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What Is An Arbitration Agreement?
An arbitration agreement is a legally binding contract that offers an alternate dispute resolution between two parties or more. Arbiration agreements provide an alternative to civil court litigation. Parties sign an arbitration agreement and enter into a process known as arbitration if a dispute arises.
Here is a web article with more information about arbitration agreements .
Arbitration is a form of alternative dispute resolution (ADR) that is typically more cost effective than going through the court system in the US. It solidifies an agreement between two disputing parties using an arbitration agreement, and typically limits discovery which can create huge bills for litigation in the courts. Typically, both parties mutually agree to use arbitration to settle disputes before creating a formal relationship.
Instead of using a judge at trial, arbitration uses a neutral third-party to analyze the case's facts and circumstances. This neutral third-party is called an arbitrator and follows a specific Code of Ethics.
Here is an article that goes over arbitration in more detail.
Purpose Of Arbitration Agreements
The purpose of an arbitration agreement is that the dispute process is faster and more affordable than litigation. Cases are less formally presented than legal proceedings as well. However, there are pros and cons of signing an arbitration agreement, of which you should be aware.
Pros of Signing an Arbitration Agreement
Arbitration agreements have several distinct advantages. Regardless of your industry, you can use these advantages by including an arbitration clause in your contracts.
These are the pros of signing an arbitration agreement:
- Pro #1: Avoids civil court hostility
- Pro #2: Less expensive than civil litigation
- Pro #3: Resolutions are generally faster
- Pro #4: Process is more flexible than litigation
- Pro #5: Proceedings are not on public record
- Pro #6: Rules of Evidence do not apply
- Pro #7: Parties can mutually agree to an arbitrator
As you can see, arbitration agreements can be useful for keeping costs low and dispute processes more flexible. They are a popular ADR method for companies based on these reasons alone.
Cons of Signing an Arbitration Agreement
However, there are disadvantages associated with arbitration agreements. It would be best if you discussed them and how they affect you with an arbitration lawyer.
These are the cons of signing an arbitration agreement:
- Con #1: Limited form of legal redress
- Con #2: Not always a level playing field
- Con #3: Objectivity is questionable
- Con #4: Process is not always transparent
- Con #5: Arbitration costs are rising
- Con #6: Decisions can be made on speculation
- Con #7: Fewer opportunities to appeal the decision
These disadvantages can significantly affect your case's outcome and even how you choose to move forward in the future. Consider them carefully when including them in contracts or being asked to sign one.
Suing After You Sign An Arbitration Agreement
You cannot sue or be sued after you sign an arbitration agreement. If the original contract included an arbitration clause, it means that both parties agreed not to pursue legal action in court against the other. Any disputes that arise will have to be settled through arbitration.
You can check out this article to learn more about the limitations of signing an arbitration agreement .
Are Arbitration Agreements Legally Binding?
Arbitration agreements are legally-binding if the case is disputed through binding arbitration. If the arbitration is non-binding, then you can pursue the case in court. If the arbitration is binding, then it is enforceable under law.
In general, you will know if the arbitration agreement that you are signing is legally-binding or not. It is worth noting that any other contracts you sign during arbitration are valid and enforceable as well.
Non-bind arbitration agreements carry little weight in court if one party wishes to sue after signing an arbitration agreement. It is possible that the litigating party could be countersued for a breach of the original arbitration agreement.
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Arbitration Agreements and Employment
More companies are asking employees to sign an arbitration agreement. However, many employees are not entirely sure of what they are being asked to sign. Therefore, both employer and employee will benefit from understanding their roles related to arbitration agreements and employment.
Employers may ask employees to enter into arbitration agreements. Essentially, you are asking employees to give up their right to sue in civil court over issues like breach of contract, discrimination, harassment, and wrongful termination. It is a big deal to ask employees to sign one, which means you should take care when implementing them into your legal strategy.
However, numerous surveys are showing that employers are using a mandatory arbitration process. In fact, more than 56 percent require their employees to do so as a condition of employment.
Arbitration agreements do not favor employees. While the process of arbitration is not necessarily a bad thing for employees, forced arbitration is.
It namely deprives them of their rights to the civil justice system. Employees under forced arbitration file claims rarely. This situation gives rise to abusive employment practices by allowing companies to sidestep the civil justice system.
An employee should carefully review an employment contract and the arbitration agreement employment clause with employment lawyers before signing. He or she can provide legal advice and information regarding the impact on your rights.
This article will help you learn more about arbitration agreements and employment .
Arbitration Agreements and Real Estate
In real estate matters, arbitration agreements are used on a case-by-case basis. Many real estate agents do not disclose to clients that they do not have to engage in arbitration proceedings. As such, clients must go to civil court unless the real estate agent agrees otherwise.
It is also possible that an arbitration agreement real estate case could result in additional dispute resolution proceedings if buyers, sellers, and agents are involved. This situation results in additional costs to the real estate agent.
Simply put, real estate agents may not want to sign an arbitration agreement to avoid legal issues. However, it would be better if you always spoke with real estate lawyers to help you make this decision for your specific situation.
Who Needs An Arbitration Lawyer
Hiring an arbitration lawyer is not necessary to enter into an agreement. However, the arbitration process can be contentious, and the final outcome will affect your rights. As such, it is critical to hire an arbitration lawyer to protect them.
You need an arbitration lawyer if:
- Reason #1: You are worried about your rights
- Reason #2: You are struggling to plead your case without a lawyer
- Reason #3: You are a smaller organization going up against a larger faction
- Reason #4: You are facing a company that is experienced with arbitration
- Reason #5: You are worried about the potential outcome
Your arbitration lawyer will also help you find an arbitrator that can handle the dispute. Since you will have to agree upon an arbitrator with the opposing party mutually, it is helpful to have a legal professional on your side during this process. He or she can negotiate terms and provide representation when facing the opposing party or parties of your case.
