Arbitration

Authorized by a ninety-year-old federal law, arbitration is a procedure used to resolve common disputes and avoid costly and time-consuming litigation. In arbitration, an independent third party, the arbitrator, reviews the facts and circumstances of the dispute, applies the appropriate legal standard, and issues a ruling to resolve the conflict. For nearly a century, arbitration has reduced the cost of lawsuits for businesses and taxpayers alike. But now arbitration is under attack by plaintiffs’ lawyers, who see it as a barrier to the expansion of lucrative class action lawsuits.

Due to the clear advantages of arbitration over litigation in any number of situations, and the need to preserve this important dispute resolution process, ILR has established the Coalition to Preserve Arbitration. The Coalition's membership is varied and broad. AT&T is one member of the Coalition and has provided legal and technical support on an in-kind basis in connection with our arbitration-related activities. This disclosure is being made to comply with the requirements of the Lobbying Disclosure Act of 1995, as amended by the Honest Leadership and Open Government Act of 2007. 

Class action lawsuits are the bread and butter of plaintiffs’ lawyers. The lawyers often pocket millions of dollars in fees, while the class members they represent get little in the final settlements. read more...

For many, arbitration is the better way to go. Arbitration produces faster resolutions – typically in a matter of months as opposed to years. Arbitration eases the burden on the overcrowded court system. And arbitration reduces the costs of legal fees for both parties.

Little wonder, then, that plaintiffs’ lawyers want to eliminate arbitration. Their aim is to maximize litigation and legal fees by bundling claims that would have gone to arbitration into lucrative class action lawsuits.

Eliminating arbitration may help plaintiffs’ lawyers’ bottom line, but it would hurt those seeking redress through our legal system. Eliminating arbitration would lengthen the legal process and channel more money into the hands of trial lawyers rather than individuals seeking compensation. Moreover, the vast majority of claims resolved through arbitration would be ineligible for class actions. Many cannot be bundled into a class action because the facts are not in common. Eliminating arbitration would leave these individuals without legal recourse. And even for those cases that are eligible, many disputes now settled through arbitration are small-dollar claims that typically cost more to litigate than they are worth. They usually will not be taken on a contingency fee basis by plaintiffs’ lawyers.

In other words, if plaintiffs’ lawyers succeed in eliminating arbitration, it will drive up the cost of litigation, increase the workload of courts and leave millions of Americans with very limited opportunities for restitution.

 

Preserving Arbitration

Legislative measures to limit the use of arbitration have largely been unsuccessful. In the previous two Congresses, twenty-eight bills or amendments that would have restricted or banned arbitration were blocked. These include the Arbitration Fairness Act (prohibiting arbitration in all consumer and employment agreements) and the Consumer Mobile Fairness Act (prohibiting arbitration in cell phone contracts).

With little success in Congress, arbitration opponents have also attempted to curtail the practice in the courts. However, the U.S. Supreme Court, in the recent cases of AT&T Mobility v. Concepcion (2011) and American Express Co. v. Italian Colors Restaurant (2013), has upheld the legal enforceability of arbitration under the Federal Arbitration Act. 

At the same time, the Consumer Financial Protection Bureau is engaged in an arbitration study, as mandated by the Dodd-Frank Act. The agency’s findings could determine whether arbitration clauses will be upheld in consumer financial agreements. In addition, the 2010 Dodd-Frank Act authorizes the SEC to prohibit or restrict arbitration requirements for both broker-dealers and investment advisers, but the agency has yet to take action on the issue. 

 

All Results for Arbitration

In the News Today - March 25, 2014

March 25, 2014 | Insights

Families in Florida are spending more on goods and services due to the costs of litigation. Read More »

Tags: Arbitration, Lawsuit Abuse Impact, Securities Litigation Reform, Delaware, Florida

In the News Today - March 24, 2014

March 24, 2014 | Insights

"We're particularly concerned about developments here in third-party litigation financing," ILR president Lisa Rickard told the Australian Financial Review. Read More »

Tags: Arbitration, International Judiciary Impact, Third Party Litigation Funding

In the News Today - March 18, 2014

March 18, 2014 | Insights

BP is petitioning the full 5th Circuit Court of Appeals to review a panel's decision that proof of causation isn't required under the terms of the gulf oil spill settlement. Read More »

Tags: Arbitration, Environmental Litigation, Medical Liability, New York

In the News Today - January 22, 2014

January 22, 2014 | Insights

In a court filing, Standard & Poor's says that the government's $5 billion lawsuit is in retaliation for the agency's downgrade of the United States' credit rating in 2011. Read More »

Tags: Foreign Corrupt Practices Act, Arbitration, Delaware

WSJ: Trial Lawyer Protection Act

December 30, 2013 | Insights

A Wall Street Journal editorial highlights ILR's study that found consumers collect little or nothing from class actions. Read More »

Tags: Arbitration, Class Actions

In the News Today - December 13, 2013

December 13, 2013 | Insights

An op-ed in the Milwaukee Journal Sentinel says a pending bill will protect Wisconsin businesses from out-of-state trial lawyers taking advantage of a loophole to file asbestos lawsuits against solvent companies while 'double-dipping' into a trust system set up to compensate legitimate victims. Read More »

Tags: Arbitration, Asbestos, Court Underfunding, Wisconsin

Study: Class Actions Benefit Lawyers, Not Consumers

December 11, 2013 | Insights

A new report from the Institute for Legal Reform found that consumers who participate in class actions recover little or nothing as a result of the litigation. Read More »

Tags: Class Actions, Arbitration

In the News Today - December 4, 2013

December 04, 2013 | Insights

An appeals court has overturned a National Labor Relations Board decision that prevented employers from including arbitration agreements in employee contracts. Read More »

Tags: Arbitration, Preemption/ Federalism, State Attorneys General, Mississippi

In the News Today - November 22, 2013

November 22, 2013 | Insights

The retiring chief justice of the Delaware Supreme Court said he expects more legal wrangling over the state's business arbitration program. Read More »

Tags: Arbitration, Environmental Litigation, Delaware

In the News Today - November 6, 2013

November 06, 2013 | Insights

Citing the precedent set by the Supreme Court's decision in American Express v. Italian Colors, the Sixth Circuit ruled that a plaintiff cannot bring a class arbitration against LexisNexis. Read More »

Tags: Arbitration, Class Actions, State Attorneys General, Mississippi

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