November 16, 2020

Fairer, Faster, Better II: An Empirical Assessment of Consumer Arbitration

Though COVID-19 has dominated headlines and legislative priorities for the better part of a year, 2021 will likely see the reemergence of a different political flashpoint: arbitration. Frequently the target of attacks from the plaintiffs’ bar, arbitration is a near-century-old method for efficiently resolving legal disputes without resorting to lengthy and expensive trials.

The latest research from ndp | analytics demonstrates that in disputes initiated by a consumer, consumers fare much better in arbitration than they do in litigation. Specifically:

  • Consumers are more likely to win in arbi­tration than in court. Consumers initiated and prevailed in 44% of all consumer arbi­trations that were terminated with awards during January 2014 – June 2020. During the same period, consumers initiated and prevailed in 30% of all consumer litigation cases that were terminated with judgments. 
  • Consumers receive higher awards in arbitration than in litigation. The mean award in arbitrations that consumers initiat­ed and won was $68,198, compared to $57,285 in litigation. The median award in consumer-initiated arbitrations was $20,019, compared to just $6,565 in litigation they initiated.
  • Consumer arbitration is faster than litigation. It took a mean time of 299 days for consumers to initiate and termi­nate a dispute with an award in arbitra­tion compared to 429 days in litigation. The median number of days for consum­ers to initiate and complete a dispute with an award was 251 days in arbitra­tion compared to 311 days in litigation.

These results reinforce similar findings from ndp’s 2019 research on employment arbitration: resolving disputes through arbitration is clearly more effective than filing lawsuits.

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