6 ms·

The problem is that companies favor arbitration because arbitration tends to favor companies. If arbitration were truly neutral, and it were easy to access with

The problem is that companies favor arbitration because arbitration tends to favor companies. If arbitration were truly neutral, and it were easy to access with low costs to the consumer, companies would stop using them. So even if companies don't pick the arbitrator, arbitrators still have an incentive to find in favor of companies. Additionally, small claims court already basically works like what you're describing, no jury just one arbitrator not picked by either side--the judge.

jedberg 8y ago
> The problem is that companies favor arbitration because arbitration tends to favor companies. That's only because they are paid by the companies (and picked by the companies). If the companies didn't pick and the payment came out of the disputed amount or the loser paid, then they wouldn't have an incentive to favor the company.
- learc83 8y ago
  I think you may have missed the rest of my comment.
- jbottoms 8y ago
  An article in Harvard Negotiation Law Review points out that courts can order arbitration if both parties agree to it, but cannot control the mechanisms of the arbitration. Therefore, if the company is paying any portion of the arbitrator's fee and the company is not leading in the process, they can elect to not pay the arbitrator's fee. In which case the arbitration fails and the case is dismissed. It appears to be in the plaintiff's interest to prefer mediation over arbitration. In essence, arbitration is broken.
  - arethuza 8y ago
    Think about it from the arbitrator's point of view - who are they going to get repeat business from?
munchbunny 8y ago
Restructuring arbitration for neutrality and thus cannibalizing arbitration as an industry seems like a fine outcome to me. Feels a bit like the payday loan industry: I'm sure it does some people some good, but it's largely just predatory and throws people into a rigged game. We'd be better off with less of it.
- learc83 8y ago
  I'm fine with doing away with arbitration in most cases, but I'd rather just do that directly. My point is that it's hard to enforce neutrality, because there is always an implicit incentive for arbitrators to find in favor of big companies. Even if those companies aren't directly choosing a specific arbitrator, big companies in the aggregate are the ones primarily driving the business.
  - deleted 8y ago
    [deleted]
- verbify 8y ago
  An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse. I agree we should have less of it, but all legislation should be mindful of the consequences of certain types of restrictions.
  - CaptainZapp 8y ago
    Why not cap the maximumum interest rates? Switzerland, not really a communist hell hole and quite liberal in economic matters, for example, caps annual interest rates at 15% annually. You don't see more broken legs than anywhere else.
    - verbify 8y ago
      If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere. Switzerland is a wealthy low-crime country to start with, the mafia do not have a strong hold. For example the homicide rate in Switzerland is 0.54 per 100,000 people, by comparison in the United States it is 5.35 per 100,000 people.
RcouF1uZ4gsC 8y ago
One thing that could fix this would be making the decision for arbitration binding on companies. Basically, once a company picks arbitration, it can’t ever go back. Then make it so someone other than the company picks the arbiter. This would go a long way towards removing perverse incentives.
- JumpCrisscross 8y ago
  > One thing that could fix this would be making the decision for arbitration binding on companies This is how arbitration works. Non-binding arbitration is called mediation, and is basically glorified group therapy.
  - hopler 8y ago
    You denigrate it but it works well in many situations where parties want to rea b a profitable agreement.
  - RcouF1uZ4gsC 8y ago
    I should have phrased it better. I am not talking about an arbitration case itself, but the decision to use arbitration as the means for settling disputes. If company decides to use arbitration in 2018, then in 2020, they are not allowed to change their mind to not use arbitration. Deciding to use arbitration locks the company in. Thus, the various arbitration providers don't have any concern that if their decisions are not friendly to the company the company will stop using their services.
    - JumpCrisscross 8y ago
      This is how every arbitration clause I've seen is structured. I think it's a good idea to write that restriction into law, given anyone deviating from the norm is probably tryin to game the system to their advantage.
daveFNbuck 8y ago
Arbitration is also a lot cheaper than going to court, so companies would save money on arbitration even if arbiters were slightly less likely to side with them than courts.
- learc83 8y ago
  Assuming arbitration is also cheaper for potential plantifs, and assuming a truly neutral arbitrator, then that's not likely true. Court costs are a greater barrier to the side that doesn't have a full time legal team.
  - marcoperaza 8y ago
    Not exactly. Most plaintiffs attorneys are working on contingency, i.e. a percent of the judgment. Going to court costs the plaintiffs themselves nothing. They only need to have a case with a decent enough chance of winning or settling for enough to make it worth the plaintiff attorney’s time. Also, almost no one has in house litigators. So companies being sued also have to shell out for counsel by the hour.
    - learc83 8y ago
      >Most plaintiffs attorneys are working on contingency. I very much doubt that. The vast majority of disputes that would end up in arbitration are smaller contract disputes, not personal injury claims. >Also, almost no one has in house litigators. They have counsel on retainer, and some companies still do. All big companies would if forcing customers and employees to accept arbitration wasn't an option.
TheBobinator 8y ago
Who pays the abritration company? The employer. Does the arbitration company make money when the employer doesn't? Nope. Will the arbitration company force bribe money (Fine, Civil Suite) to make the problem go away? Nope. Will the arbitration company put someone in jail for comitting a crime? Nope. The entire point of arbitration is to eliminate the courts. "Tendancy" is the spin word, it leaves open the possibility the arbitration comapny might rule in favor of the employee. They will literally never do that. E.g. Google's executives harassing women then using binding arbitration to remove their ability to sue them, which irregardless of the merit of the case, would be dismissed by the arbiter every time. Took a company-wide revolt to get them to stop. I'm beyond sure if the could've gotten away with literal beating and raping women they would've, and nobody wants to deal with the horror show executives participating in that kind of behaivour would become when they started down that road. The problem with this approach is, the courts are there to avoid people exacting justice on their own terms which I'll remind you in our history, we've done quite a few times and it doesn't work out well. Sitting a mob of strangers down and having them pass down a ruling is a much better approach. Remember, 17 guns in america per man women and child and growing. You do not want the setiment if corporations existing to literally eat people alive or that executives would shoot their own families for money to continue to grow. You don't want to let the faith in government and the courts wane over this BS. We've got a good thing going on right now in the US, it'd be a shame to throw it away over something as banal as executive pay or stockholder income.
ardy42 8y ago
> The problem is that companies favor arbitration because arbitration tends to favor companies. If arbitration were truly neutral, and it were easy to access with low costs to the consumer, companies would stop using them. Another important factor is that arbitration is often used by companies as a way to shield themselves from class action lawsuits. Even if arbitration were fair with low costs to the consumer, no one would go through it individually to collect a $10 damage. If a million employees each suffered $10 in damages from a particular action of a company, there needs to be a way for them to collectively pursue damages.

