InsideCounsel, May 2007 at 51, chronicles the decline of arbitration in relation to litigation. The magazine cites at page 56 results from an American Arbitration Association (AAA) survey in 2003 of 254 in-house counsel (See my posts of Dec. 14, 2005 for data from that survey on price-earnings ratios; Dec. 31, 2006 regarding online settlement capabilities integrated with ADR methods; and Dec. 9, 2005 about the AAA and “ADR-favoring companies.”).
To the question, “How does the cost of arbitration compared to litigation?,” 58 percent of the respondents said arbitration was less expensive than litigation, 8 percent said it was more expensive, and 34 percent could detect no difference. With regard to “How does the speed of arbitration compared to litigation?,” 67 percent felt arbitration was faster than litigation, 7 percent perceived it to be slower, and 26 percent saw no difference.
Three questions come to mind from this data.
Why has the AAA not done a follow-up study in the four years that have passed? Perhaps they are concerned the results will be less favorable?
Why doesn’t the report explain the basis on which those 254 lawyers received the survey, how many in total were sent it, and on what basis were the invitees selected? Perhaps there was some selection bias, such as choosing only former users of the AAA (See my posts of May 9, 2007 on survey bias; and March 20, 2007 on selection bias.).
Why is data touted that gives the edge on cost of 58 to 42 percent (if you combine no difference and more expensive) and on speed of 67 to 33 percent? Perhaps the glass is almost half empty.
Some recent posts have addressed arbitration as a management tool (See my posts of Feb. 7, 2007 on mediation favored more than arbitration; Feb. 7, 2007 on the cottage industry of arbitrators; and May 4, 2007 on international arbitrations.).