Let’s start with this hypothetical: “Bob” is representing “Anne.” He carefully reviewed an arbitration agreement for Anne before she invested more than $200,000 in a mutual fund. Bob had heard that big companies inserted arbitration provisions into their customer agreements to preclude their customers from any shot at justice when the big company breached the agreement. Not so this time. Yes, the agreement said that Anne gave up her right to a jury trial. But that was OK with Bob. He liked arbitration because he knew it could be a less costly and more expeditious alternative to litigation.
After Anne’s investment was virtually wiped out — the mutual fund company invested the bulk of Anne’s monies in a company called Bear Stearns a couple of months ago — Bob filed an arbitration demand against the mutual fund company, asserting negligence, fraud and a host of other interesting common law claims. The arbitration process did not cost a lot and lasted a mere three months, from the filing of the arbitration demand to the arbitrator’s decision. Anne lost on every aspect of every claim.
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