the effect of lawyers on non-discipline/discharge arbitration decisions

The Effect Of Lawyers on Non-Discipline/Discharge Arbitration Decisions*

T E R R Y H. W A G A R

Saint Mary ' s University, Halifax, C AN ADA B 3 H 3C3

Both labor and management often have a lawyer present their case at an arbitration hearing. This paper investigates whether the probability o f obtaining a favorable arbitration outcome was related to the use of legal counsel. An analysis o f 1,284 Canadian non-discipline/discharge cases revealed that a party was more likely to receive a favorable award when it had legal representation and the other side did not. However, there was no difference in win rates when the outcomes of cases in which both parties used lawyers were compared with those in which neither side was represented by legal counsel.

I. Introduction

In both the United States and Canada, grievance arbitration is an important feature of the industrial relations system. Despite a growing interest in the arbitration process, only a handful of studies have examined the effect of the use of legal counsel on case outcome. This is somewhat surprising because both labor and management often employ lawyers to present their cases at arbitration hearings.

Raffaele (1982) argues that the increasing dependency by the parties on legal counsel leads to the use of more legalistic procedures and a greater reliance on the application of rules rather than problem-solving as a means of resolving conflict between unions and management. A highly "legalistic" approach to arbitration results in greater time delays, markedly increases the complexity of the arbitration process, and leads to greater confusion for the grievant. Furthermore, Deitsch and Dilts (1986) concluded that the use of legal counsel was highly significant in deter- mining pre-arbitral settlement of arbitration disputes. The likelihood of a dispute being resolved prior to arbitration was greater for those cases in which neither labor nor management was represented by legal counsel, while cases where both parties used lawyers were more likely to go to arbitration. Despite concerns over the legal- ization of arbitration, both labor and management frequently use lawyers because they believe that the probability of receiving a favorable decision is enhanced by legal representation.

J O U R N A L OF L A B O R R E S E A R C H Volume XV, Number3 Summer 1994

284 JOURNAL OF LABOR RESEARCH

This study has two major objectives. First, it provides data concerning the use of lawyers by employers and unions. Second, an analysis of 1,284 published non- discipline/discharge cases in Canada is used to investigate whether legal counsel significantly increases the probability of receiving a favorable arbitration award. Little empirical research has focused on how lawyers influence arbitration outcomes and the limited work to date has been confined to discharge cases (Ponak, 1991). In addition, the existing research is not without its critics; the absence of a unifying theoreti- cal framework (Gordon and Miller, 1984), the need for a comprehensive review and consolidation of the literature (Labig and Greer, 1988), and the disjointed and frag- mented nature of the empirical research (Ng and Dastmalchian, 1989) all point to the need for increased attention by researchers.

II. Legal Representation and Arbitration

Despite the heavy reliance by both unions and employers on lawyers, few studies have examined whether legal representation results in more favorable arbitration awards. Moreover, while a small number of studies have investigated whether legal representation influences case outcome, most of the research does not use multivari- ate statistics to control for other variables (one notable exception is Block and Stieber, 1987).

Studies using data from both the United States and Canada support the position that employers, on average, are more likely to use lawyers at arbitration. For instance, an American Arbitration Association (1984) study revealed that management employed legal counsel in almost three-quarters of the cases while unions were represented by lawyers about half of the time. Block and Stieber (1987) indicated that employers used lawyers in approximately 70 percent of the cases while unions were represented by legal counsel in just over 40 percent of the decisions. Ponak (1987) found that employers relied on lawyers in more than two-thirds of the cases and unions employed lawyers 52 percent of the time; Barnacle (1991) determined that employers obtained legal representation in 79 percent of the cases and unions used lawyers in 51 percent of the decisions.

The limited empirical evidence suggests that having a lawyer may result in a higher probability of "winning" an arbitration case, particularly if the other party does not use legal counsel. Block and Stieber (1987), in their study of published and unpublished discharge cases in the United States, found that both employers and unions had higher win rates when they used lawyers and their counterpart did not. However, there was no significant difference in outcome when cases in which both parties used a lawyer were compared with decisions in which neither party was represented by legal counsel.

In his study of more than 150 discharge cases in Alberta, Ponak (1987) also examined whether the use of a lawyer was associated with a more favorable decision for employers and unions. Although not statistically significant, the results indicated that the employer win rate was 54 percent if the employer was represented by a

TERRY H. WAGAR 285

lawyer and the union was not (but dropped to 42 percent if only the union had legal representation). Unexpectedly, the results also revealed that unions had an advantage if neither party used lawyers while the likelihood of an employer win was enhanced if both parties had legal counsel.

