Arbitration Gap

by Rachel Glas

Deal or No Deal? Corporate Attorney views on ADR
Better than court	17%
Somewhat better	35%
Somewhat worse	13%
Worse	13%
No difference	12%
No opinion	6%
Note: Because some survey responses were left blank, percentages total less than 100.
Source: 2011 Business-to-Business Arbitration in the United States: Perceptions of Corporate Counsel, RAND Corporation

Though a majority of in-house attorneys believe that commercial arbitration can be better, faster, and cheaper than duking it out in court, only about 11 percent of business contracts include arbitration clauses, according to a report by the RAND Corporation.

Although alternative dispute resolution (ADR) clauses are common in consumer contracts, the study reflects an overall hesitancy to use arbitration in a business-to-business context--which may stem from a limited understanding of the process. For example, more than 70 percent of the 121 corporate counsel who responded to the RAND survey believed incorrectly that professional arbitrators tend to split awards rather than ruling for one party. In fact, the American Arbitration Association reported that only 7 percent of its cases were split in 2009. Respondents also expressed concern that arbitration involves greater discovery and premotion work than it used to, and that going that route makes it difficult to preserve the right to appeal.

Yet survey participants also recognized the positive aspects of ADR. Among the top benefits cited: Arbitration helps the parties avoid a jury trial, they have control over the arbitrator selection, and the proceedings are confidential.

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