The Future of Consumer Arbitration

The future of consumer arbitration is uncertain with this week's developments.

Let's start with the National Arbitration Forum. NAF is (was) set up to arbitrate disputes between consumers and credit card companies. Earlier this week, NAF agreed, as part of a settlement with the Minnesota Attorney General, to cease administering arbitrations of consumer credit card disputes as of July 24, 2009. Versions of the story and settlement can be found here and here.

As part of this fallout, the American Arbitration Association announced that it will not participate in consumer-based arbitrations until new guidelines can be developed. Here's the Wall Street Journal's story and here's the release from the AAA.

On Wednesday, JP Morgan Chase announced that it would no longer engage in arbitration for credit card disputes and was examining its consumer contracts. Here's the link to that story.

With two major arbitration outfits leaving the field, and one major creditor leaving the field, what will the future look like?

While hard to tell, my initial thought is that consumer credit card disputes will be filed in courts instead of arbitration forums. That means more work for judges with heavier caseloads and more opportunities for mediators who will have access to these types of disputes that they didn't have before.

It may also lead to a larger break-up of mandatory arbitration of all consumer disputes, not just credit card disputes. There are a number of critics of arbitrating the consumer dispute (as well as a number of supporters)--too many to list them here (hint: Google "consumer arbitration unfair" for about 101,000 hits on the subject; "consumer arbitration unfair" yields about 130,000 hits). An excellent analysis of the pros and cons of consumer arbitration can be found here, a report by the Searle Center at Northwestern University Law School.

Workplace conflict equals lower productivity

The title of this post is likely not surprising: when there is negative workplace conflict, the workplace suffers. We all know that, or at least sense that, from our everyday workplace lives.

A recent study from the Harvard Business Review quantifies the cost of workplace conflict (the authors use "rudeness" and "incivility" in the workplace, instead of "conflict"). I encourage you to read the report.

The report, which is based upon a study of "several thousand U.S. managers and employees" found that, because of workplace rudeness and incivility:

• 48% of employees decreased their work effort;
• 47% decreased their time at work;
• 38% decreased their work quality;
• 66% said their performance declined;
• 80% lost work time worrying about the incident;
• 63% lost time avoiding the offender; and
• 78% said their commitment to the organization declined.

These are staggering numbers. Just imagine if I could tell you, as a manager, that I could increase your employee's work quality by 10%--would you be willing to listen? I'm sure you would. Now look at these numbers again not in negative terms, but as opportunities to increase job satisfaction, company loyalty, and employee performance. If you had a conflict resolution procedure in your work force and could slash these percentages by 10%, how much more effective, and profitable, would your workplace be? How many more satisfied employees--and customers--would you have?

How different would our workplaces be if we learned to manage conflict, and channelled that negative energy into positive, creative ways to improve productivity and commitment to the organization?

Foreclosure rules

Another article about courts implementing rules for residential foreclosures. Click here for the article.

Is mediation killing big law firms?

Maybe.

According to this blogger, one of the reasons leading to Heller Ehrman's demise (you can view its website here, which doesn't contain fancy graphics, just the firm news about its bankruptcy filing) is that within a 45 day period in 2007, Heller lost 25% of its litigation work due to settlements.

You don't have to be a managing partner to know that's bad news for a firm's bottom line (unless you are on the plaintiff's side of things and obtain a big settlement in favor of your client).

Settlements are tricky creatures. From a firm perspective, a settlement means that there are no more billable hours. So no more firm revenue. From a client perspective, settlement means certainty as to its future budget, a conclusion to uncertain outcome in court, and creativity in how the case is resolved.

This inherent, well, conflict, between the firm's bottom-line financial pressure and the client's goals has always been something that confronts me.

With the proliferation of alternative dispute resolution, and fewer and fewer cases going to trial, will we see a demise of big firms--because too many settlements in a quarter can zap the firm's cash flow?

Mediating dog bark cases

Ever heard your neighbor's dog bark. And bark. And bark.

Or was it your dog?

Arizona is sending dog bark cases to mediation, according to this article.

Having handled a dog-barking case before, I know that these cases are ripe for mediation and resolution by sitting down with your neighbor, instead of fighting with your neighbor.

Peace.

Ohio Foreclosure Mediation

A judge comments on the benefits of mediation of foreclosure-related cases. A copy of the article can be found here. Judge Joseph Schmenk noted that both borrower and lender can come out ahead by mediating these types of cases, instead of trying them.

Foreclosure Mediation

The American Bar Association published an excellent web page devoted to mediation of residential foreclosures. You can view the site here. Currently, ten states have developed legislation relating to mediating these types of disputes.