Barnacle (1991) analysed 348 Ontario discharge cases and found that employers used lawyers in 85 percent of the cases in which the dismissal was upheld while lawyers were used in 75 percent of the cases in which reinstatement of the grievant was ordered. Similarly, unions employed lawyers in 45 percent of the cases in which dismissal of the grievant was upheld while they used lawyers in 57 percent of the cases involving reinstatement of the grievant. Although tests of statistical signifi- cance were not used, the findings suggest that a party with legal representation may have an advantage if the other side does not use a lawyer.

Based on the empirical research as well as personal discussions with union offi- cials, employers, and arbitrators, it is expected that the probability of a party "winning" an arbitration case is greater if the party uses a lawyer and the other side does not. However, the existing research is unclear when decisions in which both parties are represented by a lawyer are compared with awards in which neither party has legal counsel; assuming that differential representation is important, it can be argued that the win rate should not significantly differ when cases in which neither side had legal counsel are compared with decisions in which both parties employed a lawyer.

III . Data Collection and Method

This study analyzes 1,284 Canadian non-discipline and discharge cases which were published in the Labour Arbitration Cases (LAC) reporter over the period 1980 to 1991. To be included in the data set, the case had to involve an issue other than discipline and discharge. Furthermore, cases decided on jurisdictional grounds and cases from the province of Quebec were not included. While it was possible to obtain most of the information about each case from the published decisions, it was also necessary to consult a number of directories and obtain assistance from the various labor relations boards in order to complete the case coding form.

The use of cases published in the LAC reporter warrants further discussion. As Knight, McPhillips, and Shetzer (1992) note, cases are selected for inclusion in the LAC reporter and thus do not comprise a complete catalog of Canadian arbitration decisions. The editor of the LAC reporter informed me that cases were selected by an editorial board on the basis of subject matter and precedent.

Case outcome was the dependent variable in the study. The arbitration decisions were coded based on whether the grievant/union won and the grievance was sus- tained (in other words, the initial employer action or decision was altered in favor of the grievant or union) or whether the employer was successful (in other words, the arbitrator did not overturn the employer's decision or action). 1

The independent variable of primary interest was representation by a lawyer which was measured using four categories: (1) only the union was represented by


legal counsel; (2) only the employer was represented by legal counsel; (3) neither the union nor the employer was represented by legal counsel; and (4) both parties were represented by legal counsel. The Labour Arbitration Cases reporter does not identify the status of the parties' representatives (lawyer or non-lawyer). Conse- quently, it was necessary to consult a number of legal directories and match the names in the directories with the representatives' names in order to determine whether the parties used lawyers.

Although representation by a lawyer was of primary interest, the impact of several other control variables were also estimated. Jurisdiction of the case (Atlantic Canada, Western Canada, Federal, and Ontario) was included to control for possible regional differences. Date of the decision, which assesses the possible effect of time on case outcomes, was measured with reference to two categories (1980 to 1985 and 1986 to 1991). Previous research (Bemmels, 1988c) has indicated that case outcomes may vary over time.

Arbitration forum (single arbitrator or arbitration board) was included in the model because of some evidence (Gilson and Gillis, 1987; Bemmels, 1988a,b) that outcome may be affected by whether the decision was rendered by a single arbitrator or by a panel. In addition, the limited empirical work to date suggests that the gender of the arbitrator may be associated with case outcome (Bemmels, 1988c, 1991a); however, other researchers have not found the arbitrator's gender to be significant (Scott and Shadoan, 1989; Oswald and Caudill, 1991). 2

Block and Stieber (1987) and Ponak (1987) note that arbitration outcomes in the private and not-for-profit sectors may vary. As a result, employer sector (manufacturing/construction, service, not-for-profit, and government) 3 was taken into account. Furthermore, previous research (Gilson and Gillis, 1987; Bemmels, 1988c) has indicated that the issue of the grievance may also affect case outcome. Consequently, the grievance issue was measured depending on whether the case involved compensation (wages and benefits), job security (layoffs and contracting out), seniority/job posting, promotion, assignment of work, or other issues.

IV. Empirical Results

Table 1 provides a summary of the descriptive statistics for the 1,284 Canadian non- discipline/discharge cases. As indicated in the table, the union/grievant was successful in 722 (56.2 percent) of the cases while the employer prevailed in 562 (43.8 percent) of the decisions.

