Do you have an arbitration agreement in your deal packet? If so, when was the last time you reviewed it. It seems lately Arbitration is costing dealers more than the cases are sometimes worth. In consumer transactions it is the business who pays the brunt of the filing fees and costs. Lately I have seen initial fees around $3500.00 and then additional $9,000.00 for the arbitrators’ fees, on a case with a worst-case value of $7,000.00. It makes no sense. Most often even if you win against a claim, the arbitrators leave the fees as they were incurred, meaning you are still out of pocket.
Arbitration may not always be the bets course of action. I hear you though, asking why to expose yourself in the courts. There are still many ways to protect yourself. If you have ever been to the FRVTA annual conventions who have likely heard Harold Ohler speak. His word of advice, and one which I have taken to heart, is to include a mandatory mediation clause in your agreements. Having the opportunity to get to the table with a disgruntled consumer and really listen and problem solve the issue will be one of the most economic tactics you and try. Another revision could be to agree to hire a private arbitrator, instead of going through some of the standard Arbitration Associations, which seem to be most costly by the day. This way you can cut a lot of the administrative costs and still seek a resolution. The courts have also become more streamlined with cases, especially smaller ones taking less then a year to complete.
While I am not saying Arbitration is never the answer anymore. The cost and time analysis should be reviewed. Revising your Arbitration agreements, with some flexibility for small claims court or private arbitrations and including mandatory mediations. You can do this even if you have a form arbitration agreement in your deal packet. I always recommend a free-standing arbitration agreement that can be modified as the laws change. The form needs to acknowledge the one in your other documents and includes language that the free-standing arbitration agreement modifies any conflicts between the documents. This technique saved me from a large class action case, because our arbitration agreement specifically covered the areas of the lawsuit, and modified all the various arbitration agreements in our forms. Protect yourself and your pocketbook. Review your documents annually to make sure they are protecting you.