Lexis Willing to Abandon Unfair Arbitration Clause

by Paul Bland

It’s no secret that Westlaw an Lexis are in a fierce competitive battle for customers and marketshare. In light of this situation, I’ve always been curious that Lexis’s standard contract with law firms contains a long set of provisions that require the arbitration of any disputes between Lexis and its customers.

It’s not enough that Lexis’s contract provides (in a weird irony) that its customers must abandon a number of basic legal rights in order to get access to its legal research service, but it’s also a particularly unfair arbitration clause:

Lexis’s arbitration clause includes a gag order on its customers requiring tem to keep all arbitrations confidential. A number of courts have struck down similar secrecy provisions in consumer arbitration clauses as unconscionable.

Lexis’s arbitration clause requires any customer with a claim against it to arbitrate the claim in the headquarters city of Lexis, which is apparently Dayton, Ohio. What a deal if the customer lives in Seattle or Maine! A number of courts have struck down similar provisions requiring consumers to travel long distances to arbitrate claims.

By contrast, if Lexis wants to sue a customer over payment, the arbitration will take place in Dayton, Ohio. Not very even-handed: "Heads, we arbitrate YOUR claim where we live, even if you life far away. Tails, we arbitrate OUR claim where we life, even if you live far away."

Lexis’s arbitration clause has a "Loser Pays" provision – if a customer challenges Lexis’s arbitration clause, they have to pay Lexis’s attorneys’ fees.

The provision also limits the remedies of Lexis’s customers, and puts potentially lefty costs of arbitration on the customer.

In short, it’s one of the most unfair and consumer-unfriendly arbitration clauses that I’ve seen. (And that’s saying a lot.)

GOOD NEWS, though! One prominent consumer lawyer, Mark Steinbach of D.C.’s O’Toole, Rothwell, Nassau & Steinbach refused to meekly cough up his legal rights. When a Lexis sales representative contracted him, Mark wrote back an e-mail dated January 24, 2008 stating, among other things, "I’m sorry, but we will not sign a contract that has this arbitration clause. If Lexis is not willing to strike that clause from the contract, there is no pint in your giving us a proposal." This was not a ploy – it’s obvious that Mark, a board member of the National Association of Consumer Advocates and a tireless defender of consumer rights, was not going to knuckle under and abandon his rights in order to get Lexis’s service.

The very next day, Lexis employee named John M. Folger wrote back saying "I have secured approval to strike the Arbitration clause from the Lexis agreement. With that obstacle removed, what would the best way be to proceed with out discussions?"

If this is not an anomaly, apparently Lexis does not insist that its customers check their basic legal rights at the door if they want to do business with it. Instead, Lexis apparently only strips away the legal rights of its customers who won’t stand up for themselves.

So here’s the bottom line: if you’re considering getting Lexis’s service, and you don’t like corporations stripping you of your rights if you were to someday have a dispute, maybe you should take a stand. It worked for Mark Steinbach.

Comments

[HobsonsChoice]

While good news that such clauses can be escaped by those with a legal education and financial clout, "negotiating" such extraneous clauses can have the perverse effect of legitimizing them. The next consumer subjected to such clauses (at Whataburger, perhaps?) is going to have that much harder a time arguing such clauses are non-negotiable or non-negotiated. This leads everyone to a prisoners' choice, with the result that such clauses will be legitimized, but only impact the uninformed/underpowered. Better to continue efforts to relegate them to the legal trash heap of 'unconscionability' or 'lack of agreement.'

[Paul Bland]

I think HobsonsChoice makes a sophisticated point, and one which I admit I had not considered. I believe that at the end of the day, though, these kinds of clauses are effectively legitimized by courts already, and that little damage can be done by people fighting back against them. I regularly urge all kinds of consumers (including lawyers, when they are being consumers) not to silently absorb these insults to their rights, but to push back where possible. I agree that it's not possible nearly often enough, but in this case it apparently is at least some times (I've already heard from another lawyer with an experience similar to Mark Steinbach's), and while I think HC makes a thoughtful point, I personally conclude that not taking action for fear of legitimizing what's already out there is not the best course.

[James Fishman]

Way to go Mark! Just for kicks, don't pay your bill and see if they send you an arb.notice. then sue them for breach of contract.

[Dale Pittman]

I am very proud of Mark. I got an arbitration clause free Lexis account in 1997 at a VA Trial Lawyers Assn convention. A few years ago I was going to modify my contract to add some new features that would have made my plan better and more economical. When the new contract came by fax, I marked through the arbitration clause that had been added, signed the contract and faxed it back. Lexis would not accept it, even after the rep. took my request to strike the arbitration clause "up the ladder." So I did not upgrade.

[Anonopinion]

Well said - but here's something we should remember. These aren't the only options when it comes to finding vendors, particularly with website and blog options for attorneys. The "big guys" aren't even good options, IMO. The saying goes, "no one ever got fired for hiring IBM" - I think there is an element of that here.

IMHO, we don't have to chose between the lesser of two evils. You don't need do business with the establishment simply because everyone else is - take the time to seek out alternatives, check references, and work with proven vendors, even if smaller and less well known. I think you will see fairer terms, better value, and better service more often than not. Even if you are getting the same services for the same money, you are fostering competition and hopefully forcing the effective monopolies to play nicer to retain market share. I say this because I have watched firms get taken time and time again, simply because they didn't know any better.

Regarding arbitration clauses - come on guys, you all should know better. Lawyers, don't forget you are business people - as my real estate friends like to say, "EVERYthing is negotiable in a deal."

Good luck!