Alternative Dispute Resolution (ADR)/Arbitration

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Alternative Dispute Resolution (ADR) refers to methods and processes of resolving claims without litigation, such as arbitration, mediation, and small claims procedures. ADR can be formal or informal and provides a method to avoid the expense and inefficiency of litigation. Read More...

ADR is widely used in the U.S., where empirical studies demonstrate that it is cheaper, faster, and often offers more compensation for the consumer. There are also well-established ADR procedures in many of the EU member states and in other countries around the world.

Arbitration

Arbitration, a form of ADR, is formally authorized by a ninety-plus-year-old U.S. federal law, the Federal Arbitration Act. Arbitration is a procedure used to resolve common disputes and avoid costly and time-consuming courtroom 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 Holy Grail for plaintiffs' lawyers, who often pocket millions of dollars in fees, while the class members they represent get little or nothing of the final settlements.

For many, arbitration is the better way to go. Arbitration produces faster resolutions—typically in a matter of months, as opposed to class actions, which often last years. Arbitration reduces backlogs in our courts and reduces the costs of legal fees for both sides in a dispute.

Given the lucrative nature of litigating class actions, it is not surprising that plaintiffs' lawyers want to eliminate arbitration with an aim towards maximizing litigation and their legal fees. Eliminating arbitration may help plaintiffs' lawyers' bottom line, but it would hurt those seeking timely, efficient, and fair redress through our civil justice system. Eliminating arbitration would lengthen the legal resolution 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 are not even eligible for class action consideration. The facts in these cases are very individualized and rarely have enough in common to meet class certification standards. Eliminating arbitration would effectively leave consumers with these types of claims without legal recourse, since most of these disputes are over a relatively low dollar amount and would typically cost more to litigate than they are worth. Furthermore, plaintiffs’ lawyers rarely take such small dollar claims.

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 worked to curtail the practice through the courts and federal regulatory agencies. Fortunately, 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. Furthermore, the Trump Administration and Congress have either eliminated or diminished the administrative efforts to limit the availability of arbitration in multiple contexts such as the Consumer Financial Protection Bureau (CFPB), the Department of Labor, the Department of Health & Human Services and the Department of Education.

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.

Suggested Resources

Research
  • Fairer, Faster, Better: An Empirical Assessment of Employment Arbitration

    Fairer, Faster, Better: An Empirical Assessment of Employment Arbitration

    May 15, 2019

    Plaintiffs do better in employment arbitration than in litigation. That's the key finding from research performed by ndp|analytics, which among other things shows that during the study period of 2014-2018, employee-plaintiffs were three times as likely to win arbitration cases that terminated in awards than they were to win comparable cases in litigation. The average dollar award for employee-plaintiffs was over 90 percent higher in arbitration cases than in litigation, and the average arbitration case was also much faster to resolve. Read More

  • Arbitration Survey | March 7-11, 2019

    Arbitration Survey | March 7-11, 2019

    May 11, 2019

    Read More

Additional Resources

All Results for Alternative Dispute Resolution (ADR)/Arbitration

  1. In the News Today - May 17, 2019

    May 17, 2019 | News

    ILR President Says "Only Winners Will Be Trial Lawyers" If Congress Takes Away Arbitration... Read More

  2. New Research Finds Employees Win More Money and More Often in Arbitration Than Litigation

    May 16, 2019 | News

    A new report from NDP Analytics found that employees who settled an employment suit in arbitration were "three times more likely to win in arbitration than in court."... Read More

  3. New Study: Workers Win More Money and More Often in Arbitration Than in Court

    May 16, 2019 | Press Release

    New Poll Also Shows More Than Six in Ten View Arbitration Favorably as a Way to Solve Disputes ... Read More

  4. Fairer, Faster, Better: An Empirical Assessment of Employment Arbitration

    May 15, 2019 | Research

    Plaintiffs do better in employment arbitration than in litigation. That's the key finding from research performed by ndp|analytics, which among other things shows that during the study period of 2014-2018, employee-plaintiffs were three times as likely to win arbitration cases that terminated in awards than they were to win comparable cases in litigation. The average dollar award for employee-plaintiffs was over 90 percent higher in arbitration cases than in litigation, and the average arbitration case was also much faster to resolve.... Read More

  5. Arbitration Survey | March 7-11, 2019

    May 11, 2019 | Research

    ... Read More

  6. In the News Today - April 25, 2019

    April 25, 2019 | News

    "Another Ninth Circuit Spanking;" Monsanto Says Judge in RoundUp Case May Have Been Influenced By PR Campaign... Read More

  7. SCOTUS Says Class Arbitration May Only Be Invoked If Specifically Authorized

    April 24, 2019 | News

    The U.S. Supreme Court ruled 5-4 that the class arbitration process can only be invoked if the arbitration agreement specifically authorized it, Law360 reports.... Read More

  8. Forced Litigation Benefits Only Lawyers, ILR President Rickard Says

    March 01, 2019 | News

    In Corporate Counsel, U.S. Chamber Institute for Legal Reform President Lisa A. Rickard (ILR) said bills that would eliminate arbitration are really a "forced litigation scheme that will cut most people off from justice" and enrich plaintiffs' lawyers.... Read More

  9. Unlikely Allies: Trial Lawyers and Conservative Treasurers

    December 10, 2018 | News

    A Legal Newsline report in Forbes details the unusual alliance between class action trial lawyers and free market state treasurers.... Read More

  10. In the News Today - October 18, 2018

    October 18, 2018 | News

    Attorney Asks: "Can Class Arbitration Even Work?"... Read More