I thought that the section of the reading which describes the "7 Deadly Sins" of drafting arbitration clauses (which starts on page 571) was really interesting. In my mind, it shouldn't be too hard to draft an arbitration clause, especially considering that the textbook was able to break a good clause down into a list of four clear requirements.
After doing the reading, though, it appears that lawyers have been taking shortcuts with arbitration clauses--with the result that some poorly-drafted clauses make the contract (or at least the clause) unenforceable. In fact, it would seem that some clauses are so badly written that disputing parties would probably need to arbitrate (or even litigate) their arbitration clauses to determine the format by which their actual dispute can be resolved. This seems to completely negate the reason that some parties plug in arbitration clauses in the first place--to save time and avoid costly litigation. It seems that this problem plagues both overly simple and overly complicated arbitration clauses, leading to the not-so-shocking This would mean that attorneys who are drafting an arbitration clause should consider what format of arbitration will lead to a simple and speedy dispute resolution process for both parties. This would entail elaborating on a "one size fits all" clause to fit the circumstances of the parties involved, or, making it easy for the arbitration process to proceed--without excessive restrictions as to the qualifications of arbitrators and the time the arbitrators have to make a decision.
On the casebook's suggestion, I thought I'd look up an agreement that I signed (admittedly, without reading), to see if it a) had an arbitration clause and b) whether that arbitration clause was well drafted. I thought I'd look at the Apple End User License Agreement, but it doesn't have an arbitration clause that I could find. AT&T, on the other hand, does have a mandatory arbitration clause in Section 2.0 of its Wireless Customer Agreement (available here: http://www.wireless.att.com/learn/articles-resources/wireless-terms.jsp)As far as the "seven sins" go, I'm not sure if this one commits any of them, even though it is pretty long. When it comes to the arbitration process, Section 2.2 (3) makes it pretty clear that disputes will be arbitrated through the AAA, and by their rules. There are a couple of procedural additions, in terms of venue and notice, but otherwise the clause seems pretty direct. It is interesting that AT&T is willing to cover the costs of filing and the arbitration itself--kind of gives away how much they would prefer arbitration to litigation!
After doing the reading, though, it appears that lawyers have been taking shortcuts with arbitration clauses--with the result that some poorly-drafted clauses make the contract (or at least the clause) unenforceable. In fact, it would seem that some clauses are so badly written that disputing parties would probably need to arbitrate (or even litigate) their arbitration clauses to determine the format by which their actual dispute can be resolved. This seems to completely negate the reason that some parties plug in arbitration clauses in the first place--to save time and avoid costly litigation. It seems that this problem plagues both overly simple and overly complicated arbitration clauses, leading to the not-so-shocking This would mean that attorneys who are drafting an arbitration clause should consider what format of arbitration will lead to a simple and speedy dispute resolution process for both parties. This would entail elaborating on a "one size fits all" clause to fit the circumstances of the parties involved, or, making it easy for the arbitration process to proceed--without excessive restrictions as to the qualifications of arbitrators and the time the arbitrators have to make a decision.
On the casebook's suggestion, I thought I'd look up an agreement that I signed (admittedly, without reading), to see if it a) had an arbitration clause and b) whether that arbitration clause was well drafted. I thought I'd look at the Apple End User License Agreement, but it doesn't have an arbitration clause that I could find. AT&T, on the other hand, does have a mandatory arbitration clause in Section 2.0 of its Wireless Customer Agreement (available here: http://www.wireless.att.com/learn/articles-resources/wireless-terms.jsp)As far as the "seven sins" go, I'm not sure if this one commits any of them, even though it is pretty long. When it comes to the arbitration process, Section 2.2 (3) makes it pretty clear that disputes will be arbitrated through the AAA, and by their rules. There are a couple of procedural additions, in terms of venue and notice, but otherwise the clause seems pretty direct. It is interesting that AT&T is willing to cover the costs of filing and the arbitration itself--kind of gives away how much they would prefer arbitration to litigation!
This blog made me think of reading one of the previous blogs, regarding a new Microsoft arbitration clause covering a ton of different products and services.
