As the frequency and size of damage awards have grown, bankers nationwide have looked for ways to resolve their disputes without going to court. Plaintiffs too have been frustrated by the cost and delay associated with complex litigation. Particularly in the area of lender liability, arbitration can reduce legal costs, ensure privacy, and deliver faster and more predictable decisions than the court system.
This article discusses the pros and cons of alternative dispute resolution (ADR) in the financial services field, noting some practical and legal aspects that should be taken into account when deciding what resolution process to use. The author suggests some considerations in drafting arbitration or mediation clauses and concludes that use of ADR in the banking field is likely to grow.