Additionally, your arbitration lawyer can help you resolve the process from start-to-finish. Rather than leave your case to conjecture, ensure that you hire an arbitration lawyer to help you stick to the verifiable facts of your case and seek the most favorable outcome possible.
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Meet some of our Arbitration Agreement Lawyers
Terry Brennan is an experienced corporate, intellectual property and emerging company transactions attorney who has been a partner at two national Wall Street law firms and a trusted corporate counsel. He focuses on providing practical, cost-efficient and creative legal advice to entrepreneurs, established enterprises and investors for business, corporate finance, intellectual property and technology transactions. As a partner at prominent law firms, Terry's work centered around financing, mergers and acquisitions, joint ventures, securities transactions, outsourcing and structuring of business entities to protect, license, finance and commercialize technology, manufacturing, digital media, intellectual property, entertainment and financial assets. As the General Counsel of IBAX Healthcare Systems, Terry was responsible for all legal and related business matters including health information systems licensing agreements, merger and acquisitions, product development and regulatory issues, contract administration, and litigation. Terry is a graduate of the Georgetown University Law Center, where he was an Editor of the law review. He is active in a number of economic development, entrepreneurial accelerators, veterans and civic organizations in Florida and New York.
I'm a Washington-licensed lawyer specializing in trademark practice and with an extensive trademark education and academic background. I currently work with domestic and international businesses seeking trademark protection in the U.S. by conducting trademark searches, providing legal advice, submitting USPTO applications, and preparing responses to office actions. I'm passionate about trademark law and always looking forward to helping small and medium businesses promote their value by having a registered federal trademark. If you have questions or concerns about trademark/copyright/IP licensing and require legal advice, feel free to contact me so we can have a first chat.
Mr. Pomeranz serves as the principal of Pomeranz Law PLLC, a boutique law firm representing clients across myriad industries and verticals. Before founding the firm, Mr. Pomeranz served as Senior Vice President, Legal & Compliance and General Counsel of Mortgage Connect, LP in 2017. Mr. Pomeranz also served as Counsel, Transactions for Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) beginning in 2013, and was based in the company’s C-Suite in Luxembourg City, Luxembourg. Mr. Pomeranz began his career with Mainline Information Systems, Inc. as an in-house attorney.
I have 10 years experience providing general counsel, in the form practical and timely legal advice, under strict deadlines to individuals and various business unit stakeholders, balancing commercial needs with legal concerns at large corporations and start-ups. I am skilled at reviewing, analyzing, drafting and negotiating commercial and government contracts globally for the procurement and sale of services and goods. I also help clients ensure compliance with regulations (including data privacy), laws and contractual obligations and protect, enforce and exploit intellectual property rights and support in the development of IP strategy. I am a Certified Information Privacy Professional/United States (CIPP/US) licensed by the IAPP - International Association of Privacy Professionals.
Over 15 year experience drafting, reviewing and negotiating contracts both as in-house counsel and in law firms, including my own law firm.
Rinky S. Parwani began her career practicing law in Beverly Hills, California handling high profile complex litigation and entertainment law matters. Later, her practice turned transactional to Lake Tahoe, California with a focus on business startups, trademarks, real estate resort development and government law. After leaving California, she also served as in-house counsel for a major lending corporation headquartered in Des Moines, Iowa as well as a Senior Vice President of Compliance for a fortune 500 mortgage operation in Dallas, Texas prior to opening Parwani Law, P.A. in Tampa, Florida. She has represented various sophisticated individual, government and corporate clients and counseled in a variety of litigation and corporate matters throughout her career. Ms. Parwani also has prior experience with state and federal consumer lending laws for unsecured credit cards, revolving credit, secured loans, retail credit, sales finance and mortgage loans. She also has served as a special magistrate and legal counsel for numerous Florida County Value Adjustment Boards. Her practice varies significantly from unique federal and state litigation cases to transactional matters. Born and raised in Des Moines, Iowa, Ms. Parwani worked in private accounting for several years prior to law school. Her background includes a Certified Public Accountant (CPA) certificate from Iowa (currently the license is inactive) and a Certified Management Accountant (CMA) designation (currently the designation is inactive). Ms. Parwani or the firm is currently a member of the following organizations: Hillsborough County Bar Association, American Bar Association, Tampa Bay Bankruptcy Bar Association, National Association of Consumer Bankruptcy Attorneys, and the American Immigration Lawyers Association. She is a Fellow of the American Bar Association. Ms. Parwani is a frequent volunteer for Fox Channel 13 Tampa Bay Ask-A-Lawyer. She has published an article entitled "Advising Your Client in Foreclosure" in the Stetson Law Review, Volume 41, No. 3, Spring 2012 Foreclosure Symposium Edition. She is a frequent continuing legal education speaker and has also taught bankruptcy seminars for the American Bar Association and Amstar Litigation. She was commissioned by the Governor of Kentucky as a Kentucky Colonel. In addition, she teaches Immigration Law, Bankruptcy Law and Legal Research and Writing as an adjunct faculty instructor at the Hillsborough Community College Ybor campus in the paralegal studies program.
Possesses extensive experience in the areas of civil and transactional law, as well as commercial litigation and have been in practice since 1998. I addition I have done numerous blue sky and SEC exempt stock sales, mergers, conversions from corporations to limited liability company, and asset purchases. I have worked in commercial litigation, corporate and transactional law, intellectual property and bankruptcy. In recent years I have expanded my practice to include family law, personal injury, medical malpractice, and wrongful death.