Trial lawyers and their friends in the Legislature want to eliminate arbitration and extract big settlements to line their pockets.
But no matter what they may say, arbitration is a solid tool for consumer protection.
We have all signed numerous arbitration agreements without a second thought – with our cable company, banks, gyms and Internet and email providers, as well as the applications we download to our phones.
Under arbitration agreements, should we encounter a problem, cases are decided by a neutral arbiter rather than a judge or jury. These agreements make it easier to open a bank account, rent a car or get a credit card – and make resolving a dispute faster and cheaper than hiring a lawyer and going to court.
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Trial lawyers are attempting to convince us we’re forfeiting our rights when signing arbitration agreements. For example, they believe that when we purchase a mobile phone or the service to make it work, we are also buying the “right” to sue the company if something goes wrong.
However, that misses the point. Should something go wrong most of us are not interested in filing a lawsuit, we just want the phone to work again and be properly compensated for any down time or inconvenience.
But the goal of the trial lawyers is to win a lottery where we buy the tickets and collectively furnish the cash.
Without arbitration, class-action suits would flourish. Time and again we’ve all been placed into a class action without our consent.
Each time the lawyers walk away with millions of dollars, while we get a postcard in the mail for $1 off our next purchase – of a higher-priced item to offset the cost of the lawsuit.
We also routinely sign arbitration agreements with our employers that allow for higher wages, because without them, employers would be forced to set aside large amounts of cash for legal expenses.
Trial lawyers troll for persons they can convince are victims, then file lawsuits. But researchers have found that employees do at least as well in arbitration as they do in court, and in some cases they do better.
Now the trial lawyers are trying to turn arbitration into a civil rights issue.
Assembly Bill 2667 would prohibit enforcing an arbitration agreement whenever there is a claim of discrimination. Tuesday afternoon, that bill was narrowly defeated.
But should this bill become law, lawyers who specialize in suing businesses would simply add a discrimination claim to move it from arbitration and into court, where these lawyers make more money.
We understand why trial lawyers hate arbitration, but don’t let that convince you to hate arbitration, too.
Ken Barnes is executive director of California Citizens Against Lawsuit Abuse. He can be contacted at firstname.lastname@example.org.