With regard to legal counsel, the results are in accordance with the previous research (American Arbitration Association, 1984; Block and Stieber, I987; Ponak, 1987; Barnacle, 1991) which found a higher propensity on the part of employers to use lawyers. In 77.0 percent of the cases employers were represented by a lawyer at the arbitration hearing while the utilization rate of lawyers by unions was 57.2 percent. Both parties used lawyers in 47.7 percent of the cases and neither party employed counsel in 13.6 percent of the decisions. In 29.3 percent of the cases, the

TERRY H. WAGAR 287

Table 1

D e s c r i p t i v e S ta t i s t i c s

Variable Number Percent

Case Outcome

Union/Grievant Victory 722 56.2 Employer Victory 562 43.8

Legal Representation

Union Lawyer/No Employer Lawyer 122 9.5 Employer Lawyer/No Union Lawyer 376 29.3 No Union Lawyer/No Employer Lawyer 174 13.6 Union Lawyer/Employer Lawyer 612 47.7

Jurisdiction

Atlantic Canada 98 7.6 Western Canada 315 24.5 Federal 56 4.4 Ontario 815 63.5

Time (Date of Decision)

1980-1985 680 53.0 1986-1991 604 47.0

Arbitrator's Gender

Female 131 10.2 Male 1,153 89.8

Arbitration Forum

Single Arbitrator 672 52.3 Arbitration Board 612 47.7

Sector of Employer

Manufacturing/Consu-uction 555 43.2 Service 173 13.5 Not-for-Profit (Non-Government) 311 24.2 Government 245 19.1

Grievance Issue

Compensation (Wages/Benefits) 518 40.3 Job Security 169 13.2 Job Posting 86 6.7 Promotion 107 8.3 Assignment of Work 131 10.2 Other 273 21.3


employer had a lawyer while the union did not whereas the reverse situation (a union lawyer and no employer lawyer) occurred only 9.5 percent of the time.

A summary of the use of lawyers by employers and unions over the twelve years of the study is reported in Table 2. 4 Although there were fluctuations over the years, employers were relatively consistent in their utilization of lawyers at arbitration hearings. With reference to the use of legal counsel by unions, the data suggest somewhat increased reliance on lawyers during the mid to late 1980s followed by a decline over the past three years. However, caution should be used in interpreting these findings; chi-square analyses of both employer and union use of legal counsel were not significant at the conventional p <.05 level.

For the control variables, the results indicated that more than 63 percent of the decisions were from Ontario and there was a modest decrease in the number of cases during the 1986 to 1991 period. Approximately 10 percent of the awards were rendered by female arbitrators and slightly more than half of the decisions were made by a single arbitrator. Just over 43 percent of the cases involved employers in manufacturing and construction, and compensation (wage and benefit grievances) issues accounted for 40.3 percent of the cases.

Table 3 presents the results of the logit analysis of the impact of legal representation on arbitration awards (probability of a union victory). The omitted category for both Model 1 and Model 2 was both parties being represented by a lawyer.

Table 2

Use ofLawyersbyErnployersandUnions

Employer Use of Union Use of Year Lawyers (%) Lawyers (%)

1980 79.4 48.4 1981 74.2 53.6 1982 79.4 56.1 1983 86.1 63.5 1984 79.5 64.8 1985 78.0 60.2 1986 75.8 62.5 1987 64.7 56.5 1988 77.3 67.0 1989 76.1 56.5 1990 70.6 50.4 1991 79.0 52.0

TERRY H. WAGAR 289

Table 3

Logit Analysis of the Probability o f a Union Victory (standard errors in parentheses)

Variable Model t Model 2

Constant .179"** .197"** (.035) (.059)

Legal Representation

Union Lawyer/No Employer Lawyer .233** .251"* (. 105) (. 107)

Employer Lawyer/No Union Lawyer -.171"** -.154"* (.066) (.090)

No Union Lawyer/No Employer Lawyer .077 .087 (.088) (.090)

Jurisdiction

Atlantic Canada -.021 (.113)

Western Canada -.015 (.O7O)

Federal -.061 (.151)

Time (Date of Decision)

1980-1985 .038 (.029)

Arbitrator's Gender

Female .043 (.050)

Arbitration Forum

Single Arbitrator .013 (.030)

Sector of Employer

Manufacturing/Construction -.050 (.085)

Service .028 (.104)

Not-for-Profit .154" (.093)

290 J O U R N A L O F L A B O R R E S E A R C H

Table 3 - - Continued

(standard errors in parentheses)

Variable Model 1 Model 2

Grievance Issue

Compensation (Wages/Benefits) .010 (.077)

Job Security -. 104 (.lOl)

Job Posting .071 (.128)

Promotion -.033 (.117)

Assignment of Work -.214"* (.109)

*(**,***) p < .10 (p < .05, p < .01)

Model 1 examined the effect of legal representation on the probability of a favorable union award with the control variables omitted from the analysis while Model 2 included the control variables. For both models, the coefficients relating to legal representation were relatively stable.

