It was going to save us, alternative dispute resolution. Couched in glowing terms, replete with warm and fuzzy adjectives, reasonable people would resolve their disputes through mediation, where the sides would try in good faith to accommodate their differences, see each other’s perspective and, because people are truly good at heart, end in a hug. And if they didn’t, there was always arbitration.
The legal system was brutal, expensive and time-consuming. It took forever and, by the time anything was resolved, the damage was long since done. Arbitration was derived from the notion that a prompt, informal system would far better serve people’s needs than the formalized legal system. Sure, not for everything, but for some. And so the Federal Arbitration Act was enacted in 1925, reflecting the government’s favor of informal resolution.
The problem wasn’t the concept of arbitration, per se, but that it became captive of its users. If you’re an arbitrator working for an arbitration company, you would have a one-off user on one side and a corporate user on the other, who might have hundreds, perhaps thousands, of employees, and need your services over and over. Continue reading →