The global International Arbitration Attorney Network offers a flat fee of 14,000 Euros per month for full legal representation in any international arbitration, which is intended to reduce the overall cost of resolving a dispute by international arbitration by half, thereby addressing this problem in a blunt but effective manner. This flat rate can be modified, or can be replaced by more traditional hourly rates, depending on the needs of individual clients.
Whether a rate of 14,000 Euros per month reduces the overall cost of arbitration in half may be tested on the basis of the data in the CIArb Costs of International Arbitration Survey 2011, which was intended to provide hard data for the debate regarding the cost of international arbitration. This survey was based on 254 arbitrations conducted between 1991 and 2010, a sample that was considered to be useful for statistical analysis, and it included ICC, LCIA, LMAA, AAA, SCC, ad hoc and other types of arbitrations, in the proportions shown in the chart below.
Among this survey’s many interesting findings, such as the average duration of an international arbitration ranging from between 17 and 20 months, it provided some of the best data currently available concerning the average cost of resolving a dispute via international arbitration:
- The overall average cost of international arbitration paid by Claimants was found to be approximately £1,580,000 (EUR 1,885,619), whereas the average cost of international arbitration for Respondents was lower at £1,413,000 (EUR 1,686,316), a difference of approximately 12%. The amount spent per arbitration did vary to a certain extent on the basis of the amount claimed, as shown in the graph below, but not in a strictly linear fashion.
- While noting the general rule that common costs, consisting primarily of arbitrators’ fees and administrative expenses, represent approximately 20% of the total cost of international arbitration, as had also been found in a previous ICC study, the survey found common costs to be largely dependent on the nature of the dispute, with an average common cost of £103,000 (EUR 122,923) for general commercial disputes and £90,000 (EUR 107,409) for construction/engineering disputes. The largest head of common costs was arbitral fees, totaling 60% of the common costs.
- Party costs, composed primarily of lawyers’ fees, expert costs and witness costs, were far more significant, averaging between £1,348,000 (EUR 1,608,744) and £1,521,000 (EUR 1,815,207).
- Of these party costs, 74% were spent on external legal fees including those of lawyers and barristers, with the remaining 26% spread across experts’ fees, external expenses, witness fees and management costs. As 74% of costs were constituted by external legal fees, as a percentage of overall party costs, it may be calculated that the average legal fees per arbitration were between £997,520 (EUR 1,190,470) and £1,521,000 (EUR 1,815,207). The table below shows a breakdown of the elements composing party costs.
- As indicated above, the average duration of international arbitration was found to be between 17 and 20 months. Hence, by reducing legal fees to the flat monthly rate of EUR 14,000/month, total fees for legal representation in an international arbitration will be reduced to between EUR 238,000 (i.e., £199,425, for 17 months) and EUR 280,000 (i.e. £234,617, for 20 months). For a standard 18-month commercial arbitration, roughly midway between these durations, the resulting legal fees would equal EUR 252,000.
- By subtracting EUR 252,000 (legal fees for an 18-month arbitration at the above-mentioned rate of EUR 14,000/month) from average legal fees of EUR 1,190,470 to EUR 1,815,207, an overall savings of EUR 938,470 to EUR 1,563,207 may be calculated with respect to legal fees per arbitration.
- Savings of EUR 938,470 to EUR 1,563,207 from an overall cost of EUR 1,686,316 to EUR 1,885,619 per arbitration (see first bullet point, above) represent average overall savings of approximately half or more (EUR 938,470/EUR 1,885,619 = 49.7% to EUR 1,563,207/EUR 1,686,316 = 92.7%, in extreme cases). Therefore, the rate of EUR 14,000/month does appear to reduce the overall cost of international arbitration by half or more.
In short, based on the findings of the CIArb Costs of International Arbitration Survey 2011, a 14,000 Euros per month flat rate reduces the overall cost of international arbitration by half, on average, resulting in far more cost-effective international arbitration.
To the best of our knowledge, no law firm offers equally competitive rates for high-skilled international arbitration legal representation by experienced international arbitration lawyers.