National Arbitration Forum Report:
Studies Compare Arbitration and Litigation

A study conducted by the National Workrights Institute found that employees who settled disputes through arbitration prevailed 62% of the time as compared to a 43% win rate in court.

The National Workrights Institute Study: Employment Arbitration. What Does the Data Show?

A survey by Harris Interactive conduced for the U.S. Chamber of Commerce Institute for Legal Reform found wide satisfaction among individuals who chose arbitration over litigation to resolve a dispute. The independent survey was conducted among 609 adults who had participated in a binding arbitration case that reached a decision. Results from the final report, entitled Arbitration: Simpler, Cheaper, and Faster Than Litigation, showed that when comparing arbitration to litigation:

· 74% of respondents found arbitration to be faster
· 63% of respondents found arbitration to be simpler
· 51% of respondents found arbitration to be less expensive
· 66% percent of respondents said they would likely use arbitration again

Full report (pdf)

An independent study on consumer lending cases conducted by Ernst & Young, entitled Outcomes of Arbitration. An Empirical Study of Consumer Lending Cases, confirmed that consumers found the arbitration process to be beneficial in resolving legal claims, and that reports that consumers are disadvantaged by contractual arbitration are clearly erroneous. The observations from the study as noted in the Executive Summary state:

• Consumers prevailed more often than business in cases that went to an arbitration hearing. A review of the National Arbitration Forum cases that resulted in an arbitration decision shows that consumers are more likely to prevail than the business involved in the dispute; 55 percent of the arbitrations were resolved in the consumer's favor. This compares favorably with similar results in state courts across the nation.
• Consumers obtained favorable results in close to 80 percent of the cases that were administered by the National Arbitration Forum.
• A substantial majority of consumers surveyed were satisfied with the arbitration process as shown through the 69 percent who indicated that they were satisfied or very satisfied with the arbitration process as conducted by the National Arbitration Forum.

Link to study

Consumer and Employment Arbitration in California: A Review of Website Data Posted Pursuant to Section 1281.96 of the Code of Civil Procedure
California Dispute Resolution Institute, August 2004
http://www.mediate.com/cdri/cdri_print_Aug_6.pdf

Reviewing the results of 1,559 consumer and employment arbitrations, the California Dispute Resolution Institute found that the median time to resolve a dispute by arbitration was 104 days. The median cost of resolving these disputes by arbitration was $870.

By comparison, cases involving consumer goods and employment claims take 650 to 720 days to be resolved court, according to the National Center for State Courts, indicating that arbitrating disputes is approximately 85% faster than litigating similar claims.

Survey On Arbitration
ABA Section of Litigation Task Force on ADR Effectiveness
American Bar Association - August 2003
http://www.abanet.org/litigation/taskforces/adr/surveyreport.pdf

Formed in August of 2002, the ABA Section of Litigation Task Force surveyed trial lawyers regarding various ADR processes. When comparing arbitration to litigation, 78% of those surveyed said that arbitration was timelier than litigation, and 56% said that arbitration was more cost effective than litigation.

Comparing Litigation And Arbitration Of Employment Disputes: Do Plaintiffs Better Vindicate Their Rights In Litigation?
Michael Delikat & Morris M. Kleiner
American Bar Association Litigation Section Conflict Management
Vol. 6, Issue 3 – Winter 2003
http://www.insurancejournal.com/pdf/InsuranceTimes_20030429_39125.pdf

This study compared various outcomes and timing factors involved in 125 employment discrimination cases filed in the Southern District of New York with 186 arbitrations involving employment disputes in the securities industry. Claimants prevailed 46% of the time in an arbitral forum versus 34% in court. The outcomes involving arbitration generated higher median monetary awards for successful claimants--$100,000 for arbitration compared with $95,554 in court. Furthermore, arbitrations were significantly more efficient than litigation, as the median time from filing to judgment was 16.5 months for arbitrations and 25 months for claims subject to litigation.

Report To The Securities And Exchange Commission Regarding Arbitrator Conflict Disclosure Requirements In NASD And NYSE Securities Arbitrations
Michael Perino, Visiting Professor Columbia Law School, Associate Professor St. John’s University School of Law
http://www.nyse.com/pdfs/arbconflict.pdf

The data were derived from securities arbitrations involving consumers over a 21-year period (1980-2001). During those years securities industry arbitrators decided 31,001 public customer cases, and 16,294 of those cases (52.56%) resulted in awards for consumers. (Note: Federal court data from the Administrative Office of the United States Courts show plaintiffs in “Stockholders Suits” in 2000 prevailed only 32% of the time).

