In Arbitration, a ‘Privatization of the Justice System’ | Hacker News Reader

In Arbitration, a ‘Privatization of the Justice System’

mobile.nytimes.com

119 pointsyesplorer65 comments

It's an issue that has more than one position.

For a long time I was a volunteer at a mediation center where maybe 70% of the cases we did were parenting plans for divorced or separated parents.

The scientific evidence is that mediation is much more effective, for parenting plans, than court both in terms of (i) people being happy with the results, and (ii) people following their plan and not winding up back in court.

The family court in the county has a close relationship with the mediation center and tries to send as many cases to it as it can because it is cheaper and faster, never mind getting the better outcomes that are mentioned above.

Now in the case of that center people can always go to court if they don't come to an agreement, but I would say that the NYTimes assessment of alternative dispute resolution is pessimistic and reflects the viewpoint of the lawyers who are 99% of democratic congressmen and nearly 50% of the republicans.

Sure, but surely there is a significant difference. What you describe is essentially voluntary mediation process (you can always take it to court if you really really want to) between parties with a similar level of power (ideally...). What the article complains about is clauses in contracts of adhesion that force people to use a private tribunal without the option to appeal to the public courts for civil suits. A tribunal which is furthermore designed to resolve disputes between individuals and large corporations on which the private tribunal depends for business.

It's not so much more than one position as it is "more than one kind of settlement procedure", some of which are reasonable and some of which are quite obviously crooked.

Edit: In fact, even a private arbitration tribunal would be OK if you could: a) guarantee that the costs of the process in time and money are not unreasonable, b) reserve the right of appeal to the public courts for both parties. Just the additional leverage to the consumer of being able to appeal the arbitration tribunal might remove a lot of the incentives for it to deliver unfair results, and most people would likely settle for a fair resolution by arbitration anyways, only going to the public courts when they believe it would produce a very different result than arbitration.

> Now in the case of that center people can always go to court if they don't come to an agreement

This is the key. Most arbitration clauses in contracts, however, seek to prevent going to court. And, in addition, arbitrators side with companies what appears to be far to often.

If people are required to seek arbitration, but can still go to court afterward, I have no issue at all with arbitration.

> And, in addition, arbitrators side with companies what appears to be far to often.

Of course the arbitrators have to side with the companies often, otherwise the company will change the arbitrator.

Sorry buddy, but arbitration rules don't work that way.

For all the arbitration hate here, i'm going to guess that basically nobody here has any experience with arbitration past reading articles about how they are "company friendly" or whatever.

I'd really love to know what's wrong with arbitration in theory (it's definitely more effective and efficient than going to court for 7 years).

Most of the complainers are the plaintiffs lawyers who can no longer sell sob stories to juries and get millions because juries are easy to sway.

IE you present statistics on how "company friendly they are". These statistics do not take into account that maybe these people should be winning these claims. Given how many claims are completely worthless, ...

And please, read the normal JAMS or AAA arbitration rules, which are generally quite fair, before complaining. Because i would suspect most of the suggestions that get made are already the way things are.

This response is a little on the hostile side and doesn't address the clear problem that there is an economic incentive for arbitration companies to provide resolutions favorable to the company providing their source of income. That is a problem in theory with arbitration when contracts prohibit people from taking the case to court if arbitration doesn't prove fair.

Dismissing posters as "complainers" and arguing that they don't have first hand experience completely skirts around this problem and isn't a reasonable argument.

There also seems to be a flaw with where you suggest people have a bias, then proceed to say maybe the companies should be winning and it's okay to have the bias that "many claims are completely worthless."

Statistics can demonstrate that arbitration is more than favorable in situations where companies did something that should at least require a refund, and this has been brought up as evidence in recent articles.

There simply is no check or balance to such an arrangement where one party picks and pays for the judge and process that will be used to settle a distribute. I find it suspicious that someone wouldn't see this as a challenge.

I've read about the benefits of arbitration in situations where it isn't deployed as such a one-sided method to sidestep the law, but this arrangement isn't one of them.

"This response is a little on the hostile side and doesn't address the clear problem that there is an economic incentive for arbitration companies to provide resolutions favorable to the company providing their source of income."

You certainly realize the justice system has the same problem, right? Judges are elected in most states, and not by corporations. You are also quite literally paying their salaries.

