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Fortune 500 GC Says Litigate, Don't Arbitrate, Employment Disputes

(photo:  Employees Only by Michelle Thompson

While most of the arbitration news of the week is about the unfair advantage given to corporate "repeat players" in the arbitration of disputes, Senior Legal counsel for DHL counsels employers to abandon arbitration's ship and swim back into litigation's pacific waters.  

Though I'm the "pro" arbitration speaker with DHL in-house counsel Joshua Frank at this week's ALFA Labor & Employment Practice Group Seminar in Half Moon Bay, I don't have strong feelings one way or the other (preferring, as you can imagine, the negotiated, to the adjudicated, resolution).

Mr. Frank's reasons for suggesting that the Courts are a better forum for employers and arbitration better for employees?

    • Arbitration's finality favors the employee because appellate judges have been "trending towards more favorable decisions for employers for several years."
    • While arbitration providers have a vested interest in their case load persisting, the courts are interested in purging their dockets, thus making early termination in court more likely.
    • Arbitrators' self-interest in maintaining and expanding their own ADR practices encourages a "split the baby" mentality and reluctance to terminate the case short of a full hearing.
    • Litigation is becoming faster and cheaper while arbitration becomes more procedurally encrusted and expensive, particularly in those states where the employer is  required to bear the entire expense of the arbitral forum.
    • Despite the Maryland Employment Lawyers' recent observation that "median to average jury verdicts in discrimination cases [have been reported to be] at least three times higher than the comparable mean and median arbitration awards," Plaintiffs actually do better overall in arbitration than in Court.
      • the evidence?  One study over a 12-year period showed that plaintiffs in employment disputes prevailed 38% of the time when the matter was adjudicated by a jury while plaintiff employees prevailed in 68% of the cases adjudicated by the AAA during the same time period.
    • Arbitration proceedings aren't "complex, intimidating and confusing enough" to deter "frivolous" claims by employees.
    • The "repeat" player bias will favor the Plaintiffs' bar who the arbitrator will see far more often than counsel for any particular employer.
    • Arbitration makes life too easy for plaintiffs' attorneys.
    • The risks of litigation are manageable, with only an estimated six to eight percent of employment cases going to trial.
    • Great lawyers (assuming, of course, that the defense is more likely to hire the great ones) do better in litigation than in arbitration.

    The "pros" of arbitration?  I'm saving them for the conference but will blog on them when I return.

Comments (2)

Read through and enter the discussion by using the form at the end
Stephen M (Ethesis) - October 2, 2007 2:52 PM


I had just pointed this out to someone this morning as a reason to avoid arbitration and it was nice to see the actual numbers on-line.

Ron MIller - October 4, 2007 10:24 PM

1. I like your blog, I'm glad to see you were reading http://www.marylandlawyerblog.com

2. I'm not an employment lawyer, actually, I am a personal injury lawyer.

3. The problem I have with arbitration at least in the PI context is that most of the work comes from insurance companies because the insurance companies have more market share than the PI lawyers in almost every case. Accordingly, about 50% of the retired judges who are generally selected as arbitrators in PI cases in Maryland are predisposed to slant their findings for the defendant.

Again, I like your blog a lot. Our main blog is www.marylandinjurylawyerblog.com

Ron Miller

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