The Public Believes Predispute Binding Arbitration Clauses Are Unjust: Ethical Implications for Dispute-System Design in the Time of Vanishing Trials
31 Pages Posted: 11 May 2017
Date Written: May 10, 2017
This Article discusses a troubling cause of the decline in civil trials — the growing ubiquity of predispute binding arbitration clauses — and discusses tension between roles and responsibilities classically associated with zealous advocacy and the pressing need for new roles and responsibilities associated with ethical dispute system design.
Over the past decade, two interacting patterns have come to encourage transactional attorneys to engage in zealous advocacy when crafting predispute binding arbitration clauses in adhesion contracts. First, recent U.S. Supreme Court jurisprudence broadly defers and delegates authority to those who create such clauses in adhesion contracts with little oversight. Second, members of the public rarely read or understand these clauses buried in the boilerplate.
Predispute binding arbitration clauses displace the legal backdrop of fair, legitimate, and just public legal institutions with the dispute-system procedure most preferred by those who draft and design these adhesion contracts. Therefore, norms of zealous advocacy may collide with a wider and more virtuous ethic that considers third parties and the public’s desire for a fair, legitimate, and just civil justice system.
Before turning to the dialectic between these two ethical principles, we report a psychological experiment conducted with the American public. The study randomly assigned members of the public into conditions that varied how much they learned about the procedure (e.g., a legal definition, an example clause, a New York Times article) and asked them to rate the fairness and justice of binding arbitration. The experiment reveals that the more the public learns about pre-dispute binding arbitration, the more they believe this dispute-resolution procedure is unjust and illegitimate. Yet the vast majority of participants mistakenly believed that they had never entered into a binding-arbitration clause.
This empirical legal study illustrates the psychological and felt injustice that many poor and middle-income members of the public experience when learning from legal professionals for the first time both that the legal wrongs they have suffered will likely not be remedied because of barriers imposed by binding arbitration and that the will likely not be able to secure legal representation as a result.
Drawing on these findings, we discuss the pressing need for a wider ethic that applies to the transactional attorneys who design binding-arbitration clauses within adhesion contracts. We also draw lessons from behavioral legal ethics and social psychology. These lessons reveal that this wider ethic may be endangered by the situational influences that currently operate within law firms (and in-house) due to these two intersecting patterns. We discuss ways of altering the regulatory environment to encourage the wider ethic to flourish in this time of vanishing trials.
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