Much is made of the efficiency and cost effectiveness of alternative dispute resolution (ADR). In our rather litigious society there is seemingly no shortage of people who want to sue one another. No one I know really wants a lawsuit, but sometimes lay persons believe a lawsuit is the only means of resolving a dispute when one occurs. Lawsuits, however, are costly, time consuming, technical, and something akin to repeatedly beating one’s head against a wall. Little wonder then why ADR has become such a hot topic in law and business. Any business executive, irrespective of industry, usually craves two things: 1) certainty (in most things but definitely on costs) and 2) the time value of money being what it is, efficiency.
When a company enters litigation, it is a virtual certainty that a lawsuit will take at least double the amount of time one believes it will take at the outset. This fact usually leads to the spiraling of attorney fees, other third party fees, and the loss of staff productivity due to the time spent on an actual lawsuit. For these and other reasons companies often prefer ADR processes to lawsuits. The number one ADR tool most companies prefer in today’s world is arbitration. Arbitration tends to be much faster than a lawsuit and the rules of evidence are oftentimes much more streamlined than in an actual court of law. An arbitrator acts like a judge without being an actual judge. This is usually advantageous to a company. But what about when you, as an employee or a consumer, are on the other side of the arbitration matrix? Let’s say, for example, you have a dispute with a company from which you purchased a vacuum cleaner and you mailed back the one-year warranty form. That form says all disputes will be resolved through binding arbitration. Arbitration usually limits the amount of damage awards, and rarely has the same protections for litigants that a court of law affords. Let’s say that arbitration clause says the vacuum company gets to choose the arbitrator and the rules by which the arbitration will proceed?
Please answer the following questions below:
For the all the benefits of certainty and efficiency of arbitration, how would you feel about being the potentially aggrieved party on your side of the arbitration?
Do you think arbitration actually hurts the consumer, the employee, the less advantaged party in a business transaction?
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