ReplyDeleteIt seems like companies are trying to become more all encompassing with shorter, simpler arbitration clauses. There might even be pressure to draft simple arbitration clauses that look effective.
My question is, how is it possible to draft arbitration clauses covering every possible injury or multiple products and services, with the exact same language.
Further, if companies see that it is necessary to draft better, more specific arbitration clauses, will the additional cost drive some companies away from the practice? I guess time will tell.
A bad lawyer is not always one who loses a case, but a client can definitely determine whether or not a lawyer is doing their job right in litigation. Are they prepared, do they speak well in front of the judge? There are some obvious go-to's. However, when lawyers write arbitration clauses they are somewhat shrouded in mystery, and a client may not know whether their lawyer is doing a good job. Should there be some standard for originality that will prevent copy-cats of poor clauses? Is this too large of a burden to place on lawyers. I think it would be great for a group of lawyers in certain areas to select the best clauses and share them as examples in a published document. That way clients can check the clauses themselves against trusted knowledge and hold lawyers accountable for their arbitration clauses.
ReplyDeleteHey Meera, while I think you're right and a lot of drafting issues do result from poor lawyering, sometimes, you just can't cover all potential disputes that might arise out of a certain product/service as Zach mentioned. That, in combination with the pressure of drafting succinct yet effective arbitration clauses, results in the mess that we sometimes encounter today; your AT&T clause is a great example of good (highly-paid) lawyering and thorough (re)editing I imagine.
ReplyDeleteI think Jennifer's idea of a database of exemplary arbitration clauses for each field of practice would be an excellent start to resolving this problem, but then, you might get into the same debate that open source program advocates/opponents have with proprietary rights, etc.
Ultimately, many corporations draft arbitrations in with a financial slant; they're looking for a more economic out if they do encounter a problem. It would then be a matter of balancing the front-end costs of formulating a bullet-proof arbitration clause with the possibility of a dispute and the costs of it. Sometimes, I'll bet chalking up those extra billable hours to get a perfect arbitration clause might not be fiscally worth it.
It is certainly interesting to note how many of our gadgets and gizmos today come with arbitration clauses. I'm sure you're correct that the cost benefit of arbitration compared to litigation most certainly weigh in favor of the former. It would be interesting to get a financial comparison of the two approaches.
ReplyDeleteI wonder if a database of exemplary arbitration clauses really would work. It's a great idea in theory, but successful lawyers would still need to be able to manipulate and flex these clauses to fit whatever issue was at hand. For example if there was an exemplary list of say, construction contracts, good lawyers would still only be able to use those as a base. Furthermore, I wonder if as a lawyer you really can even draft an arbitration clause that isn't biased toward your client - as Christine mentioned, many corporations draft these clauses with a financial slant.
ReplyDeleteTo build on what Nikki wrote, it may be in a corporation's best interest to have their lawyers draft arbitration clauses that are biased in their favor. An individual such as Meera, who didn't read the agreement before signing it, would sign any agreement that the corporation's lawyers create. If a slanted arbitration agreement is not a deterrent for potential customers then a corporation would be crazy to do anything less than create an arbitration agreement that is as far in their favor as possible. This may seem very unethical (and probably is) but we shouldn't expect corporations or their lawyers to be stewards of our ethical ideals. A possible solution to this may be to follow Christine's suggestion of making some type of database with arbitration agreement templates. If the creativity of a corporation's lawyers is limited then maybe the arbitration agreements will be fairer for the average individual customer.
ReplyDeleteYou can get a bunch of standard recommended arbitration clauses from PLC (practicallaw.com), which includes language for a bunch of standard groups such as AAA. This resource may not be available to individual clients but may be for institutional clients with in-house legal departments.
ReplyDeleteThat is interesting about AT&T willing to cover costs. I imagine that takes any even more objections a party might have with regard to arbitration in order to have their preferred method of dispute resolution. I've never looked at any of the agreements I've signed for arbitration clauses, but think it would be pretty entertaining to come across some poorly written ones at this point (with the obvious hope that I'm not entering into arbitration with a company under a poorly drafted arbitration clause).
ReplyDelete