X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A recent wave of lawsuits against law firms brought by their attorneys has some firms looking to mandatory arbitration as a way to gain control over such disputes. But the mechanism for resolving those clashes may not prove a good fit for the peculiar workings of a law firm. Although the use of mandatory arbitration has grown among employers in general that want to better manage employment feuds, law firms apparently have yet to embrace the strategy used by many of their own clients. And they may want to continue lagging behind in the business trend. The downside of mandatory arbitration for law firms, say observers, often overshadows the perceived benefits of curbing litigation costs and of keeping disputes under wraps. Three years ago, attorney Thomas Garwood “absolutely” would have advised law firms to implement mandatory arbitration, he said. Garwood is an employment and labor law partner and a member of the management committee at Ford & Harrison. Today, however, he is not so sure about that advice. “It depends. I would tend to nudge them into having mandatory arbitration, but I would caution them.” His own firm does not have mandatory arbitration. “It’s the tale of the shoemaker’s sons going without shoes,” he said. About 20% of all employers in the United States had mandatory employment arbitration in 2007, compared to 14% in 2003, according to study published last year in Employee Rights and Employment Policy Journal. But just how many law firms use compulsory arbitration for their employees or partners is uncertain. A study from 2003 showed that, among 200 law firms responding to a survey sent to nearly 1,200 located in major U.S. cities, only 10% of those firms had mandatory arbitration in place. The study was published in the Employee Rights and Employment Policy Journal. Mandatory arbitration in general prohibits current and former attorneys from suing their law firms in court. Instead, it requires them to submit their claims to arbitration, in which one or more arbitrators, usually agreed upon by the disputing parties, reach a binding decision. Mediation, on the other hand, is nonbinding. Many law firms, if not most, have mandatory arbitration provisions in their partnership agreements, said Arthur Ciampi, a New York attorney who is co-author of the legal treatise Law Firm Partnership Agreements. However, requiring at-will employees, including associates, to sign binding arbitration agreements is not routine, he said. ‘Less adversarial’ Even so, Kirkland & Ellis recently implemented such a program for its associates. The firm’s new requirement, which applies to employees, was first published on AbovetheLaw, a law blog. Reducing the costs of litigation and making “things less adversarial” prompted the change, said Kirkland & Ellis partner Jay Lefkowitz. The Chicago firm implemented mandatory arbitration for partners last year and included all employees “this spring,” he said. Sullivan & Cromwell also is considering mandatory arbitration for employees, and DLA Piper, the nation’s largest law firm, has pondered whether binding arbitration would be a good move. Although 3,623-attorney DLA Piper includes a provision in its partnership agreement, it does not require employees to submit to binding arbitration. “We have lots of different opinions on it,” said Bill Campbell, a DLA Piper partner who serves as general counsel for the firm. Campbell, who is not in favor of the change, is concerned about the impression such agreements can create. “Your attorneys can perceive that you are materially changing their position vis-�-vis the firm and attempting to circumscribe the rights they might otherwise have,” he said. The desire to keep disputes confidential is a major reason law firms use mandatory arbitration. And little wonder. Last year, news of a lawsuit brought by a Sullivan & Cromwell associate, who alleged that the firm discriminated against him because of his sexual orientation, quickly barreled through the Internet and into print. The lawsuit, filed by attorney Aaron Charney, served as a glaring example of how rapidly such news can build an audience as it hops from Web site to Web site. A partner at Sullivan & Cromwell said that following the Charney suit, which settled last year, the firm thought about implementing mandatory arbitration for its associates. “We’d be foolish not to consider it,” said the partner, who spoke on condition of anonymity, saying that the firm does not discuss internal employment matters with the media. The issue was still under discussion, the partner said, but it is unlikely that Sullivan & Cromwell would adopt such a requirement. Within the past month alone, several actions filed by attorneys against their former firms have made news on blogs and in print. Among them was one filed with the Massachusetts Commission Against Discrimination by an associate at Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, who alleges that the firm retaliated against her after she complained about the way members of its labor and employment section treated her. Also recently, a former staff attorney at Covington & Burling claimed in an online column that black attorneys at the Washington-based firm were given fewer opportunities for advancement than white attorneys. Following those lawsuits was one also filed in March by a Haitian attorney formerly at Clifford Chance who contended that the firm hired her without giving her any meaningful work and blacklisted her after she complained, which prevented her from obtaining employment at other law firms. Also last month, a former of counsel litigator at Sonnenschein Nath & Rosenthal sued the firm for age discrimination following its merger with RubinBaum. The idea that mandatory arbitration will shield law firms from the embarrassment of such actions these days is “a complete myth,” said Leslie Corwin, a partner in Greenberg Traurig’s New York office. “It’s going to get out there,” he said. Corwin advises against arbitration clauses even in partnership agreements. Arbitration, he said, no longer offers the benefits of a speedier, cheaper resolution, as proceedings have become bogged down in discovery and quasi-motion work that mirrors litigation. Indeed, a survey by the International Institute for Conflict Prevention & Resolution last year found that arbitration ranked third behind mediation and early case assessment as the most preferred form of alternative dispute resolution. The nonprofit organization is composed of general counsel and senior lawyers of Fortune 1,000 companies, as well as partners in firms, judges and academics. The respondents ranked arbitration, on a scale of one to five, 2.8 for speed and 2.9 for cost savings, while they ranked mediation 4.1 for speed and 4.2 for cost savings. Another concern is that arbitration requirements leave firms vulnerable to lawsuits from attorneys all too eager to challenge their validity. Last year, the 9th U.S. Circuit Court of Appeals determined that the arbitration agreement at O’Melveny & Myers, which applied to associates and other employees, violated California law. The provision called for the termination of employees within three months if they did not sign the agreement. The court ruled the arbitration requirement overly broad.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.