Additionally, if you had any source of statistical data showing that arbitration was an unfair process, that would be admissible to get the arbitration thrown out.

"There simply is no check or balance to such an arrangement where one party picks and pays for the judge and process that will be used to settle a distribute"

According to roughly all arbitration rules, the arbitrators can be picked by the people complaining.

> Additionally, if you had any source of statistical data showing that arbitration was an unfair process, that would be admissible to get the arbitration thrown out.

False. The Federal Arbitration Act applies in most cases where a party has "agreed" to arbitration, and pre-empts state law. A party can't just show "any" source of statistical data showing arbitration is unfair. If they run to court, in most cases, all the other party has to do to succeed in a motion to compel arbitration is establish that an arbitration agreement exists, applies, and meets the minimum procedural requirements for arbitration under the FAA. The court will not entertain an inquiry into the fairness of arbitration in the large or examine statistical evidence. It will basically rely on the text of the arbitration agreement standing alone.

I'm quite aware of what the arbitration act requires/allows.

Here's, let's take a look at what you claim won't be admissible:

https://www.law.cornell.edu/uscode/text/9/10

(a) In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—

...

(2) where there was evident partiality or corruption in the arbitrators, or either of them;

So, i guess you don't think this means what it says?

What I said have nothing to do with arbitration rules. Unless ALL available arbitrators can make the same fair judgement, it's just a matter of the company switching the services until they find one that has the result they like (not necessary because of malicious intent on the arbitrators side). The same issue happens in court as well, and we do complain about it just as much (how the IP lawsuit tends to concentrate in a small set of courts and justices). But it's probably harder to pick and choose court/ justice than you do arbitrators, unless I'm mistaken on this count?

Except, as I said, if you appealed and provided that evidence to the court, the arbitration would be thrown out, and the company likely sanctioned.

What can't be appealed is an arbitrator's judgement because you didn't like it, you can definitely appeal if the actual process is unfair.

> but arbitration rules don't work that way.

They work exactly that way. If the arbitration company doesn't produce results that favor my company we will dump them as a service provider. Each year, we can run an A-B test, randomly assigning cases to two arbitration companies, and whichever one has a higher win rate for us will stick around next year, and the other one gets fired. After a few years of that we should have a provider that performs really well for us.

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?ar...

Exactly right! Businesses use arbitration because it works better for them. They are the ones hiring the arbitrators. How about the other way, why can't regular people say I won't sign your contract unless you agree to use my arbitrator if there is a problem - people can't because they don't have that power.

"e: (1) the employee win rate amongst the cases was 21.4%, which is lower than employee win rates reported in employment litigation trials; (2) in cases won by employees, the median award amount was $36,500 and the mean was $109,858, both of which are substantially lower than award amounts reported in employment litigation; "

These key findings are of course, completely irrelevant to whether this is the right outcome. IE they are not good or bad in and of themselves.

" (6) the mean amount claimed was $844,814 and 75 percent of all claims were greater than $36,000."

The likelihood that this amount claimed is sane seems low when viewed over a group of 1200 people, and particular, people who pretty much all make < 100k a year.

"The results also indicate the existence of a significant repeat employer-arbitrator pairing effect in which employees on average have lower win rates and receive smaller damage awards where the same arbitrator is involved in more than one case with the same employer, a finding supporting some of the fairness criticisms directed at mandatory employment arbitration"

The conclusion aout fairness does not follow from these facts of course, in any way. It may be the arbitrator now has a better perspective on the way various folks may be trying to game the system or whatever else.

You will also find very similar pairings in state vs federal venue win rates for employees and class action lawsuits.

Yet i don't see anyone here screaming that this is unfair

So given the evidence that arbitrators are substantially more biased towards corporations than regular courts are, your argument is that it's actually the courts that are biased in favor of individuals and the arbitrators are actually perfectly fair and impartial.

I suppose that isn't ruled out by the evidence at hand. But isn't it more likely that regular courts, with all their rules about conflict of interest and judges that aren't paid their salary by one side of the dispute are a little more likely to be the fairer ones?

"But isn't it more likely that regular courts, with all their rules about conflict of interest and judges that aren't paid their salary by one side of the dispute are a little more likely to be the fairer ones?"

