Consumers Turn to Arbitration
by Curtis D. Brown, general counsel of the National Arbitration Forum
If you're feeling litigious and want to drag someone into court, don't count on having a judge and jury decide your case. Unless a lot of money is at stake, the court is likely to steer your dispute into arbitration.
If you still insist on going to court, you may even have trouble getting a lawyer to represent you. The ABA Journal reports that most lawyers won't take a case worth less than $20,000. The complaints of most consumers don't begin to approach that level.
And even if you can get a lawyer to handle your case and file the necessary papers to go to court, the chances are that the case will be settled out of court. Only two out of every hundred cases are actually resolved by a court.
So, how do you get your "day in court?" Well, if you aren't fussy about wood paneling and judges in black robes, you can take your case to arbitration. With arbitration, you retain your legal rights, you get due process, and if you think the arbitrator muffed the call, you can appeal that decision to a court of law. In addition, you are almost certain to save money on legal fees and get your dispute resolved quicker. It typically takes anywhere from two to five years to get a civil case before a judge; an arbitration case is often resolved within a matter of weeks.
If arbitration is so good, why aren't more people using it? Well, the fact is more people are using it. The number of cases going to arbitration has been growing every year. Last year, more civil cases were resolved through arbitration (300,000) than through the federal courts (275,000). And the trend is accelerating. With court budgets being slashed, state courts are directing more cases to arbitration, and some states are mandating that fender benders and other small auto-related insurance disputes be arbitrated.
Add to this the fact that many companies are now including arbitration agreements in their purchase and service contracts. Surprisingly, statistics show that companies tend to lose a few more decisions through arbitration than through litigation. But, they more than make up for the losses by cutting their overall legal costs. It's the huge expense of dragging dozens, even hundreds, of small cases through the courts that makes litigation such a burden for corporations.
Simply from watching TV, you probably already know a lot about taking cases to court. But what about arbitration? How much do you know? If your roofer does a lousy job or if your new car breaks down, are you ready to go to arbitration? Do you understand your legal rights? Are you ready to act as your own spokesperson and make your case?
Here is some basic information that you should know before going to arbitration.
How much does it cost? - Arbitrating a dispute is far cheaper than litigating a dispute to resolution. Filing and hearing fees (and attorney fees if you elect to have an attorney help you) are much less than the total cost of litigation expenses and mandatory attorney fees. Also, in some cases involving consumers and employees, the company or employer either voluntarily pays, or is required to pay, all or part of the costs.
What are my legal rights? - You have the same basic rights and remedies as in a court of law. And an arbitrator has the same power as a judge to award monetary or other legal and equitable remedies.
Does arbitration protect my due process and other legal rights? - Yes. The U.S. Supreme Court has held that parties to an arbitration are entitled to due process and other basic legal rights. You can present your case before an arbitrator as you would before a judge, and the courts can review arbitration proceedings to make sure due-process standards are followed.
Can I seek discovery from the other party? - You can often use the same discovery methods as in litigation and can require the other party to produce relevant documents and give deposition testimony.
Can I take a large claim to arbitration? - Arbitration procedures exist for claims of all sizes, from less than $1,000 to more than $1,000,000.
Are the proceedings secret? - Arbitration awards may or may not be published, depending upon the parties' agreement, but judges review arbitration hearings and awards in open court and awards are reported when they are confirmed as civil judgments.
If I don't like the result, can I appeal it? - If you think the arbitrator mishandled your case or misinterpreted the law, you can appeal to the courts. In fact, all arbitration awards are reviewed by courts in a process called "confirmation."
How do I enforce the arbitrator's decision? - Arbitration awards are just as enforceable as lawsuit decisions. The courts recognize and enforce the awards.
Arbitration is generally quick and easy. Here's a typical case. When a tax-preparation firm didn't provide the services agreed upon and refused to refund his money, Daniel Thomas of Akron didn't go to court. Instead, he paid a $50 filing fee and arbitrated the case through the National Arbitration Forum. Costs came to a fraction of what it would have cost to go to court, and the case was decided in less than two months. The arbitrator, an attorney who had worked in the Ohio Attorney General's office, ruled in Thomas's favor to the tune of $1,100. When it was over, Thomas said, "It was an excellent job, very speedy. My wife and I were very pleased with the results of our arbitration. Everything was handled in a very professional and timely manner."
A few years ago, the American Bar Association reported that 100 million Americans are effectively barred from seeking justice by the high cost of lawyers and litigation. By providing a low-cost alternative to litigation, arbitration is opening the doors of justice wide enough for even the poorest consumers to have their disputes heard in a legal forum and to gain justice.
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The National Arbitration Forum is one of the world's largest neutral administrators of arbitration and mediation services, with a select panel of former judges and experienced senior attorneys providing dispute resolution worldwide. Founded in 1986, the Forum is headquartered in Minneapolis-St. Paul, with arbitrators located across the globe. Additional information can be found on the Forum's website, located at www.arbitration-forum.com.