Mass Arbitration Filings Rise, Challenging Corporate Legal Teams
Mass arbitration cases rose 467% from 2021 to 2022, impacting legal strategies.
Why it matters: General Counsels face increased arbitration costs, impacting budget and strategic planning.
- Mass arbitration cases rose 467% from 2021 to 2022, reaching over 90,000 cases.
- Amazon and TurboTax accounted for 58% of AAA cases over the past five years.
- Amazon dropped arbitration clauses after facing 75,000 privacy claims.
- AAA increased its mass arbitration fee to $3,125 per case.
The dramatic rise in mass arbitration cases is urging corporations to reassess their legal dispute strategies. From 2021 to 2022, mass arbitration filings shot up by 467%, with over 90,000 cases reported, according to Bloomberg Law. This surge has placed significant budgetary strains on corporate legal teams.
Major companies, notably Amazon and TurboTax/Intuit, represent 58% of mass arbitration cases filed with the American Arbitration Association (AAA) in the last five years. In a strategic pivot responding to 75,000 privacy claims, Amazon removed arbitration clauses from their customer agreements.
The financial burdens are intensified by higher administrative costs, as the AAA has raised its initial mass arbitration fee to $3,125 per case, up from previous rates. Companies must account for these increased expenses in their legal budgeting and planning.
Moreover, firms endorse innovative approaches to gather claimants, as detailed by Corporate Secretary. Although only about 5.9% of firms reported facing mass arbitration, the potential financial risks necessitate strategic adjustments across corporate legal departments.
By the numbers:
- 467% — Increase in mass arbitration cases from 2021 to 2022.
- 58% — Amazon and TurboTax's share of AAA mass arbitration cases in 5 years.
- $3,125 — New AAA fee per mass arbitration case.