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.

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.  Read More...

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.

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All Results for Alternative Dispute Resolution (ADR)/Arbitration

  1. Study Shows Arbitration is Fair and Cost-effective For Consumers in Broad Array of Cases

    March 11, 2009 | Press Release

    The findings released by the Searle Civil Justice Institute today helps prove that arbitration continues to provide consumers with fair, inexpensive, and unbiased access to justice across the broadest spectrum of consumer disputes.... Read More

  2. READ BEFORE BURNING: Congress should examine the latest arbitration study before torching an 84-year-old method of consumer justice

    March 11, 2009 | Press Release

    As Congress once again attempts to pass legislation that would potentially nullify hundreds of millions of arbitration agreements in consumer contracts, they should carefully review the mounting evidence that verifies the benefits of arbitration. This week, the Searle Civil Justice Institute, a unit of the Northwestern University School of Law, released an independent study confirming that the 84-year old arbitration system remains a fair, inexpensive and unbiased option for millions of American consumers. ... Read More

  3. Arbitration Ain't Broke, But Trial Lawyers Want To Fix It

    April 02, 2008 | Press Release

    A short article appeared in The New York Times on June 13, 1925 headlined 'Federal Court Cases Double in Ten Years.' From 1915, the number of cases had risen annually from nearly 63,000 to about 126,000. Despite their best efforts, the federal courts were drowning in cases, but change was coming. Four months earlier, Congress had passed the Federal Arbitration Act. ... Read More

  4. Bogus Attack on Arbitration Really about Plaintiffs' Lawyers' Right to Sue

    September 26, 2007 | Press Release

    WASHINGTON, D.C.-U.S. Chamber Institute for Legal Reform President Lisa A. Rickard released the following statement on the arbitration system in response to recent trial lawyer-backed studies and legislation aimed at undermining arbitration and encouraging more class action lawsuits:

    "The plaintiffs' lawyers' attack on the arbitration system - a process that has helped consumers resolve disputes for more than 85 years - is nothing more than their latest attempt to enrich themselves by opening the door for more class action lawsuits.... Read More

  5. U.S. Chamber Releases Poll Showing Arbitration Faster, Simpler and Less Costly than Litigation

    April 13, 2005 | Press Release

    WASHINGTON, D.C. - A United States Chamber of Commerce Institute for Legal Reform (ILR) survey by Harris Interactive found wide satisfaction among individuals who chose arbitration over litigation to resolve a dispute.... Read More

  6. Anti-Arbitration Bill Sets Dangerous Precedent, Warns U.S. Chamber of Commerce

    June 07, 2000 | Press Release

    WASHINGTON, D.C., June 8, 2000 - In testimony before the House Judiciary Subcommittee on Commercial and Administrative Law, the United States Chamber of Commerce today criticized the Fairness and Voluntary Arbitration Act, H.R. 534, for undermining contracts and forcing businesses that have agreed to work through the arbitration process into the congested court system.... Read More

  7. Chamber Supports Keeping Binding Arbitration Current System Works to Settle Disputes Fairly

    February 29, 2000 | Press Release

    WASHINGTON, D.C., March 1, 2000 - The United States Chamber of Commerce called on Congress to maintain the current binding arbitration system for workplace disputes, in testimony before the Senate Judiciary Committee.... Read More