Study: Arbitration a better venue for consumers than courtrooms

Chris Rizo Jul. 15, 2008, 11:00am

Lisa Rickard

WASHINGTON (Legal Newsline)-A legal analysis of thousands of debt collection cases shows that arbitration is a better venue for consumers to settle disputes than are already crowded courthouses.

The study of 34,000 debt cases in California found that consumers fared better in arbitration rulings than they did when their case was decided in a courtroom.

The analysis by Chicago-based Navigant Consulting found that more than 32 percent of consumer debtors named in cases that did not settle prevailed in their case by either winning their arbitration hearing or having the claims against them dismissed.

In more than 16 percent of the cases that did not settle, researchers found consumer debtors had the claims against them reduced by a median of nearly $825.

"The data is increasingly clear: for most consumers, arbitration is a better way to resolve disputes than being forced into court," Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, said in a statement Tuesday.

The study, commissioned by the Washington-based Institute for Legal Reform, comes as trial lawyer-backed groups are feverishly lobbying Congress to pass legislation that would nullify arbitration clauses in millions of consumer contracts for goods and services.

"As a growing number of American families are facing burdensome debt collection issues in these times of economic uncertainty, it is astounding that America's plaintiffs' lawyers are working to tear down a proven dispute resolution system and force tens of millions into court," Rickard said.

Legal Newsline is owned by an affiliate of the U.S. Chamber of Commerce.

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