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Order out of court!
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May 10, 2000: 10:37 a.m. ET
Arbitration can offer an alternative to an unpleasant and lengthy trial process
By Staff Writer Rob Lenihan
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NEW YORK (CNNfn) - In the current hit movie "Erin Brockovich," the climactic legal decision does not take place in a courtroom.
In the film, based on an actual case, the residents of a small California town did not take their battle with Pacific Gas & Electric to a court of law, but chose arbitration instead.
Under arbitration, opposing sides in a dispute agree to take their case to one or more neutral decision makers who hear the case and render a decision. There are many dispute resolution firms that provide arbitration.
Supporters say cases can be resolved cheaper, faster and more efficiently through arbitration. There is no waiting for the case to drag through the courts, cases are heard behind closed doors, and often you can avoid using an attorney. An average case, according to one alternative dispute resolution firm, is settled in three months.
Arbitration is also spreading to the Internet, as Web sites take arbitration to cyberspace.
Consumer groups say arbitration is fine, as long as it is your choice. They complain, however, that many companies are skirting the legal system by requiring employees to sign mandatory arbitration agreements and thus keeping any employment disputes out of the courts. The arbitration is held behind closed doors and there is little or no chance of reversing the decision.
Some experts say mediation may be a better choice in many circumstances. Unlike the arbitrator, the mediator does not render a decision, but works with both sides to reach an agreement.
All rise
Walk into just about any courtroom in this country nowadays and you're probably guaranteed one thing: a long wait.
Legal experts say you can be looking at a three-year wait from the time you file a civil case until you actually have your day in court. If you have to hire experts or bring in witnesses for your case, every delay means you are losing time and money.
Instead of watching the wheels of justice slowly grind, many companies and private individuals look to arbitration for a faster resolution of their cases.
 "It is growing exponentially," said Paula Ann Hughes, dean of the University of Dallas Graduate School of Management, who has served as an arbitrator. "It's rapidly increasing because the pressures on the justice system are just too great."
The American Arbitration Association said its number of mediation and arbitration cases rose to a record-breaking 140,000 in 1999, up from 95,143 cases filed the previous year.
"In many instances, arbitration levels the playing field for individuals who don't need to have a lawyer," said Bob Meade, American Arbitration's senior vice president. "Most arbitrators are lawyers or former judges and they must disclose any relationship with any of the parties involved in a case."
Diane McGaha, managing attorney for the Washington office of United States Arbitration & Mediation, which also provides dispute resolution, said the parties in a case may choose arbitrators who are knowledgeable in a particular field. So, if you are involved in a case relating to construction, for example, you can get an arbitrator with construction experience.
"There could be a technically complex issue that you don't want to leave up to the lottery system," she said.
Hughes, a permanent member of arbitration panels for Dallas Area Rapid Transit, the City of Dallas and other entities, said the burden of proof is not as great in arbitration as it is in the courts.
"The rules of evidence aren't as tight," she said. "You basically have a better chance to tell your stories without a bunch of 'I objects!' 'I objects!' "
The facts of the case
Costs of arbitration vary depending upon the type of case, the need for attorneys and witnesses, and other factors. Experts said an employment case in arbitration can cost between $3,000 and $5,000, compared with the costs of a court case of between $50,000 and $100,000.
One private arbitration firm listing a fee schedule on its Web site, charges an administration fee of $100 to $175 per party and $150 to $350 per hour for arbitrator time.
 The National Arbitration Forum did a survey of the results of its cases compared to the results in federal court. It found:
Ø Corporations win 63 percent of cases they bring against individuals, while winning 87 percent of cases against individuals in federal court.
Ø Individuals win 71 percent of arbitration cases brought against corporations, the forum said, while winning 54 percent of the cases brought against corporations in federal court.
Ø Creditors win 62 percent of arbitration collection actions brought against debtors, while they win 98 percent of collection actions brought against debtors in federal courts.
If you decide to go to arbitration, Hughes of the University of Dallas said you should go into the hearing prepared.
"Go in prepared to tell the story in a good logical way," she said. "The person who hears the story has to be able to follow it. You don't want to go in and just appeal to sympathy."
Whatever you do, Hughes said, leave the attitude at home.
"Some people come in and just want to argue with each other," she said. "They've already done that. Forget what you've seen on 'Law & Order.' It's not all going to happen in 30 minutes or an hour. And realize that ego and principle are separate."
If you choose to go with an attorney, Hughes said you should get one who is familiar with arbitration. "Some of them get all huffy and try to make it into a court room, and it's not," she said.
Or should you mediate?
Critics of mediation say the system makes it easier for large corporations to skirt around big lawsuits.
They object to mandatory arbitration, in which companies include arbitration clauses in standard contracts involving newly hired employees, credit card agreements or the purchase of products such as personal computers or cell phones. Experts advise you to carefully read any agreements before you sign them to make certain if there is an arbitration clause.
San Francisco attorney Cliff Palefsky, who has been coordinating national efforts opposing mandatory arbitration, said you should wait until a case arises before choosing the venue in which to fight it.
"Arbitration is a good way to solve simple disputes," he said. "It's not good for cases involving discovery, such as discrimination claims or malpractice cases. Small claims courts are a much more economical and expedient way to resolve disputes. Most people assume the goal of arbitration is justice. The goal of arbitration is finality."
Palefsky and Hughes both suggested mediation as a third choice for consumers. Here, there is no arbitrator rendering a decision, but rather a mediator who will work with both parties to reach an agreement. Legal experts said this method could be effective in cases in which parties have a disagreement, but most continue to work together.
"I think its particularly good for cases that have some real sensitivity, like sexual harassment or a family dispute," Hughes said. "A mediator can talk to people separately and try to work on a settlement." 
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