Driven partly by a legal reformist spirit and entrepreneurial zeal, some lawyers are testing a new weapon in arbitration: sheer volume, according to a New York Times analysis. And as companies face a flood of claims, they are employing new strategies to thwart the very process that they have upheld as the optimal way to resolve disputes. Companies, in a few instances, have refused to the pay fees required to start the arbitration process, hoping that would short-circuit the cases. “There is no way that the system can handle mass arbitrations,” said Cliff Palefsky, a San Francisco employment lawyer who has worked to develop fairness standards for arbitration. “The companies are trying to weasel their way out of the system that they created.” Even as Supreme Court rulings over the last two decades have enshrined arbitration as the primary way that companies can hash out disputes, giving them enormous sway, consumer advocates and labor rights groups have criticized its inequities. One of the biggest obstacles for consumers and workers is that payouts on individual arbitration judgments don’t justify the costs of mounting a complex case against a big company. Teel Lidow runs FairShake, a start-up that uses an automated system to get the arbitration process started. If the claim results in a payout, the start-up takes a cut. Lidow got interested in arbitration after the e-commerce company he founded to sell ethically sourced clothing shut down. A former mergers and acquisitions lawyer, he wanted to use some of his digital know-how to disrupt the legal system that nearly every American must agree to use instead of going to court against their employer, rental car provider or cable company.
