Comment Submitted via Email
Thursday, October 17, 2002
Dear Mr. Garwin:
I read with interest an article in the ISBA news entitled "Definition of law practice? ABA task force seeks input"
Input: There is very significant irresponsible and harmful conduct on the part of lawyers who engage in the "business" of arbitration, and then disavow any practice of law while doing it. They accept funds from consumer parties and their lawyers, proceed to disburse the funds as they see fit, which usually favors repeat players (big companies) in cases of consumer arbitration, and if a complaint is received by disciplinary committees from the consumer about the way the money was handled in violation of the professional canons, he is told "Oh, but arbitration is not the practice of law." Since we have compulsory arbitration clauses that disenfranchise the consumer from taking a complaint even to small claims, there is definitely a public interest at stake in seeing that arbitration as practiced by lawyers is the law business and should be regulated as such. Furthermore - some arbitration services are mere referral services for lawyers by either non-lawyers, or lawyers hiding behind the desk as an administrator "not practicing law." The courts are abetting this juice racket by enforcing compulsory arbitration clauses without adequate supervision. There are statutes out there to remedy some of the problem, but they are basically ignored because the expense of supervising the arbitration through litigation in the courts makes the claim not worth pursuing by a small claim consumer. (By a small claim I mean less that 15,000 dollars.)
Furthermore, compulsory arbitration clauses as they concern smaller claims, and as presently enforced by most state courts, effectively insulate the corporation dealing with the consumer from any litigation because they insist on an expensive process which they know the consumer cannot afford. The arbitrator charges $250 - $300 per hour, and the consumer has no assurance he will not be hit with a $5000 charge on a 1500 dollar claim by a biased arbitrator with no avenue for appeal. To ask a court not to enforce an award against a consumer under such circumstances, under today’s "arbitration" atmosphere would be shoveling against the tide. The courts are only too happy to enforce these adhesive clauses because it helps clear the docket. A glaring example of this is what used to be Green Tree (now Conseco), whose adhesive arbitration clauses in connection with mobile home buyers is the archetype of abuse. (Recent U.S. Supreme Court Case "Green Tree v. Randolph.")
While, I believe in the principle of contracts with arbitration clauses as legitimate, there is a public policy issue of not allowing the dominant party to strip a citizen’s right to a due process he can afford and has already paid for with the American court system. Therefore, compulsory arbitration clause with consumers should be restricted so that the drafter by law pays for the process unless the claim is frivolous.
Lawyers who run arbitration businesses should be subject to the professional canons regarding client funds, and subject to appropriate discipline for violating those canons. Anyone dealing with a lawyer who is in any way involved in the business of arbitration should be classified as a client for professional regulation purposes.
The way arbitration and mediation is run by lawyers today is nothing other than an approved conflict of interest by the BAR.
George E. Goodwine