In my experience, no ;-)

Also, they are paid by one side of the dispute - you pay judges salaries ;-) In a lot of states, they are directly elected, too.

Are you happy with your customers knowing this?

All my customers will ever know is that their disputes are required to be arbitrated by "Super Fair Arbitration, Inc.". They won't know that Super Fair has a 99% corporate win rate, and that we pay them a bonus every year the win rate for us is over 95%.

Hey, I'd be the defendant in a case that may go to arbitration. The company claims that I've committed a violation of their ToU. To the extent that their ToU is a valid contract which I've actually entered (presently a point of dispute), it also stipulates that all non-intellectual-property claims must be settled through a neutral arbitrator.

This actually gives me a little bit of hope, because if it happens, I may be able to sway the arbitrator in my favor, as arbitrators are not bound by case law (currently ambiguous but slightly leaning against me) but their own ideas of fairness and justice.

In an actual court, it'd cost me millions of dollars in legal fees before the case got close to a final resolution, and I personally think it'd be very difficult to get a positive outcome, for a handful of involved reasons. With an arbitrator, the prospect of millions of dollars in legal fees is off the table, and there's no data at all as to the likelihood of success since it seems to be wholly dependent on the actual individual that ends up hearing the case. The case hinges on a modern understanding of a technical issue. If the arbitrator is not tech-savvy, he'd likely favor Big Corp. If he is, he'd likely favor me.

My primary concern is that the arbitrator would want to side with the Fortune 500 company in question here, because they're a Fortune 500 company that can bring his arbitration firm a lot of money. I even have this concern to some extent with bona fide judges, and especially have this concern with regard to international operations. The fact is that there is potentially a lot more to gain by making Big Corp like them than there is by getting a fair result for little old me, who is just a regular chump and unfortunately not one of the wealthiest entities on earth. There's not even really street cred, because most people really like this Big Corp.

Pretty much the only hope I'd have is that the arbitrator, judge, court system, and everyone else involved has a rock solid commitment to justice and fairness, unphased by the allure of Big Corp's massive money-dick wagging all over the place (I should note too that this massive money-dick was substantially involved in creating the legal grey area they're using to go after me in the first place, so maybe that should be a good indicator of my prospects). Can you give me some hope that I'd get a fair hearing?

You failed to explain what was wrong in the comment you accused of being wrong.

"This is the key. Most arbitration clauses in contracts, however, seek to prevent going to court."

Most mediated settlement agreements have the same clause.

The goal is finality.

"And, in addition, arbitrators side with companies what appears to be far to often."

Based on what data do you think it is far too often?

IE why is it bad that they side with companies often if the companies are right?

In my experience, most of what our justice system deals with are bullshit or worthless claims, and so if the private arbitrators agree with the companies, instead of the company settling, that's good not bad.

I'd love to see some independent org do an independent review of the strength/merit of the claims of each arbitration case, and whether there is still bias "accounting for that"

I realize how difficult such a thing would be ;)

Without such a thing, at least, given what i've seen, i remain unconvinced that most complainers are is not just the whining of plaintiffs lawyers and people they sold a bill of goods to.

Because arbitration is cheaper, faster, and probably better for everyone.

(plus, you don't need lawyers to represent you. In fact, i could start a company that handled thousands of arbitration claims for folks much more effectively than i could handle thousands of class action lawsuits. Because i don't need $500 an hour lawyers to manage the case, legally.

It happens that lawyers are really slow and haven't noticed this yet, but i expect arbitration will end up better long term for people once they do)

"If people are required to seek arbitration, but can still go to court afterward, I have no issue at all with arbitration. "

If they could, there would be no point in arbitration!

Someone is going to lose. If the next step is to go to a judge and have them re-decide the whole thing, why bother with the arbitration step?

> Most mediated settlement agreements have the same clause.

After you have come to an agreement. Arbitration clauses usually make that requirement before there is even a dispute. There's a pretty big difference between requiring that you try to come to an agreement out of court and requiring that you give a third party the power to make legally binding decisions that you don't agree to.

> Based on what data do you think it is far too often?

Let's start with these:

http://www.responsiblelending.org/credit-cards/research-anal...

http://www.nasaa.org/5698/state-securities-regulators-say-ne...

And from the second, let's grab this quote: "A striking 75 percent of customers who compared their arbitration process to their civil litigation process indicated that arbitration was “very unfair” or “somewhat unfair” compared to court."

