ARBITRATION WORKS FOR CONSUMERS
Citizens Against Lawsuit Abuse groups urge interim committee to support arbitration, noting support from voters and high consumer satisfaction
AUSTIN – Urging legislators to resist efforts that would undermine the use of arbitration in Texas, Citizens Against Lawsuit Abuse (CALA) groups today told members of a House committee that arbitration is a less expensive, more efficient alternative to litigation that bolsters access to justice for many Texans.
“If personal injury lawyers and their advocates in Texas have their way, employers and consumers here may have fewer alternatives to costly and time-consuming litigation,” said Chip Hough, a small business person and board chairman of Bay Area CALA in Corpus Christi. “Why the focus on arbitration? It’s been clear for years that personal injury lawyers chafed at the system. They don’t like arbitration because it provides solutions to disputes without lengthy and expensive litigation. Employers and consumers, on the other hand, embrace arbitration for the very same reasons.”
CALA representatives from across the state made their case in testimony provided to the Texas House Committee on Judiciary and Civil Jurisprudence. As part of its interim activity, the committee has been charged with studying and making recommendations regarding the use of arbitration in Texas. This interim study comes on the heels of an unsuccessful effort during the 2009 legislative session by state Sen. Royce West of Dallas to effectively eliminate arbitration in consumer cases, employment matters, franchisor/franchisee disputes, and in many other instances.
As personal injury lawyers lobby against arbitration in Texas, the American Association of Justice (formerly known as the American Trial Lawyers Association) is waging a battle on the national level. In early January, this group announced that making arbitration clauses illegal would top their 2010 agenda.
“At Citizens Against Lawsuit Abuse, our mission is to advocate for a fair and just legal system,” said Stephanie Gibson, executive director of Central Texas CALA in Austin. “Since our founding, we have advocated for an end to abusive and frivolous litigation that can delay or deny justice for those who are truly injured. Our support for arbitration is a natural extension of our support for timely justice.”
Arbitration allows an individual to seek justice within a legal structure but does not necessitate that they hire a lawyer (although they can choose to do so).
Opponents of arbitration claim the system harms consumers. But a 2008 study, submitted to the committee today as part of the CALA testimony shows just the opposite. “Arbitration – A Good Deal for Consumers,” prepared for and released by the U.S. Chamber Institute for Legal Reform, is available for review at http://www.instituteforlegalreform.com/component/ilr_issues/29/item/ADR.html. Written by Professor Peter B. Rutledge the 2008 overview clearly shows that arbitration works for consumers and employers alike. Specifically, the report shows:
- Consumers win. Consumers won their cases slightly more than 70 percent of the time when they chose arbitration.
- Consumers win faster. In contrast to the sluggish pace of litigation, the average time from filing to disposition of a case taken to arbitration was approximately 100 days (litigation took 3 to 4 times longer, other studies showed).
- Consumers win more often with arbitration than in litigation. Conversely, when an employer initiated the case, their win rate in arbitration was almost equal to that in litigation.
- Lower costs. In a study of employer and securities litigation, arbitrated disputes cost less than litigation, even when attorney’s fees are included.
Also in 2008, the U.S. Chamber Institute for Legal Reform released a survey of U.S. voters that found 82 percent of those surveyed said they prefer arbitration to litigation as a means to settle a serious dispute with a business; the survey also found that 71 percent oppose efforts by lawmakers to remove arbitration agreements from consumer contracts.
Michelle Martin, executive director of Houston CALA agreed, saying: “It’s no secret that lawsuits are costly. Many individuals are discouraged from seeking justice – especially in those cases that threaten long, drawn-out legal battles. Arbitration provides parties an alternative solution.”
CALA representatives said the current system works for consumers and is critical for employers. “Preserving these options is critical for consumers and the small employers who provide the jobs and paychecks our families depend on,” said Veronica Villegas, executive director of the Valley CALA.
“The bottom line,” Hough concluded, “is some personal injury lawyers argue against arbitration because it hurts their law firm’s bottom line. For the rest of us, arbitration works. We hope the committee conducts a thorough review and reaches the same conclusion.”
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