Still, potentially useful for ad hoc arrangements between smaller firms.
Just so you know ahead of time: no company you do business with that has actual counsel is going to accept an arbitration clause affirming an agreement to use any specific arbitrator you've chosen; in all likelihood, most real companies will flatly refuse mandatory binding arbitration.
It's hard to imagine any corporate counsel ever accepting binding arbitration using an arbitrator they hadn't hand-selected; with choice of arbitration rules comes concessions regarding discovery, regarding appeal, fees, rules of evidence, potentially regarding maximum awardable damages, the list goes on & on.
Choice of arbitration procedures is a much bigger wild card than choice of governing state law. An arbitration clause is more or less a binding promise not to sue, but instead resolve any dispute under an opaque and drastically simplified set of rules. Arbitration clauses are also, as far as I can tell, very much more enforceable when they occur in contracts between businesses.
This sounds like an obvious win when the dispute is over at most 5 figures of web site design; who would want to deal with years of court drama over that? The problem is, real lawyers won't be thinking of the 5 figure contractual amount; they'll instead be thinking of things like liability and IP protection, which are issues that can be denominated in sums that dwarf legal process costs.
That's not correct, Thomas. All kinds of big and small companies include mandatory binding arbitration provisions in B2B and especially B2C contracts.
(In B2C contracts, a big part of the appeal of an arbitration provision is that the U.S. Supreme Court recently said, in AT&T Mobility v. Concepcion [1], that B2C contracts can essentially eliminate consumer class-action lawsuits by requiring individual arbitrations and jumping through a few minor hoops.)
[1] http://en.wikipedia.org/wiki/AT%26T_Mobility_v._Concepcion; see also http://scholar.google.com/scholar_case?case=1708881634152670...
You're the expert: what do you think the odds are here? My experience is limited to watching the redlines ping-pong over simple choice of state law in our own contracts.
I think this is a cool idea for a business, by the way.
Not least, I'd welcome the chance to put disputes into an informal, comparatively-inexpensive forum, where the risk of a runaway jury deciding the case mainly out of sympathy for the freelancer is essentially eliminated.
I would almost certainly object, though, to the ex aequo et bono standard that judge.me proclaims --- that standard, in essence, gives the arbitrator carte blanche to do whatever seems good in his or her eyes, regardless what the contract or the law says. That, coupled with the extremely-limited right of appeal of arbitration decisions, could definitely be a show-stopper.
For those interested, as part of the materials for a law-school course I teach, I've posted an extensively-annotated model arbitration provision [1].
[Disclosure: My wife is a full-time labor- and employment arbitrator.]
[1] http://www.techlawnotes.com/docs/Common-Draft-2012-02-15.pdf...
It's certainly not uncommon.
> even a website redesign puts outside people into contact with confidential business information, poachable employees, company IP, and liability if the website e.g. includes IP from other companies.
All the more reason for arbitration, which by agreement can be made private and confidential, whereas confidentiality in litigation can be very dicey under open-court laws [1].
[1] See, e.g., http://www.nytimes.com/1990/04/23/us/texas-high-court-cuts-i...
Another alternative would be to work with an up and coming Valley law firm ultimately gunning for WSGR's business, but willing to start by automating arbitration.
This reputation transfer trick is the key way to bootstrap a new enterprise that needs to establish itself. Get a few of the most farsighted members of the old guard to invest, endorse, join, publicize. That is why Coursera and Udacity are so much more likely to succed than the University of Phoenix: because they have Stanford faculty who defected. All they need are a few defectors.
Looks really interesting. Can you tell me how lawyers are reacting to the pricing you are paying them for being arbitrators? (assuming you are paying them) and if you are not paying them, how are you getting them to agree.
When I look at $300 for a case, I think, well, most attorneys bill at $400+ an hour (many for as much as $1,000), and they may get $100/hour+ personally after splitting with the law firm, so if a case takes more than 3 hours to arbitrate it seems hard.
On the other hand, there are no law jobs out there, so maybe you are getting fresh graduates?
I'm just curious I guess.
2. Some libertarian scholars apply who love the idea so much they want to work below market rate.