Arbitration has a brand recognition problem. Not enough people know what it is.
The recent CFPB report summarized studies showing that even among consumers who know they have an arbitration clause, the majority do not realize they cannot go to court or have their claims decided by a jury. One explanation is that those consumers are not aware what it means to sign an arbitration clause.
Often when I present to groups of sophisticated business people about arbitration, their questions make clear they think I am talking about mediation. I find many law students are also confused between arbitration and mediation, as are plenty of practicing lawyers.
Confusing arbitration and mediation is understandable, by the way. Arbitration and mediation rhyme. They are often taught together at law school under the “Alternative Dispute Resolution” umbrella, which ensures the concepts are forever linked in the minds of those lawyers. (Or included together in the same section of contracts.) And sure, they are both “alternatives” to litigation, but so are fistfights and “hugging it out” but we don’t teach those (and we would never confuse them).
Plus, arbitration does not come from a root word that most people recognize or can associate with a private system of dispute resolution. (At least mediation sounds a bit like middle-ation.) Instead, arbitration sounds like arbitrary. And that’s not a good connotation.
Does arbitration’s brand awareness matter? I think so. 80 million consumers are subject to arbitration agreements in their credit card agreements, and almost as many arbitrations are filed each year as new civil cases in the federal district courts. Tons of people are entering into arbitration agreements (as individuals and on behalf of companies). And, a good chunk of those people may have no idea what arbitration means. That undermines the primary rationale of arbitration acts – that contracting parties affirmatively chose to resolve disputes in a private arena with less formality and no government-paid decisionmaker and the courts are just enforcing those pre-dispute choices.
But, what can realistically be done? I suppose all the arbitral providers could form a marketing association and put out billboards and banner ads. And we could stop packaging arbitration and mediation together under an “ADR” banner. Or we could just start calling arbitration something new. Like what… Disputation? Coolidgation (after the President who signed the FAA into law)? Scaliation (after the Justice whose opinions have strengthened enforcement of arbitration agreements)? Or even just simply litigation – instead of saying “they arbitrated their dispute” you could say “they litigated their dispute before the AAA.”
Something to ponder over your summer vacation… Send me your great ideas.
By Liz Kramer