The Justice-at-a-Price Guys Take Aim at Arbitration

Under the guise of “consumer advocacy,” a small group of trial lawyers is waging a well-financed legislative campaign that would make it much harder for some people to get access to justice in California. Legislators must defeat the measures, which are headed for final votes in the Senate.

Dispute resolution services--including arbitration, mediation and conciliation--offer individuals and businesses a way to resolve disputes quickly, fairly and cost-effectively outside of court. In California, these services are well regulated and supported by the courts. For many Californians, alternative dispute resolution is their only chance to be heard.

Arbitration is especially important because the right to trial by jury is increasingly available only to those who have unlimited resources to spend on years of litigation or those who have spectacular, headline-worthy claims.

The high cost of justice shuts out as many as 100 million Americans from the legal system, according to the American Bar Assn. A survey of employment lawyers indicated that a prospective plaintiff needed to have a minimum of $60,000 in provable damages before an attorney would even take a case. Moreover, in our already overburdened civil justice system, it takes an average of 2 1/2 years for a case to get to a jury--if it gets there at all.

Arbitration has provided an alternative to this slow and expensive justice system. Currently, under procedures established by the American Arbitration Assn., a not-for-profit, public service organization, the total fee charged to the individual in a business-to-individual arbitration is $125 for claims under $10,000; or half of the arbitrator’s fee, capped at a maximum of $375, for claims between $10,000 and $75,000. If the case is settled before a hearing, the individual pays no fee.

Furthermore, appearing without an attorney in arbitration is much easier than in litigation, as the parties do not have to navigate the evidentiary hurdles, motions and discovery that often define court proceedings. This allows many people to represent themselves and avoid lawyers’ fees. If need can be proved, the arbitration services are offered for reduced amounts or for no fee at all.

But the measures proposed by a few trial attorneys, if passed and signed into law by Gov. Gray Davis, would create roadblocks that would make arbitration impractical. These roadblocks include exposing those who provide arbitration services to lawsuits if one of the parties isn’t pleased with the outcome (judges are immune from such lawsuits) and forcing the organization that provides arbitration services--rather than the business involved in the dispute--to bear the costs of the procedure if the individual is unable to pay.

The system of alternative dispute resolution in California is not without its flaws. But the overreaching legislation proposed by anti-arbitration trial lawyers to remedy these problems would create a windfall for trial attorneys, further tax California’s civil court system and force those who cannot afford it into expensive and lengthy litigation.

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William K. Slate II is president and CEO of the American Arbitration Assn.