Lawyers for the N.B.A. and the players union spent more than three and a half hours on Wednesday presenting their arguments to the arbitrator, Kenneth Dam, a professor at the University of Chicago law school.
The union contends that a player claimed on waivers should retain his Bird rights, which allow a team to re-sign a player without respect to the salary cap. The league contends that Bird rights are lost once a player is waived.
The case potentially affects four players: Lin and Steve Novak of the Knicks, J.J. Hickson of the Portland Trail Blazers and Chauncey Billups of the Los Angeles Clippers. Novak attended the hearing Wednesday in Manhattan.
If the union loses the case, the Knicks will have to use their midlevel exception to re-sign Lin, and therefore will probably lose Novak and other free agents. If Lin and Novak win their Bird rights, the Knicks will have much greater flexibility to keep their players and shop for free agents.
Dam said he would issue a decision by July 1, when free agency opens.