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More Statistics on the Differences between Arbitration and Litigation Procedures, Cost, Duration and Outcome

(photo:  Amanda Graham's Outlier)

I have Christina Doucet at the National Arbitration Forum to thank for summarizing some of the most recent statistical literature available on differences between procedure, cost, duration, outcome and party satisfaction of litigated and arbitrated consumer and employee disputes.

Time and Cost Differences Between Arbitration and Litigation

  • Employment claims take 650 to 720 days to be resolved in court, according to the National Center for State Courts. 
  • The median time to resolve an employee dispute by arbitration is 104 days 
  • the median cost of resolving employment disputes by arbitration is $870.

Sources: Consumer and Employment Arbitration in California: A Review of Website Data Posted Pursuant to Section 1281.96 of the Code of Civil Procedure California Dispute Resolution Institute, August 2004 http://www.mediate.com/cdri/cdri_print_Aug_6.pdf   and Examining the Work of State Courts, (1999-2000) National Center for State Courts http://www.ncsconline.org/D_Research/csp/1999-2000_Files/1999-2000_Tort-Contract_Section.pdf

Outcome Differences Between Arbitration and Litigation:  Arbitration & litigation final awards are essentially the same as court judgments

  • median monetary awards for successful claimants are greater in arbitration than in court—$100,000 in arbitration compared with $95,554 in court.

Sources: Employment Arbitration: What Does the Data Show? The National Workrights Institute Article reviewed on workrights.org site on November 15, 2004

http://www.workrights.org/current/cd_arbitration.html; Comparing Litigation and Arbitration of Employment Disputes: Do Plaintiffs Better Vindicate Their Rights In Litigation? Michael Delikat & Morris M. Kleiner American Bar Association Litigation Section Conflict Management Vol. 6, Issue 3;  Winter 2003 http://www.insurancejournal.com/pdf/InsuranceTimes_20030429_39125.pdf

  • The “win-rate” for employees is at least as favorable as an individual’s win-rate through a lawsuit 
  • In contract disputes, individuals who sue businesses win 55% of the time in both court trials and in arbitration and some researchers have found that employees win more often in arbitration than in court.

Sources: 2004 Employment Arbitration: What Does the Data Show? The National Workrights Institute Article reviewed on workrights.org site on November 15, 2004 http://www.workrights.org/current/cd_arbitration.html

Do the Parties Believe they've had their "Day in Court"?

  • only 2.8% of contract cases ever reach trial in state court.
  • more than 40% of cases brought before the National Arbitration Forum are resolved through an arbitration proceeding.

Sources: Examining the Work of State Courts, (1999-2000) National Center for State Courts; Outcomes of Arbitration : An Empirical Study of Consumer Lending Cases Ernst & Young, Quantitative Economics and Statistics Practice Publication forthcoming December 2004

Other Research Sources

The Truth About ADR: Do Arbitration and Mediation Really work? by Michael T. Burr Corporate Legal Times - February 2004 -  survey of general counsel and other high-ranking in-house counsel from both public and private companies in October and November of 2003.

  • 59.3% surveyed indicated arbitration was less expensive, 
  • 78% indicated arbitration led to a faster recovery
  • 83% indicated arbitration was either equally fair or fairer than the traditional adjudication process.

Survey on Arbitration

ABA Section of Litigation Task Force on ADR Effectiveness American Bar Association - August 2003 -- http://www.abanet.org/litigation/taskforces/adr/surveyreport.pdf

  • 78% of those surveyed said that arbitration was timelier than litigation, and 
  • 56% said that arbitration was more cost effective than litigation.

Legal Dispute Study Roper ASW: Survey for the Institute for Advanced Dispute Resolution April 2003 http://www.adrinstitute.org/adri-lds2.pdf

  • Updating a study conducted in 1999, this study revisits Americans’ awareness, knowledge, attitudes and experiences regarding arbitration as an option for resolving disputes.
    • 64% of respondents would choose arbitration over a lawsuit in disputes involving monetary relief. 
    • 67% of respondents felt that lawsuits take too long, 
    • one-third or some 32% said that lawsuits cost too much.

Costs and Value of Arbitration

Lisa Brener World Arbitration and Mediation Report - April 2003 14 No. 4 World Arbitration & Mediation Report 111 (2003)

In a 1990 survey,

  • 100% of respondents found arbitration to be quicker than litigation. 
  • 89% found that arbitration was less expensive than litigation. 
  • only 17% of attorneys’ time was spent on discovery in an arbitral setting, compared to 45% in court 
  • over half of the respondents believed arbitral awards were more equitable than the outcomes in litigation.

ADR Preference and Usage Surveys

Surveys and Ballots, Inc. surveys of: American Bar Association’s General Practice Solo and Small Firm (GPSolo) Division and Tort Trial and Insurance Practice (TIPS) Section members September 2005 http://www.abanet.org/tips/TIPS%20ADR%20Preference%20and%20Usage%20Report.pdf

The surveys assess the usage and preferences regarding negotiation, mediation and other forms of alternative dispute resolution (ADR). Respondents from both ABA member groups report an increasing support of ADR. Both groups view ADR usage as a necessity that will continue in the future, reiterating the growing trend in ADR.

Private Justice: Employment Arbitration and Civil Rights Lewis L. Maltby Columbia Human Rights Law Review, Fall 1998 30 Colum. Hum. Rts. L. Rev. 29 (1998)

  • by lowering costs, private arbitration holds the potential for bringing justice to many to whom it is currently denied. 
  • Employee-plaintiffs generally fare as well in arbitration as they do in court, even though most of the experiences they reflect took place before the establishment of the due process standards that currently exist. 
  • In the future, the quality of justice employees receive in arbitrations under these standards should be even better.

 

Comments (1)

Read through and enter the discussion by using the form at the end
Kyle - August 13, 2008 10:55 PM

Excellent article!

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