Attorney Nancy Abell has spent years defending Los Angeles businesses against employment claims such as sexual harassment and unjust termination.

But sometimes, she doesn't take her cases to court and that suits her just fine. Instead, these cases can be resolved within days in a low-key office with a judge-arbitrator presiding.

"You get judges who have one case (at a time) to do. They are completely immersed in it," said Abell, a partner with Paul Hastings Janofsky & Walker LLP and head of the firm's employment law department. "It's more businesslike. It's more rational. It's more thorough."

That's not the way consumer attorney Cliff Palefsky looks at it.

He's been watching a rise in the number of business disputes being resolved by arbitration, mediation and other forms of alternative dispute resolution. For many jobs, agreeing in advance to mandatory arbitration is often a condition of employment.

"Alternative dispute resolution, when voluntary, can work for both sides," Palefsky said. "When it is mandatory, you eliminate the checks and balances that make it fair, and it's an invitation to abuse."

Consumer attorneys, employment rights activists and others have drummed up a backlash against the process, saying it's often tilted in favor of businesses. Most consumers agree to it when they get a credit card (even if they don't realize it), and it's often required when consumers have complaints about their stockbroker.

The complaints have prompted the American Arbitration Association and the California Supreme Court (through its Judicial Council and a court ruling) to institute reforms. New ethics standards for arbitrators, for instance, have been promulgated by the Judicial Council, though Palefsky and others say they do not go far enough.

Startling growth

While both sides agree that the use of alternative dispute resolution is accelerating, it's unclear how many disputes might otherwise have ended up in courts. Part of the problem is that not all mediation and arbitration is court ordered. Moreover, many occur in private, without oversight by any governing body.

Still, the American Arbitration Association's caseload of arbitrations has grown from 76,144 in 1997 to 150,009 in 2002. "It's almost part of (the) corporate culture," said Roy Arbeit, senior vice president of marketing for the New York-based association.

The rules of arbitration make it nearly impossible to appeal any decision, a key attraction since that guarantees swift resolution to cases. In fact, the California Supreme Court has ruled that an arbitrator's decision cannot be appealed even if it violated clear legal rules and causes substantial harm to one of the parties. But the prospect appears to worry few businesses when the drawbacks of arbitration are weighted against wild-card jury awards.

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