Mandatory arbitration clauses have become an accepted part of many contracts, when we buy cars, open bank accounts and when we apply for jobs. The mandatory arbitration clauses block employees and consumers from their day in court. But, those clauses are increasingly under attack, according to a recent story in the San Antonio Express News. Arbitration clauses are criticized by the #metoo movement because they are used to hide sexual harassment.

They were also used by Wells Fargo to shield complaints by customers when the bank abused customer data and opened bogus accounts. One state, California, passed a law preventing financial services companies from using arbitration clauses in cases of fraud.

Some companies are re-thinking the use of mandatory arbitration clauses altogether. Microsoft has dropped mandatory arbitration clauses in cases of sexual harassment. Some lawyers here in Texas are advising their corporate clients that mandatory arbitration clauses are not wise. One Dallas lawyer told about a client who lost an arbitration with a supplier. The company then had no avenue for appeal. The losing company was then hit with an arbitration bill of $200,000. Yes, in arbitration, the loser generally pays the expenses of the arbitration. AAA has rules for employment arbitrations in which the employee will not pay the expenses even if s/he loses. But, in most arbitrations, the loser pays the expenses of the arbitration. We tend to think of a lawsuit being free, more or less. The loser in a lawsuit will not be expected to pay the salary of the judge, the court reporter, the court clerk and the bailiff. The losing party will not have to pay for the use of the court room. But, in most arbitrations, someone has to pay those expenses.

One Houston lawyer who advises small automobile dealerships advises his clients to avoid arbitration clauses. He says in the judicial process, you know what to expect. With an arbitrator, you never know quite what to expect. See San Antonio Express News report.