Belsky Weinberg & Horowitz, LLC A Personal Injury & Workers’ Compensation Law Firm

Arbitation - The Advantages and Disadvantages

Arbitration - a means for settling disputes out of court - has found increasing favor withmajor corporations and some physicians. Mandatory arbitration clauses are becomingmore and more common. Unfortunately, many consumers and job seekers are findingthat, as a condition to purchasing a product or obtaining employment, they have waivedtheir right to a jury of their peers if things go wrong.

The arbitrator is an impartial but experienced person selected by both parties to thedispute. Many arbitrators are retired judges. An arbitration award can be entered as ajudgment after being confirmed by the court. The arbitrator's decision is legally bindingand can not be appealed, except in very rare circumstances, unless the parties agree inadvance that the decision can be appealed.

There are advantages and disadvantages to arbitration, which must be carefully weighed.

Arbitraiton advantages:

  • Lower costs. Resolving a case through arbitration is usually less costly than going through litigation because the process is quicker and generally less complicated than a court proceeding. In addition, some organizations charge fees based on a sliding scale based on the size of the dispute.
  • Confidentiality. Arbitration proceedings are generally private. This can be beneficial if the dispute might cause embarassment or reveal private information. The parties can decide in advance if they want to have the decision of the arbitrators to be confidential.
  • Speed. Arbitrators often make decisions in less time than judges. The average time from filing to a decision in an arbitration is about 475 days, while a similar case can take anywhere from 18 months to three years in the court system, according to a study by the Federal Mediation and Conciliation Services.
  • Flexible scheduling. Arbitration hearings can be scheduled on weekends and evenings, unlike court cases.
  • The rules of evidence and procedure are simpler. In arbitration, most matters, such as who will be called as a witness, are handled with a phone call. Also, some people prefer that, unlike the formal atmosphere of a courtroom, an arbitration can take place around a table.

Arbitration disadvantages:

  • Loss of access to courts in the first place. Many consumers simply aren't given a choice whether to litigate or arbitrate. Mandatory arbitration clauses are hard to escape. One 2008 University of Michigan study found mandatory arbitration clauses in 93 percent of the employment contracts it surveyed and in 77 percent of the consumer contracts it surveyed.
  • Concern about the impartiality of the arbitrator/conflict of interest. If an arbitrator is repeatedly used by the same company, there is a concern that the arbitrator will begin to make decisions favorable to the company so as to stay employed.
  • Appeal is not likely. A final decision generally can not be appealed if the arbitrator's decision is unfair or difficult to comprehend.
  • Many arbitration clauses bar class action lawsuits. Class action lawsuits are an important right for consumers, because, historically, each individual claim is worth relatively little. However, when hundreds of consumer claims are bundled
  • togther in a lawsuit, large, well-funded companies take notice and, in most cases, will enter into a meaningful settlement to compensate victirms. More importantly, class action lawsuits can cause corporations to change their business practices so that other citizens are not victimized by the same practices in the future.

Belsky, Weinberg & Horowitz have been fighting for their clients who are the victims of negligence for many years. Call us at 410-234-0100 or email us for a free consultation and let us help you.

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