Authorized by a ninety-plus-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 consumers alike. But now arbitration is under attack by plaintiffs’ lawyers, who see it as a barrier to the expansion of lucrative class action lawsuits.

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. For example, multiple bills and amendments that would have banned arbitration have been proposed and blocked since the early-2000s. 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 released its anti-arbitration study in March 2015, as mandated by the Dodd-Frank Act, and is now preparing a rulemaking. 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.

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.


The Trial Lawyer Underground: Covertly Lobbying the Executive Branch

September 30, 2015 | This report highlights examples of the quiet and effective influence the American Association for Justice, the organization that lobbies on behalf of the plaintiffs' bar, exerts within the Executive Branch.

All Results for Arbitration

CMS Abandons Nursing Home Arbitration Appeal

June 05, 2017 | News and Blog

The Centers for Medicare & Medicaid Services (CMS) "ditched its Fifth Circuit appeal of a decision blocking the agency's ban on mandatory nursing home arbitration," writes Law360. Read More »

SCOTUS to States: Keep Out of Arbitration Agreements

May 16, 2017 | News and Blog

In Kindred Nursing Centers v. Clark, the U.S. Supreme Court ruled 7 to 1 yesterday that "states may not impose rules that single out, overtly or otherwise, arbitration agreements for negative treatment," writes the National Law Journal. Read More »

In the News Today - April 14, 2017

April 14, 2017 | News and Blog

The question hanging over the CFPB's arbitration rule is "less about the finer points of the final rule than about whether the regulations will ever see the light of day." Read More »

In the News Today - April 10, 2017

April 10, 2017 | News and Blog

The Senate confirmed Tenth Circuit Judge Neil Gorsuch to the U.S. Supreme Court on Friday by a vote of 54-45. "You could not have a finer person, a more ready person, a more legal expert type of person, than Neil Gorsuch," said Sen. Orrin Hatch. Read More »

President-elect Trump May Undo Anti-Arbitration Developments

January 06, 2017 | News and Blog

In a Lexology post, Stinson Leonard Street attorney Liz Kramer analyzes the "big arbitration developments" of 2016, including the death of Justice Antonin Scalia, the 7th Circuit's favorable ruling for the National Labor Relations Board (NLRB)'s position on arbitration, and the CFPB proposed rule-making aimed at eliminating pre-dispute arbitration clauses. Read More »

Arbitration "Ripe for Consideration" By Supreme Court in 2017

January 03, 2017 | News and Blog

In 2016 arbitration was a hot-button topic in U.S. circuit courts, with "mixed" news coming from courts across the country. Read More »

Manhattan Institute Releases Report on Benefits of Arbitration to U.S. Economy

December 16, 2016 | News and Blog

The Manhattan Institute released a report "Trial Lawyers, Inc.: Arbitration" noting there has been a "litigation explosion" in the U.S. and the "cost of lawsuits in America remains uncommonly high" which has "enriched some lawyers but cost American businesses and consumers dearly." Read More »

Will Trump Remove CFPB Director Immediately After Taking Office?

November 29, 2016 | News and Blog

Does President-elect Donald Trump -- who campaigned on the promise to 'dismantle' Dodd-Frank, which created the Consumer Financial Protection Bureau -- have the power to remove CFPB Director Richard Cordray immediately after taking office? Read More »

Hong Kong's Call for Litigation Funding Disclosure Leads the Way for Global Reforms

November 23, 2016 | News and Blog

Last month, the Hong Kong Law Reform Commission (LRC) released a Report on Third Party Funding for Arbitration which calls for "light touch" regulation and disclosure of third party funding in arbitration. While this is an important first step and may lead the way to global recognition of the need for meaningful oversight in the litigation funding industry, "light touch" regulation will not suffice. Read More »

In the News Today - November 14, 2016

November 14, 2016 | News and Blog

ILR's recent election night survey was quoted in Florida Business Daily, Palmetto Business Daily and Illinois Business Daily, quoting state legal reform allies in each state. The survey results showed that most voters "don't want Congress to pass laws making it easier for attorneys to file lawsuits." Read More »

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