The public relations drubbing that beset The Walt Disney Co. recently after the entertainment giant tried to force a wrongful-death lawsuit into arbitration for the quirkiest of reasons—in signing up for a Disney+ trial in 2019, the plaintiff had agreed to settle all disputes with the company out of court—should serve as a cautionary tale for other companies, legal observers say.

Companies often prefer to resolve disputes through binding arbitration, rather than in court, in part because of the efficiency and confidentiality of the process. But in this matter, Disney found itself a social media punching bag because of the legal tactics it used in a dispute that otherwise might have garnered little or no public attention.