Major companies, including some in tech, have long enjoyed an arbitration system that has made it difficult and costly for individuals to mount successful cases against them. But lawyers and startups, according to The New York Times, have found a new way to go after the biggest fish: sheer volume.
- Why arbitration worked for big companies: Arbitration is often a costly, drawn-out process. And the few plaintiffs who can afford to bring complaints against companies usually don’t make enough money for the fight to be worthwhile.
- But there was demand for arbitration: Although only 30 people have brought litigation against the telecoms industry the last few years, Teel Lidow, a lawyer and entrepreneur, quickly found at least 1,000 people who wanted to take action.
Enter the startup solution
Lidow started a service, FairShake, that brings people together who want to start litigation against massive companies and then files their claims at once. Call it mass arbitration. With hundreds or thousands of similar claims brought by one attorney, the legal cost is not as high for an individual.
- Lidow and another firm, Keller Lenkner, have found companies can’t deal with the volume. DoorDash had 2,250 claims served against it in one day last summer. The food delivery company wrote in a federal court filing that it was “scared to death.”
DoorDash has been trying to get out of arbitration, the long preferred destination for major companies. FairShake and Keller Lenkner could upend one of the most routine business litigation traditions of the last several decades.