Given that civil court absolutely sucks, that's quite telling.

That statistic doesn't tell you enough, because you don't know the rate of valid claims to invalid claims, and it's very possible that the "legal dispute with this particular company" filter exerts a powerful bias on that rate.

"And from the second, let's grab this quote: "A striking 75 percent of customers who compared their arbitration process to their civil litigation process indicated that arbitration was “very unfair” or “somewhat unfair” compared to court." "

I would bet literally exact same number of people think court sucks and is unfair when they lose, too ;-)

Heck, nearly 100% of losers in divorce cases i saw my ex-wife handle thought the process was biased, unfair, and blah blah blah.

I mean, i didn't need a study to tell me that most people who lose when they think they are right blame the process instead of their rightness ;-)

> I'd love to see some independent org do an independent review of the strength/merit of the claims of each arbitration case, and whether there is still bias "accounting for that"

If only we had some independently-funded institution responsible for doing exactly that.

There's no point to it if a lawsuit will follow, as it doesn't save any time over going to court. Half of the problem is with how the arbiters are chosen: ideally, neither party would get to choose and all arbiters would be held to standards.

I offer you an alternate interpretation which may fit your data:

The easy cases where both parents are likely to agree and be happy with the results, end in mediation.

The difficult cases where both parents are likely to dispute the results, accept mediation less often, and end up in court.

Binding arbitration is a different thing entirely, because the parties have no recourse and one of the parties set up the system, which loses revenue if it cannot be useful to that party.

Businesses with experienced legal departments duping gullible individuals into giving up their right to trial is not comparable at all with individuals first considering then agreeing to resolve their issues between themselves out of court.

The NYT article discusses the former, not your example of the latter.

Actually it doesn't have more than one position.

For arbitration to work effectively the two parties need to be of roughly equal power - which in a marriage is mostly (not always, but mostly) the case.

When it's an individual up against a large corporation with a multimillion dollar legal team it's the privatization of jurisprudence. End of story.

Their assessment is based on direct evidence and statistics.

Arbitration is great if the selection of arbiters is fair and influenced by both sides.

In many cases, the arbiters end up being cozier than appropriate with one side or another. Without a system that accounts for that or has sufficient transparency to discourage misbehavior, it doesn't work.

> And unlike the outcomes in civil court, arbitrators’ rulings are nearly impossible to appeal.

> When plaintiffs have asked the courts to intervene, court records show, they have almost always lost. Saying its hands were tied, one court in California said it could not overturn arbitrators’ decisions even if they caused “substantial injustice.”

This seems like a really serious problem. If arbitrations are, as they are claimed to be, generally better on the average (cheaper, faster, better compromises, etc), one could tolerate even "forced" arbitrations (by way of fine print that few people read). But the lack of avenues to appeal (if true) seems to me a fatal flaw.

Is this generally true of all arbitrations? Or is this only a few unusual cases?

Most arbitrations are binding. That means they can't appeal the facts and the result.

If the arbitration process was unfair, they can appeal that. But if the process was fair, ....

For a definition of "fair" set by the arbitrator.

If you read the line carefully, they don't say that they lack an appeals process. They just want to paint the picture that that's the case without saying it.

Note that they say "nearly".

It's odd that they do this in their writing, even though their own style guide advises against it.

Truly disgusting -- so unimaginably perverse injustice that I can't imagine a coherent lucid defense being presented that this should be legal, though if you have one please prove me wrong. If you want to protect rights, it's vital to not only have a statute against certain entities violating them (primarily government), but to ensure people cannot sign them away. If something is permitted, it will occur -- there will always be people desperate enough or uninformed enough to agree to anything that's permitted for them to agree to, and all of a sudden your rights only exist if you're wealthy enough to avoid being forced into a contract like this.

In our case it's become so ubiquitious that in job offers, not having binding arbitration is a perk -- companies sometimes choose to allow their employees the ability to exercise their rights in order to attract better talent. That's not good enough.

People who think the "normal" legal system is "fair and honorable" have very clearly never dealt with it. It's many things but neither fair nor honorable are among them.

Arbitration can be good and can be bad. I'm not sure the best way to reduce the bad. It best not come at the expensive of Freedom of Contract.

