Second, consumers get access to justice in arbitration that is most likely unavailable to them otherwise. The simple truth is that lawyers are not going to take a case unless the amount in controversy is big enough to cover their fees and expenses. In fact, one study shows that lawyers won’t represent people with provable damages of less than $60,000; another concludes that employment claims must reach at least $75,000 before they become cost-effective for an attorney to take to court.
That would be a problem for most consumers and many employees, since a number of studies show that the vast majority of consumer arbitration cases are for dollar amounts under $15,000, and half the employment disputes fall below the $75,000 threshold. Without enforceable arbitration agreements, people with legitimate gripes that exceed the amount allowed in small claims court, but are unable to obtain the services of an attorney, will be left to fend for themselves in the complex civil litigation system—or could be forced to drop their claims altogether.
What’s more, when a consumer has a beef with a company, arbitration provides a greater likelihood of an award to a consumer than does a lawsuit. A study of consumer-initiated actions by Ernst & Young with the American Arbitration Association estimates that pre-hearing settlements (about 60 percent of all cases) combined with judgments for the consumer result in a favorable outcome for the consumer in about three of every four arbitration cases. That’s better than comparable cases in the court system.
It’s clear that arbitration is advantageous for consumers – and consumers realize this. A national survey of likely voters conducted by bi-partisan polling firms for the U.S. Chamber Institute for Legal Reform has found that an overwhelming 82 percent of voters would prefer to resolve a serious dispute with a company using arbitration, while only 15 percent would opt for litigation. In addition, 71 percent of voters surveyed believe Congress should not remove arbitration agreements from contracts.
Take a look at the video of Sharon Kruse, a retiree in Dundee, Michigan, whose positive experience using arbitration should be preserved.
The bottom line is that arbitration has worked for more than eighty years. For the vast majority of cases it is faster, more efficient, and yes, fairer, than hiring a lawyer and going to court. Public Citizen and their trial lawyer friends would like you to believe that litigation is the only way to resolve disputes in every instance, but it isn’t – for most consumer and employment cases it’s actually the worse option.
Lisa A. Rickard serves as president of the U.S. Chamber Institute for Legal Reform (ILR), where she provides strategic leadership to ILR's comprehensive program aimed at changing the legal culture that has resulted in our nation's litigation explosion.