Counsel, Beware, 81 New York State Bar Association Journal 44 (October 2009)

Abstract: In 2009 the National Arbitration Forum withdrew from the field of consumer arbitration. An investigation by the Minnesota State Attorney General uncovered a surprising fact. The Forum, a major provider of arbitration services tailored to accommodate lawyers seeking awards against dead beat credit card users, was shown to be owned by the very attorneys who were seeking the awards. In other words, the Attorney General had uncovered a serious conflict of interest drawing into question the validity of literally hundreds of thousands of arbitrator awards entered in court houses around the United States. As a result, tens of thousands of matters were immediately removed from arbitration and redirected to court houses around the country. This wave of matters placed great strains on an already over taxed judicial system. And it gave new and urgent emphasis on the efforts of consumer rights groups to seek an amendment of the Federal Arbitration Act to bar mandatory arbitration in matters involving consumer contracts and employment agreements. This article looks at the details of what went on behind the scenes at National Arbitration Forum and offers a series of suggestions for attorney representing banks and credit card companies and employers about how to advise clients grappling with the confusion created by the controversy.