"Freedom of contract" is a silly thing to uphold as an absolute principle. The reason to uphold contracts is for the general good of society, not just "because a contract is a contract", and companies being able to put mandatory arbitration clauses in contracts of adhesion to circumvent the standards of normal courts is not generally good for society.

Assertion: the rise of arbitration is caused by the rise in the expense and time-to-resolution of the government judicial system.

Thoughts?

Having one of the parties to the dispute being the primary and continuing source of income for the decision-maker does seem likely to improve those two measures of the process.

The courts often suck, but the answer ought to be to fix the damn courts, rather than the default knee-jerk answer of American politics: "let the market decide".

More evidence for Joseph Tainter's "Excessive and growing complexity in the face of diminishing marginal returns leading to civilizational collapse" theory[1].

[1] https://en.wikipedia.org/wiki/Joseph_Tainter#Social_complexi...

"For many people, when the choice is between giving up the right to go to court or the chance to get a job, it is not a choice at all."

Nice that we have luxury tech careers and can tell employers to fuck off. Remember to read your contracts before you sign them!

In general, I'm sure that voluntary mediation works well, but to take away a persons right to seek legal recourse is deeply wrong.

To really make arbitration fair (or at least as fair public courts) you'd need so many regulations and oversights that you'd just end up with a parallel court system that would likely have the same problems that arbitration tries to solve in the first place (mainly time and expense).

The United States is essentially an oligarchy. Why is this surprising? Are we stuck with the nationalistic sentiment that America is the Best TM and are blind to the issues that affect all of us?

How does the second part of what you said relate to the article?

In my view, "binding arbitration" is a very lopsided concept by which a large entity can use an intimidation tactic against a smaller entity or individual at, essentially, a lower cost than going through the US court system. This doesn't mean that the large entity is incapable or unwilling to spend capital in defense of a position, but it's akin to an "up front" legal investment to save money later. Why bother fighting in court, where an entity like the EFF or ACLU might be willing to provide financial means to support a fight in pursuit of justice, when there's an avenue to block such a process from even happening?

Thus, I've been happy to have my own "Personal Terms and Conditions" on file (somewhere around here, it was written several years ago) that intends to help tilt the scale back to even. What do I mean? I mean that as a condition of taking my money in Good Faith, whatever business entity I'm working with will have to abide by my own parameters of negotiation - as in, if I'm dealing with a large conglomerate, their means are significantly disproportionate to those that I have. So, as a rule of doing business with me, should there be a dispute, the corporate entity agrees to only use the same budget that I have available. It's highly subjective whether such things could be defensible in court, but it's just one way that I believe it's a US Citizen's right to declare when there's a fight, it's going to be as fair as it can be.

For example, a friend recently had a dispute with their major healthcare provider over a short vs. long-term prescription issue. The friend's Doctor wrote out a 90 day supply prescription for the incurable issue requiring maintenance medication. The insurance company refused to fulfill the 90 day supply, and said that they would only approve a 30 day supply. If you know about US health insurance programs, you'd know that a 90 day has a copay of $XX, and a 30 day has a copay of $YY. Thus, this person would have to pay nearly 2x in copay monies out of pocket simply because the insurance company didn't want to fund the actual, written prescription. Eventually the mail-order fulfillment service started calling up this friend, demanding $X,XXX in back co-pays. The friend pointed out that the fulfillment service had emptied out the Health Savings Account for several years, taking co-pays for each 30 day supply, which was unfair because the actual amount to be billed shouldn't exceed the 90 day cost. 5 phone calls later, and with the stubbornness of a ram, the friend finally got the company to give up on trying to extort him for money that wasn't owed. To this day, the insurance company refuses to fulfill the 90 day prescription, and he's simply waiting, fangs sharp, for if they try to come at him again.

How would the above situation work out in arbitration paid-for by the insurance company? They broke the binding agreement of fulfillment, then wanted to make it the responsibility of the party with the least means. That's injustice, and it's important for individuals to understand, or be willing to stand up and argue, when a large entity decides to "change the rules" to benefit themselves, it's fair game to change the rules right back and punch hard. I'm not presenting this kind of stuff as some kind of quick-fix or blanket approach for each and every person, life is more complex than that. However, the erosion of rights and personal liberty is another complex subject, one that I'm glad to study for its nuances and application in small and large battles.

