HOW TO LOSE A CLIENT THROUGH ARBITRATION

When I was in law school, there were and still are many schools of thought regarding alternative dispute resolution, like arbitration. Arbitration is a form of alternative dispute resolution, a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. It is a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides. It was, for many years, argued that arbitration was more cost effective than going to court and that decisions would be reached earlier. On my Facebook site at www.facebook.com/jmprobstein, I have a link to a recent article from Consumer Reports entitled "Locked Out Of The Courts" that discusses the problems that consumers are having with arbitration clauses forced upon them. But it's not just consumers that have this problem! Let me relate how I lost a client from recommending that the client, a retailer, put in an arbitration clause in their agreement with consumers. I represented this company in many litigations so after two major litigations, I suggested that we revise their agreement to include an arbitration clause and that this would reduce the costs of any future litigation. Well, one litigation came up from a wealthy and very angry consumer who decided that they would incur all the costs of arbitration for reasons that are not relevant. Because the point is: the arbitration was so costly, dragged on for over a year, dozens of hearings, etc., that my client realized that the court process was less costly and quicker. And they were so disappointed with my suggestion of an arbitration clause, that afterwards they retained new counsel. Arbitration may have it's advantages, but to date, I have only seen it's disadvantages. In fact, just several years back, there was a dispute between two parties who were subject to an arbitration clause. Because of my expertise, I was appointed an arbitrator by one side and the other side appointed another lawyer as an arbitrator. Myself and the other lawyer needed to appoint a third neutral arbitrator. It took months and thousands of dollars for both sides to agree to the neutral arbitrator and they were so annoyed by the high costs and fees, that they decided to settle the matter. The fact is: the clients could have started an action in the courts, at a cost that would have involved less fees, and come to the same early realization that the matter should be settled.