U.S. Chamber Institute for Legal Reform defends arbitration as alternative to litigation

The U.S. Chamber Institute for Legal Reform (ILR) has released new research advocating for individual arbitration as a more equitable and efficient alternative to litigation. This announcement comes amid growing federal and state efforts to limit the use of arbitration.

According to ILR's commentary, federal initiatives to restrict arbitration include proposals like the Forced Arbitration Injustice Repeal Act, which aims to eliminate arbitration in various sectors such as consumer, employment, and antitrust. ILR argues that these efforts are motivated by the plaintiffs' bar's interest in maintaining high contingency-fee litigation revenues, as arbitration can reduce such earnings. These federal measures are accompanied by attempts to limit arbitration through specific statutes, including proposals to amend the Servicemembers Civil Relief Act.

At the state level, ILR points to California’s SB 707 as an example of anti-arbitration legislation. The law imposes punitive sanctions on those who draft arbitration agreements but fail to pay fees within 30 days. ILR and business groups responded with coalition amicus briefs in the California Supreme Court, which ultimately adopted a more flexible interpretation that alleviated some of SB 707’s stricter provisions while maintaining alignment with the Federal Arbitration Act.

Empirical research conducted by ILR in partnership with NDP Analytics from 2019–2022 indicates that arbitration offers better average outcomes for claimants compared to litigation. For instance, consumers who succeeded in arbitration received average awards of $79,945 versus $71,354 in litigation. Similarly, employees won $444,134 on average in arbitration compared to $407,678 in court. The research also highlights faster resolution times: consumer arbitration cases concluded in an average of 321 days compared to 439 days for litigation; employment matters averaged 659 days in arbitration versus 715 days in court.

According to ILR’s "What You Need to Know About Arbitration," this method is described as a "fairer, faster, and less expensive" alternative compared to traditional litigation. The page notes data showing higher win rates and more favorable awards for employees and consumers involved in arbitration, along with quicker resolution times. ILR presents these findings as evidence that arbitration benefits parties involved and reduces pressure on courts.

The U.S. Chamber Institute for Legal Reform is affiliated with the U.S. Chamber of Commerce and advocates for civil justice reform aimed at enhancing fairness, efficiency, and predictability within the legal system. According to its official site, ILR conducts research and publishes commentary while engaging with legislators, courts, and regulators on issues such as arbitration reform.