CPAs as Arbitrators and Mediators—Expanding Professional Possibilities

Most CPAs have the business and financial training and experience to help resolve many types of commercial and financial disputes. However, to qualify as an alternative dispute resolution (ADR) neutral, they also need to acquire the skills of an arbitrator or a mediator.

Arbitration Training, Experience and Compensation

The two major national ADR administrative organizations, the American Arbitration Association (AAA) and the National Association of Securities Dealers (NASD), provide arbitration training for the applicants they accept. Although the AAA is not actively seeking new applicants at this time, it has accepted a limited number of CPAs who were prescreened by the American Institute of CPAs (AICPA) during the last two years. These CPAs possess the specialized skills that are in great demand by ADR users in such industries as construction, appraisal, healthcare and technology.

The NASD is seeking CPAs to become arbitrators of securities industry complaints. Since a record number of such complaints, approximately 7,000, is expected to be filed in 2001, there is a need for additional qualified arbitrators. Information about serving, and an application, may be obtained from the NASD either online at www.nasdadr.org or by calling (212) 858-8300. Initial training requires only one or two days.

The NASD pays the arbitrator’s fee at the rate of $400 a day plus transportation and meal expenses. The arbitrator, who also serves as the chairperson, receives an additional $75 a day. AAA panel members are independent contractors, so they can set their own rates, which, if accepted, are paid by the parties in the arbitration. These fees generally range from $700 to $1,400 a day, depending on the arbitrator’s experience and background.

In addition, there are CPA firms such as the Big Five and some smaller firms that practice the arbitration of disputes, including those arising from the sale of a business. Consultant’s rates are charged for these services.

Mediation Training, Experience and Compensation

There are two major types of mediation, commercial and matrimonial; it is important to select the training program that best fits your particular interest and practice opportunities. Initial training is not provided by either the AAA or the NASD. Due to the rapidly growing demand for mediation by businesses and courts, many bar associations and law schools provide such training to CPAs and others. For specific information, in New York, call the Association of the Bar of the City of New York at (212) 382-6663; in New Jersey, call the Institute for Continuing Legal Education at (732) 249-5100.

Once they’ve trained as mediators, CPAs need to gain experience before they will be accepted on the best mediation panels. The Better Business Bureau and community dispute resolution agencies provide this experience on a pro bono basis. Trained and experienced mediators charge $100 an hour and up, depending on their level of experience and background.

Opportunities for CPA Neutrals

Attorneys are the gatekeepers who decide whether a dispute will go to mediation and/or arbitration; they also choose the neutrals. The attorneys generally select neutrals who they know or believe they can relate to. Just as CPAs market their litigation support services to attorneys and others, they also may market their services as neutrals. Some courts in New York and all courts in some other states, such as New Jersey, have established their own mediator panels, which accept qualified CPAs along with attorneys and other professionals.

Gaining Recognition as a Neutral

Gaining knowledge and experience in the ADR process will help CPAs gain recognition as qualified neutrals. This will happen as more CPA firms use ADR clauses as the means of settling disputes in their engagement letters and other contracts—and encourage their clients to do the same.