incentive packages, and benefit issues.

Arbitration

In an arbitration proceeding, parties submit the issues to one or more qualified neutrals for a final and binding decision. In larger AAA cases, CPAs often serve on a panel of three arbitrators. Typically, a case is brought to the AAA as a result of a clause incorporated into a contract. Even without a future dispute clause, parties may agree afterwards to submit the matter to binding arbitration.

Parties choose the arbitration alternative to resolve issues with the expectation that arbitrators will make reasonable decisions based on the information presented by the parties. An accounting professional chosen by the parties to serve on a case brings not only financial expertise but also management skills that contribute to closure in a timely fashion.

Spreading the Word

Education has been a priority in my work with the MSCPA. One of the initiatives is MSCPA Member Guide to ADR, a publication that highlights the mediation and arbitration alternatives and the benefits of using ADR for CPAs. Copies of this publication are available from the AAA's Boston regional office.

Members of the ADR subcommittee attend meetings of other MSCPA committees to introduce ADR methods. The meetings allow ADR subcommittee members to answer questions, address concerns, and discuss the benefits of ADR; moreover, the visitations have led to the recruitment of new members. In addition, members of the ADR subcommittee contribute articles to the AAA's publications, the MSCPA newsletter, and other professional publications.

An AAA-developed system tracks the inquiries received after educational initiatives are undertaken, which has led to a mailing list of those interested in learning more about ADR methods and opportunities for service.

The AAA's commitment to work with the accounting profession continues to grow. Since 1993, the AAA's National Accounting Industry Dispute Resolution Committee, comprising accounting industry leaders, has assisted in tailoring rules and procedures for the accounting industry. Based upon these procedures, the MSCPA has developed a two-step approach to dispute resolution that includes mediation and arbitration.

I have been impressed by the dedication of MSCPA ADR subcommittee members to educate the membership, clients, and other professional groups on the values of alternative dispute resolution. The MSCPA has taken the initiative to expand the use of ADR for the benefit of its members, and I am proud to have been a member of the MSCPA ADR subcommittee--it has been a rewarding experience. *

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