Texas Bar Journal: Letter to the Editor on Improving Arbitration

[Update: Lee Keller King currently works at this firm.]

The July 2009 Edition of Texas Bar Journal titled “The Electronic Lawyer,” features the following letter to the editor written by Texas attorney Lee Keller King. Mr. King writes in response to a Texas Bar Journal article published in May 2009 (blogged here).

We welcome your commentary about this post!

I am one of those critics who believe that the trend in mandatory arbitration has gone too far (“The Future of Arbitration,” May, p. 352).

Regarding the comment that “an advocate for less arbitration … is likely to omit that the consumer fails to even appear in the majority” of credit card arbitrations is correct, as far as it goes, but does not give the reason for the high rate of defaults. Most credit card arbitration agreements that I have reviewed (and fought on behalf of my clients) have included onerous choice of venue provisions.

Is it any wonder that a consumer in Texas, who took out his credit card in Texas and used it in Texas, will be hard pressed to appear for arbitration in New Jersey? Or in New York? I think not, and I doubt if any such consumer would —in the real world — knowingly consent to such a venue provision. However, in the world of consumer arbitration, she is presumed to have consented because she is presumed to have read all the fine print in the consumer credit application she signed to get the credit card.

I am not saying that arbitration does not have its place, but is it fair to impose binding arbitration on consumers who are not educated regarding the court system, much less the arbitration system? I would say that it is not, and many agree with me.

I would, however, support a form of arbitration that our sister state of Arizona has found useful. In Arizona, all civil cases (except family law cases) with an amount in controversy under a certain amount ($65,000, I believe) are sent to an arbitration conducted by an attorney picked at random from the attorneys practicing in that county.

If a party is dissatisfied with the result of the arbitration, that party may appeal for a trial de novo in the Superior (district) Court. Should the party that appeals the arbitration not be successful in obtaining a 23 percent more favorable result at trial, then it is liable to the nonappealing party for attorney’s fees of the defendant against the appeal, reasonable expert witnesses necessitated by the appeal, and for costs. This is something I think would also work in Texas and would allow for fair resolution of many disputes, while nonetheless reducing the case load on the courts.

Lee Keller King

Technorati tags:

arbitration, ADR, law, Arbitration Fairness Act of 2009