July 28, 2011

 

******************

************

Question

***********

Ken

    Can we put a clause in our contracts that says in essence, the client by his signature agrees to forgo his/her right to sue in favor of submission to a mediator to be selected by us ??  I just saw a documentary on TV showing how  many companies (cable/telephone/etc) have this clause..and how it is so much in favor of the businesses, and how their clients don't even have a clue they agreed..(my action was NOT the intent of the special..quite the opposite!)..or does our cap on damages serve the same or a better purpose ??

*************

Answer

*************

    You don't want a mediator, but an arbitration clause.  I'd just have to make sure that the mandatory clause is not prohibited in the states you operate in and what other contract provisions may be required.

   A mediator generally has the authority to engage in settlement negotiations, but ultimately both parties would need to agreed to the terms of the settlement.  An arbitrator on the other hand is not optional, and the arbitrator hears both sides and decides the dispute.  Absent a few issues, the decision of the arbitrator is binding, final and cannot be appealed. 

   I've been using arbitration in New York for over 10 years.  It's a program designed for the alarm industry.  In New York a residential consumer can't be compelled to arbitrate, so we use it for commercial subscribers.  I just recently began handling cases in New Jersey [we do the paperwork and will use per diem attorneys for court appearances] and consumers can be required to arbitrate provided we add a few additional provisions in the contract, which we did.  Our experience with the arbitration cases versus the cases we take right to court are about the same, although the arbitration cases move faster.  The arbitrators tend to be better acquainted with the alarm law issues because they see more of the cases.  One minor drawback is that arbitration does add an additional expense to collection cases because unlike judges, arbitrators are paid by the parties.

    We can add the same provision in your contracts and we may be able to handle the arbitrations from here.  I don't think appointing one of your employees as the arbitrator will work well.  Here's the clause we'd be adding with some modification.  The actual arbitration language is the last sentence.

   And yes, arbitration will speed up your collections because the disputes can be started quickly.  Most cases are resolved by settlement anyway so the earlier in the process the better.  Those cases where there is no response from the subscriber to a lawsuit are generally difficult to collect from and increase the overall expense budget for collections in general.

 

   Arbitration can of course also be invoked and used for defense cases, and we have experience in those cases as well.  The collection and litigation departments of Kirschenbaum & Kirschenbaum PC have concentrated in alarm collection and alarm defense work for over 35 years.  Always interested in more clients and business !!!!