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What are the pros and cons of executive arbitration clauses?

| Oct 19, 2019 | Employment Contracts |

Executive employment contracts can be simple single-page documents or complex agreements with many different clauses. As executives in Michigan and other states become savvy about the agreements they sign, clauses designed to protect all parties are becoming commonplace.

Arbitration clauses, for example, appear more frequently in employment contracts than ever before, but are these clauses as good for the employee as they are for the employer? The best way to answer such a question is to have a legal professional look over the document before signing.

In the meantime, it can also help to look at a few of the advantages and disadvantages of arbitration clauses.

  • Pro: Arbitrating disputes typically takes much less time than litigation
  • Con: It is extremely difficult to appeal an arbitration decision
  • Pro: Unlike litigation, arbitration gives you better privacy protections
  • Con: In arbitration, it is usually more difficult for the proceedings to remain orderly and controlled
  • Pro: The arbitrator(s) tend to focus on the merits of the case at hand instead of procedural issues
  • Con: There exists a possibility that the arbitrator(s) may not be as impartial as a judge would be
  • Pro: In many cases, arbitration costs less than litigation
  • Con: With arbitration, you risk giving up the safeguards present in a more formal courtroom setting

The main lesson here is that arbitration can be effective, affordable and fair. However, it is vital to get assistance from an attorney familiar with the many complicated clauses that often appear in executive employment contracts of today. With experienced legal representation, you have a better chance of acquiring a fair and favorable outcome.

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