Furthermore, in a study surveying the responses of NASD investor-participants regarding their perceptions of fairness of SRO arbitrations, the results showed that an overwhelming 93% of the respondents believed their cases were handled fairly and without bias. Also, over 91% of respondents said their arbitrators demonstrated a level of fairness that was classified as excellent or good.

Securities Arbitration: How Investors Fare
United States General Accounting Office, May 11, 1992
http://www.ignet.gov/internal/sec/289.htm

Comparing the results of over 6,600 awards issued during a six-month period from both industry-sponsored self-regulatory organizations (SROs) and independent dispute resolution providers, the Government Accounting Office (GAO) concluded that for most securities arbitrations, an average of 60% of investors received an award, and the amount awarded averaged about 60% of the amount claimed. Federal Court data from the Administrative Office of the United States Courts shows that in 1991 plaintiffs in “Stockholders Suits” prevailed only 44% of the time.

Legal Dispute Study
RoperASW: Survey for the Institute for Advanced Dispute Resolution
April, 2003
http://www.adrinstitute.org/adri-lds2.pdf

Updating a study conducted in 1999, this study revisits Americans’ awareness, knowledge, attitudes and experiences regarding arbitration as an option for resolving disputes. Most notably, the study found that 64% of respondents would choose arbitration over a lawsuit in disputes involving monetary relief. Further, two-thirds or some 67% of respondents felt that lawsuits take too long, while one-third or some 32% said that lawsuits cost too much.

Costs And Value Of Arbitration
Lisa Brener
World Arbitration & Mediation Report – April 2003
14 No. 4 World Arbitration & Mediation Report 111 (2003)

In a 1990 survey, 100% of respondents found arbitration to be quicker than litigation. Furthermore, 89% found that arbitration was less expensive than litigation. Also noteworthy in the survey was that only 17% of attorneys’ time was spent on discovery in an arbitral setting, compared to 45% in court, and over half of the respondents believed arbitral awards were more equitable than the outcomes in litigation.

Due Process At Low Cost: An Empirical Study Of Employment Arbitration Under The Auspices Of The American Arbitration Association
Elizabeth Hill and Theodore Eisenberg
Ohio State Journal On Dispute Resolution - 2003
18 Ohio St. J. Disp. Resol. 777 (2003)

This empirical study of 200 employment arbitration awards, randomly selected from a pool of 356 awards made by arbitrators, evaluated numerous factors and refuted common criticisms of employment arbitrations. The study concluded that employment arbitration is not biased in favor of employers or highly compensated employees and that arbitration can competently resolve statutory employment discrimination claims, contrary to former criticism in this regard. Also, the study presented evidence that conclusively refutes any empirical support for the “repeat player effect,” the theory that an employer who arbitrates more than once will win more frequently than other employers.

Private Justice: Employment Arbitration and Civil Rights
Lewis L. Maltby
Columbia Human Rights Law Review, Fall 1998
30 Colum. Hum. Rts. L. Rev. 29 (1998)

This article explains that by lowering costs, private arbitration holds the potential for bringing justice to many to whom it is currently denied. Employee-plaintiffs generally fare as well in arbitration as they do in court, even though most of the experiences they reflect took place before the establishment of the due process standards that currently exist. In the future, the quality of justice employees receive in arbitrations under these standards should be even better.

Employment Arbitration: What Does the Data Show?
The National Workrights Institute
Article reviewed on workrights.org site on November 15, 2004
http://www.workrights.org/current/cd_arbitration.html

Research indicates that more employees are able to gain access to justice through arbitration than through litigation, and that employees are more likely to win cases in arbitration if employees use a qualified arbitration provider. The data indicates that most employees receive awards in arbitration comparable to what the employees would have received in court.

Arbitration and Unconscionability
Eric J. Mogilnicki and Kirk D. Jensen
Georgia State University Law Review, September 1, 2003
19 Ga. St. U. L. Rev. 761 (2003)
http://www.wilmer.com/files/tbl_s29Publications/FileUpload5665/3016/Arbitration%20and%20Unconscionability.pdf

This article explains that pre-dispute arbitration provisions are valid and enforceable under law. In addition, the article highlights other studies to indicate that arbitration is fair and provides benefits to individuals.