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Issue Analysis

    Issue Analysis 106 - Protecting the Trial Lawyer Monopoly: The Assault on State and Federal Binding Arbitration

    07/12/2000

    Summary

    When Alabama CSE was listening to its members talk about civil justice reform during “CSE Day” at the State Capitol, the most profound wisdom came from a college student. He put it simply, “If you know the two things that rule the world, [they are] money and power. Arbitration takes both of those away from the attorneys.”

    With the public’s increasing acceptance of both alternative dispute resolution and technology, the trial lawyers are sometimes (and rightfully so) feeling like useless middlemen that even the average consumer can work around. In a world where individuals are a mouse-click away from virtually limitless information, people are discovering that there are many things they can do for themselves that they would never have dreamed possible just a few short years ago.

    Arbitration has effectively cut trial lawyers out of a big piece of the action, leading them to launch an assault upon this form of dispute resolution before it grows even stronger. From California and Alabama to the U.S. Congress, the trial lawyers have enlisted their allies to propose anti-arbitration legislation in the guise of consumer protection. In fact, the drive to eliminate arbitration and other forms of alternative dispute resolution has nothing to do with the consumer and everything to do with self-interested motives of the trial lawyers.

    Compared to long and expensive court proceedings, arbitration offers a more timely and cost-effective way of settling disputes. In fact, 71 percent of adults believe lawsuits take too long to resolve disputes over money. Additionally, when individuals are informed that the cost of arbitration is typically 75 percent less than the cost of litigation, 82 percent of adults said that they would instead opt for arbitration.

    Some studies show arbitration may not only be more efficient in terms of time and money, but more effective overall as well. An American Bar Association study shows that while consumers prevail 71 percent of the time in court, they win 80 percent of the time when they settle matters through arbitration. In the case of non-union employment suits, there is an even starker contrast. While plaintiffs in such employment cases win between 15 percent and 17 percent of the time in court, they win between 63 percent and 74 percent of their claims under arbitration.

    It is not the consumer rights groups and advocates that we see attacking arbitration, but rather trial lawyers and their political allies who use our legal system for personal gain. The empirical evidence is clear – arbitration benefits consumers. It enhances consumers’ access to a more efficient and cost-effective means of solving legal problems. That is why consumer rights groups and advocates are not attacking arbitration. Only those with a vested interest in an expensive, time-consuming legal system – the trial lawyers and their political allies – oppose arbitration.

    The United States Congress and state legislatures need to continue to support efforts to make arbitration more, not less, available to consumers. Under the maxim put forth by the college student from Alabama, it is clear that by taking away the money and the power of the trial lawyers via arbitration, we can give back our legal system to decent, honest Americans with real grievances.

     

    Full Study:
    Citizens for a Sound Economy Issue Analysis 106
    Protecting the Trial Lawyer Monopoly:
    The Assault on State and Federal Binding Arbitration
    (PDF format, 8 p. 76 Kb)