News Release

May 3, 2002

Public Citizen Arbitration Study Contains Errors, Half-Truths and Exaggerations, Scholar Says

WASHINGTON--Earlier this week, activist group Public Citizen released a study claiming that it costs significantly more to resolve disputes through arbitration than through the court system. Samford University law professor Stephen J. Ware, an expert on arbitration, had the following comments:

"Public Citizen's statements about arbitration contain errors, half-truths and exaggerations--the same old tricks by the trial lawyers' lobby. For example, Public Citizen asserts that 'Arbitrators tend to favor businesses' over consumers and employees. That assertion conflicts with empirical studies finding that claimants win a much higher percentage of their demands in arbitration than in litigation. Admittedly, arbitration doesn't produce the big-dollar awards sometimes produced in litigation. As New York University law professor Samuel Estreicher puts it, litigation gives Cadillacs to a few and rickshaws to the many, while arbitration can give Saturns to everybody.

"The most glaring half-truth from Public Citizen is that courts charge lower fees than arbitration organizations. That, of course, is because courts are subsidized by taxpayers while arbitration is not. The most important point, however, is that fees charged by courts and arbitration organizations are only a tiny part of the total cost that a claimant faces. Any honest comparison of arbitration and litigation must include the cost of legal fees, discovery and delay. Those costs are generally lower in arbitration, and Public Citizen offers no persuasive evidence to the contrary.

"Public Citizen's pronouncement that 'High arbitration costs can ... be used to bludgeon an adversary' is bizarre. Lawyers routinely use high litigation costs to bludgeon opposing parties. Indeed, by streamlining pre-trial discovery, motions, evidentiary rules and appeals, arbitration reduces the opportunity to bludgeon."

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