Understanding the Risks and Benefits of Remote Legal Proceedings

The coronavirus (COVID-19) pandemic has forced us to change the way we conduct everyday activities. Court proceedings, arbitrations, and mediations are no exception, and parties to such proceedings increasingly rely on video conferencing to go “virtual.” While technology can allow proceedings to go forward during the pandemic, there are potential downsides to consider.

Legal Proceedings Go Virtual

In New Jersey, courts have cancelled in-person proceedings, and a wide range of court events now proceed through phone or video conference. Since transitioning to virtual operations, New Jersey state courts have conducted more than 12,000 remote court events involving more than 80,000 participants, according to the New Jersey Supreme Court.

Arbitration and mediation proceedings are also being conducted online with greater frequency. JAMS and the American Arbitration Association are both offering virtual mediation and arbitration. The Financial Industry Regulatory Authority (FINRA) has also administratively postponed all scheduled in-person arbitration and mediation proceedings through July 31, 2020. FINRA Dispute Resolution is offering virtual hearing services (via Zoom and teleconference) to parties in all cases by joint agreement or by panel order.

Risk and Benefits of Remote Legal Proceedings

New Jersey courts can and have required cases to proceed virtually; but in many cases, the parties are asked or required to give consent before proceedings are conducted remotely. It is important to understand the risks and benefits of virtual proceedings before making such a decision. The obvious benefit of virtual proceedings is that the parties can move forward without delay. Allowing proceedings to continue may help ensure that the time and resources already devoted to a case are not lost, and in appropriate cases, virtual proceedings may sufficiently resemble traditional proceedings to serve as an adequate substitute. Through the use of video conferencing platforms, such as Zoom, the parties, counsel, and the judge or other fact-finder can see, hear and engage with each other. Counsel can submit evidence and other exhibits, witnesses may be questioned, and the judge or fact-finder can render decisions. Virtual proceedings may, therefore, help parties achieve resolution of a matter in an efficient and timely manner.

Virtual hearings and trials cannot completely mimic in-person proceedings, though, so it is important to understand the potential risks and to assess the requirements of your particular case before committing to go virtual. The following are some of the considerations that counsel should consider before choosing to proceed virtually or if compelled to do so by a court.

1. Confidentiality:  A paramount concern is confidentiality. For cases involving intellectual property or sensitive financial information, for example, it is critical to verify that security protocols are in place to prevent confidential information from being obtained by a non-party.
2. Technical Issues:  Technical issues can also prevent virtual proceedings from adequately resembling live ones. Parties should be sure that they understand how the platform works and especially how sharing documents and exhibits will work. Many platforms allow the parties to practice using them ahead of time. It is also advisable to have a tech expert available during a proceeding should issues arise.
3. Procedural Obstacles:  The lack of clear procedures for virtual proceedings can be problematic. Prior to the proceedings, all of the participants should make sure they are on the same page by agreeing to a detailed written protocol that describes procedures for exchanging exhibits, examining witnesses, and other logistical issues.
4. Case-Specific Considerations:  Counsel weighing whether to proceed virtually should of course consider whether doing so would interfere with the effective presentation of their case. If attorneys and their clients participate in a proceeding from separate locations in order to maintain social distancing, the possibility of discrete and immediate communication between them in response to developments during the proceeding may be lost. Counsel must also make considered judgments about the particular dynamics of their case and how witnesses may be affected by giving testimony in a less formal, virtual environment. Certain witnesses, for example, may be less disciplined if testifying in a familiar setting rather than in the immediate presence of a judge or fact-finder. Similarly, if counsel expects cross-examination of an opposition witness to play an important part in a case, counsel should consider whether that witness might be more composed or self-assured taking questions from home rather than in a courtroom or other more formal setting.
5. Fact-Finder Engagement:  Another significant concern about virtual proceedings is that the finder(s) of fact may not be as engaged as they would be with face-to-face interaction. Wunderlich Securities Inc. (“Wunderlich”) is seeking to vacate an $11.4 million award issued by a FINRA panel, citing the panel’s apparent inattention during the arbitration’s final hearing conducted via Zoom. In its petition to vacate, Wunderlich alleges that one arbitrator frequently looked at other screens, another blocked her screen for a period of time, and another walked away from the screen during closing arguments.
6. Finality:  The Wunderlich petition also highlights another potential risk of remote proceedings — parties who are unhappy with the end result may invoke the fact that the proceeding was conducted virtually as grounds for overturning the decision. Whether justified or not, such claims may stretch out the duration of a case and increase costs unnecessarily. Moreover, this possibility undermines a central rationale for proceeding virtually — that virtual proceedings can facilitate achieving closure efficiently.

Key Takeaway

These unprecedented times are forcing all of us to adapt. As we rely on new ways of doing things, there is always a learning curve. As always, educating yourself, and relying on experienced legal advisors to guide you, can help minimize the uncertainties.

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