* One of the reasons to be skeptical of arbitration is that it is almost never mutually agreed to by the parties ex post. This isn't true of all methods of alternative dispute resolution (ADR). Parties routinely elect to participate in mediation ex post for example.
* I am not a great fan of the term "Alternative Dispute Resolution", because it confuses what the primary purpose of courts, and by association court substitutes like ADR, are really about. Court are not primarily "dispute resolution" forums. They are primarily "rights enforcement" forums, in which a fairly small minority of cases are seriously disputed (and even many disputed cases result in the enforcement of rights).
* Thinking about arbitration globally is also something that is commonly done and usually unhelpful. The predominant form of arbitration mandated in contracts and to which the Uniform Arbitration Act and Federal Arbitration Act are applied is a court substitute forum in which a private organization with professional, usually legally trained, professionals (often retired judges) serve as arbitrators and apply organization specific procedural rules. The most common rules are to apply the rules of civil procedure with only minor modification administered by private judges, or to apply one of the handful of rules of procedure that are type specific, established by the American Arbitration Association (AAA),with at least five other kinds of arbitration processes are fairly common: securities arbitration organized by the securities dealer's trade association, arbitration over commission disputes between members of the Realtors® organization organized by it, union-management arbitration of employment disputes arising during the term of a collective bargaining agreement, lawyer-client fee dispute arbitration organized by bar associations, and rabbinical divorce mediation organized by Orthodox Jewish denominations to apply Jewish law.
The currently active AAA rules for domestic U.S. binding arbitrations are:
Internet Domain Name Disputes
AAA Healthcare Payor Provider Arbitration Rules and Mediation Procedures
Employment DisputesMultiemployer Pension Plan Arbitration Rules for Withdrawal Liability Disputes
GeneralElection Arbitration Rules (for non-government entity elections)Wireless Industry Arbitration Rules (consumer and commercial).Supplements To General Rules
* I have litigated many arbitrations. They tend to be somewhat faster than litigation in court (although only marginally), but are almost never significantly less expensive and are often somewhat more expensive to litigate. The quality of the decision making in arbitration is almost uniformly worse, on average, than in the court process.
* The Federal Arbitration Act basically adopts the opposite of the better rule for addressing the question by expressing a strong preference for arbitration, even in close cases, and giving this preference pre-emptive effect. In the vast majority of cases, arbitration is inappropriate and verges on unconscionable as a contract term because arbitrators don't have to follow the law or make decisions consistent with the evidence, aren't subject to meaningful appellate review, and in most cases, show systemic bias towards the repeat players that named them or their organizations as arbitrators in their agreements. There are some narrow circumstances when arbitration can make sense, with more safeguards than exist under present law, but in the vast majority of cases, pre-dispute arbitration clauses should be invalidated as contrary to public policy.
* The existing civil litigation process admittedly does a poor job of handling some kinds of cases. For example, it is too expensive for medium sized (ca. $7,500 to $100,000) civil litigation of any complexity whatsoever (i.e. pretty much anything more complicated than a judicial foreclosure or the collection of a promissory note). The civil litigation process is also too slow (especially at the appellate level). But arbitration doesn't do a significantly better job in these cases, and even when it reaches the right result, often creates an appearance of impropriety or injustice.
* What does the status quo in civil litigation do wrong in small cases?
Some of the major factors are as follows:
(1) The finality of the factual determinations at trial profoundly increases the cost of preparing for trials and the cost of litigation; discovery and disclosures and pre-trial motion practice mostly exist to reduce uncertainty at trial,
(2) a system designed around resolving everything in a final jury trial (even when the case will actually be decided by a judge without a jury at trial) prevents the scope of the case from being narrowed early on by have a judge resolve clear but disputed factual issues,
(3) the substantive law frequently makes much more much evidence relevant than is necessary to resolve these disputes in a reasonably just manner greatly lengthening trials and increasing the costs of discovery and disclosures prior to trial,
(4) a legal document heavy process is exceedingly difficult to navigate for pro se parties, even reasonably literate ones, and small cases more often have pro se parties, but lawyers are expensive (and "simplified" procedures that are document intensive don't solve the problem),
(5) there are insufficient intermediate options between hiring lawyers whose scarcity and expensive and time consuming educations make them expensive and representing oneself inadequately pro se, and
(6) underfunding of courts slows down the process and leads judges to adopt processes and courts to adopt legal doctrines that minimize judicial involvement until it is absolutely indispensable, even though this imposes great monetary and delay costs on the parties.
* Some plausible solutions that would help include:
Resolving as many legal and factual issues as possible (with some room for reconsideration by the same judge based upon additional evidence) with little or no discovery, just weeks after a case is "at issue" following a very early, abbreviated evidentiary hearing similar to what is done in eviction cases, writ of pre-judgment attachment cases, and cases where preliminary injunctions are sought. This would also parallel the criminal procedure process of having a prompt evidentiary preliminary hearing before a judge, prior to a full jury trial if the prosecutor's case is found to have merit. In cases where they are held, often these preliminary hearings in civil and criminal cases lead to merits based settlements that dispense with a final hearing where they are present. Only the narrow remaining issues not resolved at this stage, if any, would be the subject of further litigation, following discovery and motion practice, prior to a final hearing.
In small consumer cases, handling proceedings predominantly remotely.
Authorizing independent legal paraprofessionals with narrow areas of practice who would be less expensive than traditional lawyers with an almost unlimited range of practice. I would also favor broadening the right to counsel at state expense to all issues of personal status (e.g. paternity, child custody, guardianships, and immigration), rather than only to criminal defense for indigent defendants and termination of parental rights cases.
Providing more funding for judges and courts to speed up the handling of cases and to promote earlier judicial involvement in cases.
Narrowing the right to a jury trial in civil cases, and greatly reworking the civil procedure process in cases where a jury trial is not available or not elected by the parties.