Don’t Believe Everything You Read About Arbitration


Recently, the New York Times posted a series of articles (Part I, II, III) attacking arbitration but overlooking the value of this alternate form of dispute resolution and omitting an excess of relevant details. These articles should have recognized who the actual villains in the class-action game often are—personal injury lawyers.

As Forbes’ Daniel Fisher reported, “The Times reports without skepticism the plaintiff-lawyer version of the story, which is that consumers with small losses have no chance of compensation unless they join together in a class action.” The narrative that well-meaning citizens who simply want compensation for grievances choose to pursue time-consuming and expensive class-action lawsuits is false. “Arbitration clauses prohibiting class actions provide a less costly alternative to this, but class-action lawyers don’t like it,” wrote Fisher.

The potential class members, if they’re even aware that they are, often are lured into class actions rather than the other way around. With each additional class member added to the suit, the personal injury lawyer increases his or her potential payday.

The articles villainized the wrong group, throwing arbitration clauses and corporate America under the bus while failing to recognize their own involvement in this type of legal precaution. It only took the Washington Post a few days to post a story revealing that one of the New York Times’ own businesses requires consumers to agree to precisely the sort of legal handiwork that is criticized throughout three lengthy stories.

At certain points, the Times articles make completely false claims. For example, the pieces say that these clauses are a recent legal innovation designed to shield companies from class actions. However, according to a piece in BloombergView, which reflects on the legitimacy of the Times articles, “the validity of arbitration clauses that prohibit lawsuits has been established for more than 70 years.”

The article fails to mention the many studies that have shown that consumers can fare better in impartial arbitration proceedings than in the courtroom, and that both parties in a dispute have a say in the arbiter selection. We cannot overlook that arbitration usually can resolve issues faster, cheaper and more efficiently than litigation.

Most personal injury lawyers are probably more interested in their fat 30 percent (or more) lawsuit contingency fee than in simple and fair alternatives to litigation. The authors should have done justice to the topic by considering the lawsuit greed dynamic.

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