With reference to the union lawyer/no employer lawyer category, the logit esti- mates for both models indicated that the probability of a union victory was significantly higher (p < .05 based on a two-tailed test) when the union used legal counsel and the employer did not have legal representation. Based on Model 2, the odds of a union victory were 1.65 times greater 5 when the union was represented by a lawyer and the employer was not (relative to the situation in which both parties had lawyers).

The logit coefficients on the employer lawyer/no union lawyer category were negative and significant (p < .01 for Model 1 and p < .05 for Model 2), indicating that the likelihood of an employer victory was greater if the employer was represented by legal counsel and the union was not. Furthermore, the odds of an employer win were 1.36 times greater (Model 2) when compared with the both parties had legal representation category. However, the logit coefficients were not significant when neither party employed legal counsel. 6

While arbitrator's gender was not the primary independent variable of interest, the findings are noteworthy. Bivariate analysis indicated that female arbitrators decided 61.8 percent of the cases in favor of the union, while the union win rate was

TERRY H. WAGAR 291

55.6 percent in decisions rendered by male arbitrators. Although the logit coefficient was positive, it was clearly not significant.

V. Conclusions and Discussion

Does using a lawyer increase the likelihood of winning a case? My study of published non-discipline and discharge cases from Canada indicated that both unions and employers were more likely to be successful at arbitration if they used legal counsel to argue their cases and their counterpart did not. However, a comparison of awards in which neither party relied on a lawyer as opposed to the use of legal counsel by both sides revealed no significant difference in win rates; the implication of this find- ing is that the parties could reduce the costs associated with arbitration if they agreed not to use legal counsel at hearings (Block and Stieber, 1987).

From the perspective of the grievant, it can be argued that an overly legalistic approach to arbitration may result in confusion and a fear of giving evidence. The growing literature on procedural and distributive justice (Dalton and Todor, 1985; Greenberg, 1991) emphasizes both the fairness of the procedure as well as the results. Is there a relationship between the use of legal counsel in the arbitration process and the justice perceptions of the grievant?

While the findings of this study are generally supportive of the previous research, some caveats should be mentioned. First, the results are based on published non-discipline and discharge cases in Canada and may not be generalizable to other jurisdictions and types of cases. Second, there may be other variables affecting case outcome which are not included in the model. Although the number of cases fits within Bemmels' (1991b) categorization of large sample field studies, the contract language in non-discipline/discharge decisions is not uniform across cases.

Block and Stieber (1987) identified a number of possible explanations for the higher win rates associated with cases in which only one party relied on legal counsel. It may be that lawyers, on average, are better able to present an arbitration case and cross-examine opposing witnesses. In addition, the use of legal counsel in screening grievances prior to arbitration may lead to the settlement of cases with a low probability of victory. On the other hand, Deitsch and Dilts (1986) found that the use of lawyers was associated with lower rates of settlement in pre-arbitral disputes. There is a need for more research on the involvement and participation of lawyers both prior to arbitration and during the hearing.

292 J O U R N A L O F L A B O R R E S E A R C H

N O T E S

*Support for this research was provided by a Social Sciences and Humanities Research Council/Saint Mary 's University Matching Grant. The excellent research assistance of Nancy Canavan is gratefully acknowledged.

1Although this approach has been used elsewhere (Gilson and Gillis, 1987; Klaas, 1989), a reviewer cor- rectly pointed out that it is possible to have a split or modified decision in which the union receives somewhat less than it expected. In other words, a union "win" does not necessarily mean that the union received everything that it sought at arbitration.

2The gender of the chairperson was coded for cases involving an arbitration board. For a review of the growing literature on the effect of the grievant's gender on arbitration decisions, see Bemmels (1991b). While I coded the gender of the grievant for those cases in which it was feasible, a number of the decisions involved group grievances or policy issues. Logit analysis revealed no significant effect on case outcome when comparing individual and group/policy grievances•

31 used separate categories to distinguish the not-for-profit and government sectors. The not-for-profit category included education, health care, fire, and police• The government category was comprised of munic- ipal, provincial, and federal agencies (which approximate local, state, and federal government in the United States).

41 thank an anonymous reviewer for suggesting this analysis•

5This calculation is made by multiplying the logit coefficient by two and taking the antilog of this parameter.

6When both models were re-estimated with no union lawyer/no employer lawyer as the omitted category, the probability of an employer win was significant (p < .01 with the control variables excluded and p < .05 with the control variables included) if the employer had legal counsel and the union did not. While the coefficient on union lawyer/no employer lawyer was in the expected direction, it was not significant using a two-tailed test.

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