jedberg 8y ago

> The problem is that companies favor arbitration because arbitration tends to favor companies. That's only because they are paid by the companies (and picked by the companies). If the companies didn't pick and the payment came out of the disputed amount or the loser paid, then they wouldn't have an incentive to favor the company.

learc83 8y ago
I think you may have missed the rest of my comment.
jbottoms 8y ago
An article in Harvard Negotiation Law Review points out that courts can order arbitration if both parties agree to it, but cannot control the mechanisms of the arbitration. Therefore, if the company is paying any portion of the arbitrator's fee and the company is not leading in the process, they can elect to not pay the arbitrator's fee. In which case the arbitration fails and the case is dismissed. It appears to be in the plaintiff's interest to prefer mediation over arbitration. In essence, arbitration is broken.
- arethuza 8y ago
  Think about it from the arbitrator's point of view - who are they going to get repeat business from?

munchbunny 8y ago

Restructuring arbitration for neutrality and thus cannibalizing arbitration as an industry seems like a fine outcome to me. Feels a bit like the payday loan industry: I'm sure it does some people some good, but it's largely just predatory and throws people into a rigged game. We'd be better off with less of it.

learc83 8y ago
I'm fine with doing away with arbitration in most cases, but I'd rather just do that directly. My point is that it's hard to enforce neutrality, because there is always an implicit incentive for arbitrators to find in favor of big companies. Even if those companies aren't directly choosing a specific arbitrator, big companies in the aggregate are the ones primarily driving the business.
- deleted 8y ago
  [deleted]
verbify 8y ago
An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse. I agree we should have less of it, but all legislation should be mindful of the consequences of certain types of restrictions.
- CaptainZapp 8y ago
  Why not cap the maximumum interest rates? Switzerland, not really a communist hell hole and quite liberal in economic matters, for example, caps annual interest rates at 15% annually. You don't see more broken legs than anywhere else.
  - verbify 8y ago
    If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere. Switzerland is a wealthy low-crime country to start with, the mafia do not have a strong hold. For example the homicide rate in Switzerland is 0.54 per 100,000 people, by comparison in the United States it is 5.35 per 100,000 people.

