Arbitration clause vs. Litigation….which one is best for you?
We frequently see it buried in the boiler print of contract forms provided by lawyers representing a more powerful opponent that wants such an inclusion. Non-negotiable they say.
It sounds fair, avoids expensive litigation you think, sounds more civil and less onerous, a better way to go you believe, thinking better of your associate and so you gloss right over it deeming it acceptable.
In my opinion, there is only one right answer to this question and surprise, its not the expected point of view.
I always say, no to arbitration and always keep my litigation options open.
Litigation over arbitration, absolutely, here are the reasons why.
Litigation is severe. It is a serious weapon designed to allow you to attack your opponent, control assets, cause damage. It can be expensive and thus it is a financial weapon as well. Effectively used it can cripple your opponent, long before litigation ever occurs, forcing negotiation. It can publicize alleged wrong doings before innocence or guilt is determined. It can protect your desired outcome with attachments, liens, etc, It can require soul searching discovery, it is a weapon of enormous power.
Why would you ever want to give up such an option, especially if your opponent has breached his word and his actions have violated your rights and expectations which you have relied upon?
If you have been so aggrieved, so abused, so ripped off, that you are in a litigious situation, why would you ever want to give up your power and submit to a ‘fair and square’ arbitration process, that will limit your success?
In arbitration there is no real opportunity for significant damages, no way to even pressure and leverage victory. Its a cheaper way to allow your opponent to escape the damages he should be absorbing and it levels the playing field, taking away any advantages you may have had if litigation was available.
Yet people see the arbitration clause and feel that it is fair and reasonable, so why not?…and that is the exact reason why not, because it is fair and reasonable and thus gives back your advantage to the other side, the side that may have done wrong and should not treated fairly now.
Sometimes business owners want to escape the onerous lawyers fee’s, believing arbitration is less expensive and quicker then litigation so they think this is good. The only reason the provider of the contract has arbitration in there is because he believes it is an advantage to his side which would immediately make me question why we should allow it. It means to me that they are going to take advantage of yiu and do not want to be liable under te strong arm of the law but prefer the weak arm of arbitration.
Remember very few suits ever get litigated so it really isn’t going to trial and will probably not cost a fortune, it will however support the results you want and it is reasonably affordable more often then not. It is an equalizer and brings people to their senses forcing a negotiated settlement that is in your advantage allot more effectively then arbitration will.
Keep in mind you can always agree to arbitration at any time.
My advice, never allow an arbitration clause to be in a contract, you may want a jury, you may have a huge negligence case with significant potential damages. You may have been damaged significantly.
Litigate do not arbitrate.
