Dispute Resolution: Friend or Foe?

May 20, 2014

The evolution of the lawyers' place in society and the current effect of arbitration
By Anthony Palazzo

Perhaps more than any other professionals, attorneys have seen their place in society transformed
throughout history. Initially a revered profession, the law is now in dire need of dramatic underlying
redirection.

For more than 100 years from its birth in 1776, the citizens of our country looked upon attorneys with
respect and sought the counsel of such men as John Quincy Adams, Thomas Jefferson, William Taft and
Abraham Lincoln; men whose sole purpose seemed to be to shape and organize our society for a better
quality of life and the enhancement of justice. During such times, financial gain at the expense of others
was inconceivable in the long hours spent in the dimly lit libraries of law schools.

However, there was a brief time when attorneys were regarded by both private entities and the general
public as a necessary evil. A person would not necessarily be wrong if they opined a time the "Dark
Ages" which came upon us as sudden as a single shot that horrific night at Ford's Theater. And it was not
the best time for attorneys either, as the need for men of the written law were scarcely needed. The
decades of the 1800s involved intellectual curiosity on the East Coast, Midwestern adventurers chasing
"Indians," and, of course, romantic tales of gold in the streams of the far West. It was during those times
that men of honor and good character sealed their agreements not with a notary but with a firm hand
shake. Attorneys were considered unnecessary and an annoyance.

Just as suddenly, however, the railroads, the coal mines of West Virginia, the introduction of the
automobile assembly line and Wall Street brought forth the Industrial Revolution. Modern society almost
instantly developed a dependence on attorneys. As transactions became more sophisticated, once again,
the role of an attorney at law was one of pride and a measure of prominence. And, still, financial reward
was not seen as the preeminent motivation for attending law school.

Through the Great Depression, the rise of the middle class in the '50s (with most gracious thanks to the
G.I. Bill), the women's rights movement and Vietnam war, the War on Poverty introduced by President
Lyndon Johnson during his State of the Union address on Jan. 8, 1964 (Social Security, Medicare,
Medicaid, Food Stamp Act of 1964, the Economic Opportunity Act of 1964, Community Action
Program, Job Corps and VISTA, the Elementary and Secondary Education Act- April 11, 1965).
Attorneys seemed to be doing fine and so was middle America.

But it was only a sliver of time, a mere blink in the context of centuries. Shortly thereafter, the War on
Drugs, supply-side/trickle-down economics policies of the '80s and technology advances resulting in
dramatic labor efficiencies and significant conservative activism against perceived overreaching of
litigation (tort reform, medical malpractice reform, etc.) placed most attorneys in the same quantum
disparity of income as the rest of the country, and subject to the absolute assumption of power and
insurmountable inequality of wealth of today's oligarchy.
The year 2012 saw 40,000 new attorneys in the United States. According to the Bureau of Labor
Statistics: we have an awful lot of attorneys per capita. The state of New York boasted 83.7 lawyers per
10,000 residents, in 2012; while New Jersey had 46.25 lawyers per 10,000 residents. (The state with the
fewest lawyers was Mississippi, with only 12.78 lawyers per 10,000 residents.)

Why? Corporate mergers, conservative backlash to liberal social and economic values, an increase in
labor productivity, the proliferation of applications to law school; even the normally consumer-friendly
New Jersey Supreme Court permitted real estate brokers to prepare legally binding contracts for the sale
of residential real estate containing one-to-four dwelling units with the caveat of a three-day attorney
review period, thereby significantly diminishing the financial viability of the average general practice
New Jersey attorney. N.J. State Bar Ass'n v. N.J. Ass'n of Realtor Board, 93 N.J. 470 (1983).

Alternative Dispute Resolution (ADR), more commonly known as nonbinding or binding arbitration, has
been available for many years. But with advanced technology and increased marketing, ADR is a
substantial threat to the livelihood of attorneys (especially general practitioners).

Arbitration can be binding, which means the participants must follow the arbitrator's decision and courts
will enforce it, or nonbinding, meaning either party is free to reject the arbitrator's decision and take the
dispute to court as if the arbitration had never taken place. Binding arbitration is more common.
Arbitration can also be either voluntary or mandatory. Most contract arbitration occurs because the parties
included an arbitration clause requiring them to arbitrate any disputes "arising under or related to" the
contract. For simple contract disputes in which the matter can be heard in one day, arbitration is usually a
good choice. However, if in doubt, consider the advantages and disadvantages, below.

Advantages: Arbitration can be faster and simpler than litigation. Further, it commonly avoids the
hostility seen in courtroom disputes, perhaps because it's a private proceeding versus the public drama of
the courtroom. Finally, if the subject of the dispute is technical—for example, about a patent—the parties
can select an arbitrator who has technical knowledge in that field, rather than a judge who may not be
familiar with the issues.

Disadvantages: Unlike a court ruling, a binding arbitration ruling can't be appealed. It can be set aside
only if a party can prove that the arbitrator was biased or that the arbitrator's decision violated public
policy. Unlike a court case, there is no automatic right to discovery. A requirement for discovery in an
arbitration clause is, of course, acceptable but is perhaps the most important aspect of the dispute and is
considerably difficult to coordinate.

Why the concern? In 1990, the Administrative Dispute Resolution Act (ADRA) required each federal
agency to adopt a policy on using ADR. In 1996, ADRA was reenacted as the Administrative Dispute
Resolution Act of 1996 (ADR Act). In 2000, the Equal Employment Opportunity Commission (EEOC)
required all federal agencies to establish or make available an ADR program during the precomplaint and
formal complaint stages of the EEO process. Additionally, EEOCs regulation, 29 C.F.R. § 1614.603,
requires agencies to make reasonable efforts to voluntarily settle EEO discrimination complaints as early
as possible in, and throughout, the administrative process.

According to The Centre for Effective Dispute Resolution, the current size of the civil and commercial
mediation market in the United Kingdom is in the region of 8,000 cases per year, and has been growing
by approximately 15 percent each year since 2010. In the U.S. and Canada, the trend has not been as
strong—yet. The lack of barriers to entry is the death knell of any business. And technology
advancements have destroyed many a profession. My great-grandfather owned an ice delivery company,
back when refrigeration was a big problem. We all know how that turned out.
Thomas P. Weber, president and CEO of Arbitration Services Inc. of Coral Springs, Fla., has brought
arbitration to the 21st century utilizing online "cloud computing technology." Now the entire legal
process need not leave the office. Attorneys have weathered varying degrees of attitude from our fellow
citizens, however, never before has there been such a potential dramatic societal change, where the core
of their profession was at risk.

Attorneys are trained litigators with advanced cognitive thinking abilities. Where one door closes, another
one opens. The practice of law, whether we like it or not, is now a function of modern business. Attorneys
are well positioned to bring ADR into the fold as an additional business line to save a storied profession.
Failure to get on board may result in attorneys becoming the ice delivery men of the new millennium.

Re-published with permission from the May 20, 2014 edition of New Jersey Law Journal. © 2014 ALM Media
Properties, LLC. All rights reserved. Further duplication without permission is prohibited.