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Aiming to solve the problem of small businesses dropping smaller-amount commercial contract disputes because of the expense of litigation, two Schlam Stone & Dolan partners have launched a one-day arbitration business called the Same-Day Justice Program.

The partners, Erik Groothuis and Jonathan Mazer, believe the venture can become a go-to alternative for small businesses that might otherwise abandon—or never bring—commercial claims for small sums, such as those targeting service providers or vendors that have allegedly failed to provide on-time services or deliver sufficient-quality merchandise.

Groothuis is a 20-year commercial litigator at Schlam Stone, a boutique litigation firm in Manhattan. He said he came up with the arbitration idea last November after years of watching smaller clients give up on legal claims—often against service providers and vendors—because the litigation process and its costs outweighed any hoped-for recovery.

“Too many companies walk away from a valid claim in a contract dispute,” he said in a news release issued Tuesday on the same-day program.

In a phone interview Tuesday evening, Groothuis said he thinks “there is an underserved part of the market” for arbitrated resolution of business disputes. He also noted that one-day arbitrations would be unique. He's not heard of one-day turnarounds, he said, and most commercial arbitrations last months. The Same-Day Justice Program, he also said, will aim to primarily tackle commercial disputes valued between $50,000 and $500,000.

Moreover, Groothuis said that he and Mazer believe the same-day arbitrations will become a new avenue of business for commercial practitioners who would otherwise represent an aggrieved business but who turn down the client because the amount claimed is too low relative to their legal fees.

The business venture, which is currently being run through the Schlam Stone firm but that is expected be spun off into a separate entity—and which is yet to have its first clients—is set up to operate about as cost-effectively as could be designed, Groothuis maintains.

Two businesses stuck in elongated and expensive litigation can opt for the Same-Day Justice Program to resolve the dispute, Groothuis said. Or, its use can be agreed to beforehand and made part of a contract's alternative dispute resolution clause. (The same-day program's website, launched at the start of this year, provides example ADR language to be used.)

Once both parties agree to use the program, either Mazer, a veteran trial lawyer with years of arbitration and mediation experience, or litigator Groothuis, will handle the arbitration in a day, they said.

The parties will pay a flat fee for a half-day or full day of private, neutral arbitration, said Groothuis and Mazer in the news release. Then the arbitration hearing will take place in person—unless the parties agree to handling it remotely—and it will typically be held in Schlam Stone's offices.

The parties will bring all of their evidence—documents and witnesses—to the hearing. And before that date they will exchange the documents they intend to use, as well as a list of the witnesses they'll call, the news release explained.

At the hearing, the parties can present their case in any manner they choose, whether by narrative or in question-and-answer format, added Groothuis and Mazer.

The same-day arbitrator will issue a written decision that day, and—as agreed to beforehand—the decision will be enforceable in court.

Groothuis also noted in the news release that he thinks the one-day alternative is “particularly appropriate for companies in real estate, construction, wholesale, retail and other B-to-B sectors.”