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September 23, 2019

“The Lawyer Enrichment Act”

The Wall Street Journal editorial board says “trial lawyers lose the most from arbitration” in a new piece on a House-passed bill that would restrict the use of arbitration between businesses and employees.

The U.S. House of Representatives passed the Forced Arbitration Injustice Repeal Act last week, which would ban arbitration agreements in many instances, on a mostly party-line vote. The votes come after another attempt to weaken arbitration was blocked by the U.S. Supreme Court this past April.

Banning arbitration would send many disputes to class action litigation, which the editorial board says “return only token compensation to the actual class members while most of the gains go to the lawyers.” The House rejected an amendment that would have protected against excessive legal fees.

The piece cites a study released by the U.S. Chamber Institute for Legal Reform (ILR) earlier this year which found that employees were more likely to win in arbitration than in litigation, and they win more money as well. ILR also released survey that found that 50 percent of voters do not want Congress to prohibit arbitration.

The bill now heads to the Senate, who the editorial urges to “resist the faux populism and kill this gift to” lawyers.

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