Got A Beef? Call In A Peacemaker

Judy Rosenthal had a lemon on his hands. In two years, his 1989 Chevrolet Cavalier spent 71 days in the shop. The engine kept conking out, the transmission didn't shift properly, and the trunk leaked. Unable to get the dealer or manufacturer to fix the problems, Rosenthal contacted his local Better Business Bureau, which arranged an arbitration hearing with Chevrolet. After driving the car, the arbitrator promptly ordered the company to give Rosenthal a new Cavalier. "Arbitration was the perfect solution," the Pacifica (Calif.) resident says.

Arbitration and mediation have been used for years in commercial and labor disputes. In the 1980s, they became popular in the securities industry. Now, they're settling consumer battles with a host of professionals, including doctors, insurers, realtors, and home remodelers. With clogged courts and soaring legal costs, such "alternative dispute resolution" (ADR) can be cheaper, quicker, and more effective than suing.

Consumers lay the groundwork by signing ADR agreements either at the time they contract for professional services or after a dispute arises. These clauses, which stipulate third-party referees, restrict or eliminate the right to sue. So they may not be for people who prefer to take their chances before a jury.

In most cases, one side can't force the other into mediation or arbitration. Still, there is growing pressure for consumers to settle disputes this way. Auto and homeowner's insurance carriers increasingly steer arguments over claims into mediation and arbitration. The National Association of Realtors is recommending mediation clauses in home-purchase contracts. In California, more doctors are following the lead of Kaiser Foundation Health Plan, the giant health maintenance organization that has been settling patient disputes through its own arbitration system since the mid-1970s.

EXPERT HELP. When agreeing to ADR, consumers should generally try the less adversarial mediation first. The mediator simply helps both sides work out a solution. If no settlement is reached, the consumer can still sue, or enter arbitration. An arbitrator hears evidence and renders a binding judgment, leaving little or no ground for a court appeal.

The American Arbitration Assn., which has offices in most major cities, runs the best-known ADR system. It charges a minimum filing fee of $300. The AAA draws from a pool of 57,000 trained arbitrators who come from many fields, including law, business, engineering, and contracting.

To minimize bias, AAA sends each party in the dispute a list of five arbitrator candidates and their biographies. Each side can strike two unacceptable names and rank the remaining choices. In cases that involve $100,000 or more, AAA usually assigns three arbitrators. An AAA arbitrator's time is often free for the first day. After that, the two sides split costs of about $200 to $600 a day.

For simpler cases, such as a leaky roof, check your local BBB. Or call the BBB's toll-free AUTO LINE (800 955-5100) for car disputes. The bureau usually tries to mediate before appointing an arbitrator. BBB uses volunteers, whose services are free.

BIG BUSINESS. Some 2,000 companies do a big business in settling disputes. They use lawyers or retired judges as referees, typically charging each side $50 to $150 an hour. You can also find local attorneys or companies who practice ADR by looking under "arbitration" or "mediation" in the yellow pages. Or you can get a directory of ADR organizations by writing or calling the American Bar Association Standing Committee on Dispute Resolution, 1800 M St. N. W., Suite 290 N, Washington, D. C. 20036 (202 331-2258). The booklet costs $38.99 with shipping. The ABA will send the pages for your city free of charge.

Hiring a lawyer to represent you may defeat one of the main draws of ADR: the relatively low cost. But it may be advisable if there is a sizable sum of money at stake, if the case is complex, or if the other side shows up with legal counsel.


AMERICAN ARBITRATION ASSN. 212 484-4000 New York-based nonprofit has offices in most major cities. Handles personal injury, real estate, home construction/remodeling, securities, and other disputes

JUDICATE 800 631-9900 Philadelphia firm handles cases in all 50 states. Emphasizes mediation; handles many insurance cases


Orange, Calif., firm's cases include construction, banking, wrongful termination disputes. Offices in California, Dallas, Houston, Seattle; more planned

U.S. ARBITRATION & MEDIATION 800 933-6348 Specialties include insurance, medical, auto disputes. Seattle-based firm has 42 U. S. offices


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