Harvard Negotiation Law Review

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Archives for August 2020

Forced into Employment Arbitration? Sexual Harassment Victims are Saying #MeToo and Beginning to Fight Back—But They Need Congressional Help

Samuel D. Lack

 

Abstract

 

As awareness of the prevalence and pervasiveness of workplace sexual harassment has grown in the United States, so too has the use of mandatory arbitration clauses in employment contracts, shepherding employee claims out of courtrooms and into private arbitration proceedings. Though private arbitration is often touted as cheaper and more efficient than traditional litigation, employees are significantly less likely to win in arbitration and, when they do, their awards are often much less.

Mandatory arbitration clauses have grown with the expansion of the Federal Arbitration Act (FAA), passed in 1926, and now cover over half of non-union workers in the United States. Despite evident inequities, Congress has done little to abate the expansion, and the federal court system has adopted a strong pro-arbitration jurisprudence. In recent years, the Supreme Court has effectively mandated that arbitration be individualized—to the severe detriment of sexual harassment victims amid what can be an already arduous claim process. In response, states and localities have passed laws that forbid or limit the use of mandatory arbitration clauses. These laws, however, are often preempted by the FAA and never take effect. The public has also pushed back against mandatory arbitration and has achieved real success. Many corporations and law firms are stopping the practice amid public pressure, walk-outs, and boycotts.

This Article will detail the prominent inequities present in mandatory arbitration, particularly in cases of sexual harassment and workplace discrimination. Then, it will advocate for: (1) judicial reinterpretation of the FAA and its savings clause to permit states to pass laws that restrict the use of mandatory arbitration, or, in the alternative (2) congressional action, namely the passage of the Ending Forced Arbitration of Sexual Harassment Act, which, combined with strategic public pressure on legislators and businesspeople, would lead to immediate relief for sexual harassment victims and signal larger arbitration reform on the horizon.

[Read more…]

How Litigation Funders Have Improved the Quality of Settlements in America

Robert B. Fuqua

Abstract

Litigation finance is a form of specialty funding used by litigants and law firms to pay the high costs associated with maintaining a legal claim. In a typical agreement, a litigation funder pays a portion of a client’s litigation expenses in exchange for a share of the lawsuit’s recovery. The loan is non-recourse, so if the client loses the case, the funder will lose the investment.

This form of legal financing has rapidly grown throughout the United States. The practice is popular among clients for its risk-sharing benefits, popular among investors for its high returns, and popular among critics for its expansive ethical gray areas. This Article argues that litigation finance should be popular for one more thing: improving the quality of legal settlements. Because litigation funders use their capital and experience to reduce bargaining imbalances during pretrial negotiations, settlements in cases backed by litigation funders are more likely to reflect the merits of claims than economic disparities between the parties.

Today, various forms of litigation finance can be found throughout our legal system. Even newsworthy crowdfunding efforts by criminal defendants could qualify as a form of litigation finance. The scope of this Article, however, is limited to commercial lawsuits. The Article introduces the practice, discusses the implications of adding a third-party funder to a lawsuit, and concludes with a regulatory proposal for safely expanding the practice into the future.

[Read more…]

About HNLR

Negotiation, not adjudication, resolves most legal conflicts. However, despite the fact that dispute resolution is central to the practice of law and has become a “hot” topic in legal circles, a gap in the literature persists. “Legal negotiation” — negotiation with lawyers in the middle and legal institutions in the background — has escaped systematic analysis.

The Harvard Negotiation Law Review works to close this gap by providing a forum in which scholars from many disciplines can discuss negotiation as it relates to law and legal institutions. It is aimed specifically at lawyers and legal scholars.

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