RcouF1uZ4gsC 8y ago

One thing that could fix this would be making the decision for arbitration binding on companies. Basically, once a company picks arbitration, it can’t ever go back. Then make it so someone other than the company picks the arbiter. This would go a long way towards removing perverse incentives.

JumpCrisscross 8y ago
> One thing that could fix this would be making the decision for arbitration binding on companies This is how arbitration works. Non-binding arbitration is called mediation, and is basically glorified group therapy.
- hopler 8y ago
  You denigrate it but it works well in many situations where parties want to rea b a profitable agreement.
- RcouF1uZ4gsC 8y ago
  I should have phrased it better. I am not talking about an arbitration case itself, but the decision to use arbitration as the means for settling disputes. If company decides to use arbitration in 2018, then in 2020, they are not allowed to change their mind to not use arbitration. Deciding to use arbitration locks the company in. Thus, the various arbitration providers don't have any concern that if their decisions are not friendly to the company the company will stop using their services.
  - JumpCrisscross 8y ago
    This is how every arbitration clause I've seen is structured. I think it's a good idea to write that restriction into law, given anyone deviating from the norm is probably tryin to game the system to their advantage.

daveFNbuck 8y ago

Arbitration is also a lot cheaper than going to court, so companies would save money on arbitration even if arbiters were slightly less likely to side with them than courts.

learc83 8y ago
Assuming arbitration is also cheaper for potential plantifs, and assuming a truly neutral arbitrator, then that's not likely true. Court costs are a greater barrier to the side that doesn't have a full time legal team.
- marcoperaza 8y ago
  Not exactly. Most plaintiffs attorneys are working on contingency, i.e. a percent of the judgment. Going to court costs the plaintiffs themselves nothing. They only need to have a case with a decent enough chance of winning or settling for enough to make it worth the plaintiff attorney’s time. Also, almost no one has in house litigators. So companies being sued also have to shell out for counsel by the hour.
  - learc83 8y ago
    >Most plaintiffs attorneys are working on contingency. I very much doubt that. The vast majority of disputes that would end up in arbitration are smaller contract disputes, not personal injury claims. >Also, almost no one has in house litigators. They have counsel on retainer, and some companies still do. All big companies would if forcing customers and employees to accept arbitration wasn't an option.

TheBobinator 8y ago

Who pays the abritration company? The employer. Does the arbitration company make money when the employer doesn't? Nope. Will the arbitration company force bribe money (Fine, Civil Suite) to make the problem go away? Nope. Will the arbitration company put someone in jail for comitting a crime? Nope. The entire point of arbitration is to eliminate the courts. "Tendancy" is the spin word, it leaves open the possibility the arbitration comapny might rule in favor of the employee. They will literally never do that. E.g. Google's executives harassing women then using binding arbitration to remove their ability to sue them, which irregardless of the merit of the case, would be dismissed by the arbiter every time. Took a company-wide revolt to get them to stop. I'm beyond sure if the could've gotten away with literal beating and raping women they would've, and nobody wants to deal with the horror show executives participating in that kind of behaivour would become when they started down that road. The problem with this approach is, the courts are there to avoid people exacting justice on their own terms which I'll remind you in our history, we've done quite a few times and it doesn't work out well. Sitting a mob of strangers down and having them pass down a ruling is a much better approach. Remember, 17 guns in america per man women and child and growing. You do not want the setiment if corporations existing to literally eat people alive or that executives would shoot their own families for money to continue to grow. You don't want to let the faith in government and the courts wane over this BS. We've got a good thing going on right now in the US, it'd be a shame to throw it away over something as banal as executive pay or stockholder income.

ardy42 8y ago

> The problem is that companies favor arbitration because arbitration tends to favor companies. If arbitration were truly neutral, and it were easy to access with low costs to the consumer, companies would stop using them. Another important factor is that arbitration is often used by companies as a way to shield themselves from class action lawsuits. Even if arbitration were fair with low costs to the consumer, no one would go through it individually to collect a $10 damage. If a million employees each suffered $10 in damages from a particular action of a company, there needs to be a way for them to collectively pursue damages.