Ohio Consumer Law Blog

Information on Ohio's Consumer Laws from Attorney Daniel Myers, Myers Law, LLC, not legal advice

The Good and Bad (But Mostly Bad) of Arbitration

By Daniel Myers.

If you are an adult, odds are you have agreed to one or more arbitration clauses.  These clauses come in many different shapes and sizes.  But they contain the same general terms:  you agree that if a legal dispute arises between you and the company you bought something from, you cannot file a lawsuit in court—instead you must allow one or more “arbitrators” to decide your dispute outside of court, usually with no right to appeal.  No jury, no trial, no right to receive documents from the other party.  Sounds scary, right?  It is.

Generally, arbitration is a bad idea for consumers.  Consumers are not as experienced as corporations are with the arbitration process, or the law.  Companies, however,  can be very knowledgeable about the process, and many corporate attorneys know who they want on their arbitration panels.  It was the company, not the consumer, that chose to put mandatory and binding arbitration in the contract, after all.

One state’s Attorney General alleged that at least one arbitration firm had “extensive ties” to debt collection companies.  If true, this would be a major conflict of interest, and a potentially unfriendly forum for consumers.  In a California lawsuit, it was alleged that consumers won in less than one-fifth of one percent (.2%) of arbitration hearings conducted by one particular arbitration firm during a four-year and two month period.  The winners tend to be debt collectors and creditors.  The losers tend to be consumers.  If you are a consumer, you may want to think twice about agreeing to arbitration.

While generally faster than the legal process, arbitration can be expensive.  There are usually many fees that consumers must pay along the way to a decision, and arbitration panels may be allowed to make consumers pay attorney fees of the opposing party, as well as the costs of the arbitration.  The initial out-of-pocket costs to consumers are more than the costs for the same outcome at many small claims courts or common pleas courts.

But not all arbitration is bad.  In the Cuyahoga County Court of Common Pleas, parties in a lawsuit can ask the court to allow them to arbitrate their dispute in court-administered arbitration.  In these situations, consumers who believe they received a bad decision still have the right to appeal and to have a formal trial.  There are more costs, however.

Before you sign an agreement for home repair or improvement services, look to see if it contains an clause.  Some do, others do not.  Construction contractors are not likely to remove this language for you, so you need to decide for yourself whether you want to take the risk hiring a contractor who will force you to arbitrate, or whether you want the right to your day in court if something goes wrong (and hire a different contractor).  It’s an important choice, and the time to do it is before signing on the dotted line.

 About the Author:  Daniel Myers is the founder of Myers Law, LLC in Cleveland, Ohio.  Attorney Myers was recently named a 2014 Rising Star for Consumer Law in Ohio by Super Lawyers.  Attorney Myers advocates for Ohio consumers in home repair, debt collection, car repair, and other consumer disputes.  He also represents employees in minimum wage, wrongful termination, and overtime law disputes, and is experienced in handling large construction defect lawsuits and contract disputes for property owners and commercial construction contractors.

4 comments on “The Good and Bad (But Mostly Bad) of Arbitration

  1. Pingback: Ohio Increases Small Claims Money Limits, Help Consumers Avoid Arbitration | Ohio Consumer Law Blog

  2. Pingback: Myers Law Attorney Wins Appeal; Consumers Have New Protections From Forced Arbitration | Ohio Consumer Law Blog

  3. Pingback: Cleveland’s New Funding Program to Assist Elderly With Home Repairs Needs to Protect the Elderly | Ohio Consumer Law Blog

  4. Pingback: How Bad Used Car Dealerships Secretly Rip You Off (Even After You Sue Them) | Ohio Consumer Law Blog

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This entry was posted on December 13, 2013 by in By Daniel Myers, Uncategorized and tagged , , , , .


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