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.

All Results for Arbitration

Supreme Court to Hear Consumer Contract Arbitration Case

October 05, 2015 | Insights

This week, the Supreme Court will hear a case against DirecTV where a California class-action lawsuit was allowed to proceed despite an arbitration agreement in customer contracts. Read More »

The Trial Lawyer Underground: Covertly Lobbying the Executive Branch

Author: Victor E. Schwartz and Cary Silverman, Shook, Hardy & Bacon L.L.P. | September 30, 2015 | Research

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. Read More »

In The News Today - June 22, 2015

June 22, 2015 | Insights

According to documents obtained by the Washington Free Beacon, the Ecuadorian government staged "public" protests outside the International Arbitration Tribunal in the U.S. where a legal dispute between the South American nation and Chevron was being heard. (Washington Free Beacon) Read More »

Heavily Backlogged Federal Courts Show Need to Protect Arbitration

April 07, 2015 | Insights

The Wall Street Journal reports that civil lawsuits are piling up in the nation's federal courts, causing years-long delays in cases involving civil rights, personal injury, and Social Security benefits, among others. Read More »

In the News Today - March 13, 2015

March 13, 2015 | Insights

In response to the CFPB's anti-arbitration study released earlier this week, U.S. Senator Al Franken (D-MN) plans to reintroduce legislation that would "make arbitration optional for consumers."(Al Jazeera America) Read More »

In the News Today - March 11, 2015

March 11, 2015 | Insights

In The Hill, the U.S. Chamber noted that arbitration is a "simple, inexpensive and modern system," and criticized the bureau for its "unfair and biased approach." (The Hill) Read More »

The Trial Lawyer Financial Protection Bureau?

March 11, 2015 | Insights

The CFPB's arbitration report puts plaintiffs' lawyers ahead of consumers. Read More »

U.S. Chamber Comments on Consumer Financial Protection Bureau Arbitration Study

March 10, 2015 | Press Release

David Hirschmann, president and CEO of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness (CCMC), and Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR) issued the following statement today on the Consumer Financial Protection Bureau's (CFPB) study of pre-dispute arbitration clauses: Read More »

U.S. Chamber Pushes Back on CFPB Anti-Arbitration Study

March 10, 2015 | Insights

The U.S. Chamber is joining other business groups in pushing back on a new, anti-arbitration study released today by the Consumer Financial Protection Bureau (CFPB). Read More »

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