Problem is, the much of the same can be said about lawsuits themselves. They also favor the larger party, especially when you factor in court costs.

I do wonder if it would be more fixable by requiring arbitrators to adhere to certain standards and register, then pick one at random for each arbitration request so that no one can stack the deck with their choice of arbiter.

"[Capitalism] has resolved personal worth into exchange value, and in place of the numberless and indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, naked, shameless, direct, brutal exploitation." - Karl Marx, The Communist Manifesto

This is quite the end game of capitalism, isn't it?

Individuals do not matter, capital does. Given that corporations have capital, they're the ones who matter. People, especially the disadvantaged ones who lack capital, are not important. Justice means the service of capital. If we agree to that, we'd see that this "new" system is not that unusual. If you have unfettered capitalism, you give up all other values to capital, including individual justice.

I think this is a very one sided view of things (its NYTimes after all).

The purpose of arbitration is not to take away customer's right to seek justice. The purpose is to reduce costs of fighting a lawsuit in court which is far too expensive.

I do see the risk that arbitrators might favor the right of company more than the customer but such a company and arbitrator eventually lose credibility and market share.

Imagine we had to outlaw the whole arbitration process, what would happen that ? Courts will have more cases to address and both involved parties end up spending more money than usual which increases the cost of business for everyone.

I would rather opt in for arbitration and get my car for $500 less than see the arbitration process go away.

It's great to know something like this exists. We should have arbitration like this here in Brazil too, instead of arbitrarion subjected to public courts.

I find this viewpoint surprising, given the problems with arbitration pointed out in the article.

What are your reasons for preferring arbitration? Are the courts in Brazil that corrupt? If so, how would arbitration be better?

They are very very slow, both in judging and in executing decisions, and at the same time consume a huge bunch of State money. They are probably corrupt as well.

People should be encouraged to use the courts. It's a good thing that people use the court system to resolve their disputes. At least they're not dueling in the streets - or worse, leaving their disputes unresolved and suffering without any way to resolve them. Court systems are how modern societies resolve their disputes.

I think the US court system is - on average - fair to the parties involved. One example: The US doesn't award legal fees to the winner, because then everyone would immediately hire the most expensive lawyer to get a higher chance of winning. This would raise the stakes of any lawsuit, and make people far more scared to go to court. This means people might genuinely be suffering from some issue that they can't get resolved.

There's a legitimate issue where companies are afraid of losing millions on legal fees from one of their millions of customers that paid $20 for a cable and got shocked or hurt. Maybe the product was genuinely flawed or the company genuinely treated the customer poorly. Maybe the company is in the right but the customer feels slighted and wants their righteous indignation, or is just greedy for a payout.

For smaller claims, there is small-claims court which is supposed to handle this at much lower cost.

For larger claims: Well, the stakes are intrinsically higher, so maybe it makes sense for the legal system to be expensive.

But for mid-claims - claims too large for small claims court and too small to spend millions on a legal campaign - maybe there is room for improvement. And maybe that room involves arbitration companies. If two parties of equal power consent to using them to save money on a $100,000 contract, that seems okay to me.

But if a million dogs get shocked to death by defective dog collars, it seems wrong that people couldn't use the court system to get resolution. Maybe it's a bad example - but companies engaging in some trouble worth tens of millions of dollars should end up in court. Society doing this is a good thing, even for the companies involved - although they might not feel like it at the time.

When you hear about some large corporation getting off the hook with what seems to be a slap-on-the-wrist million dollar fine, it's almost a good thing: it means you can use the court system to sue large companies to resolve disputes and get them to change their behavior without burdening everyone with a draconian court system.

I say arbitration should either always be appealable to a real court, or we should set up a new cheaper court system that reviews the evidence and makes a preliminary opinion but doesn't set precedent and can be appealed.

>There's a genuine issue where companies are afraid of losing millions on legal fees from one of their millions of customers that paid $20 for a cable and got shocked or hurt.

That's a feature not a bug. That paranoia has probably saved many tens of thousands of lives, maybe more.

The US doesn't award legal fees to the winner, because then everyone would immediately hire the most expensive lawyer to get a higher chance of winning.

Not in Germany.

If you pay your lawyer more than the normal amount (as provided by a special law) you aren't reimbursed for that. Only the normal amount.

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