News Release

April 18, 2002

Proposed Legislation Puts Private Arbitration at Risk, Study Says
Efficient, low-cost alternative to litigation is in the crosshairs of the trial-lawyer lobby

WASHINGTON--Several bills currently before Congress would place limits on the long-accepted practice of arbitrating, instead of litigating, civil suits. For example, the Motor Vehicle Franchise Arbitration Fairness Act, sponsored by Rep. Mary Bono (R-Calif.) and Sen. Orrin Hatch (R-Utah), passed the House in the last Congress and recently passed the Senate Judiciary Committee.

In a Cato Institute study released today, Samford University Law Professor Stephen J. Ware argues that arbitration--in which parties agree on private arbitrators to resolve contract disputes--is a more efficient than slow, costly, and inefficient civil litigation in a government court.

"Before trial, lawyers routinely produce enormous amounts of paperwork," Ware writes. "They write and file numerous pleadings and motions. Those often lengthy documents are typically filled with legalistic jargon, technicalities, formalities, and tedious repetition."

The more complex a case is, the more trial lawyers profit, Ware says. That's why the trial-lawyer lobby has wanted to put an end to the streamlined process that arbitration offers. In two cases before the Supreme Court in 2000, trial lawyers sought to end arbitration, but the Court reaffirmed arbitration in both instances.

"Having failed in the Supreme Court, the trial lawyers are taking their fight to the halls of Congress," Ware writes. In the paper, he explains why enactment of legislation such as the Bono-Hatch bill, which is strongly supported by trial lawyers' organizations, "would squelch private-sector alternatives to lawyer-dominated court systems, violate freedom of contract, and raise costs to American business."

A victory for the Bono-Hatch bill, which applies to auto franchise disputes, would set an anti-arbitration precedent, Ware says. "Trial lawyers have little at stake in disputes between auto dealers and manufacturers," he writes. "The Bono-Hatch bill is important to the trial lawyers, not on its own, but as a means of enacting other anti-arbitration bills -- the bills they really care about, the bills that cover the consumer and employment cases that enrich so many trial lawyers."

"Arbitration Under Assault: Trial Lawyers Lead the Charge"