Paul Bland

Lexis Willing to Abandon Unfair Arbitration Clause

It’s no secret that Westlaw and 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.

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Posted at 5:55 PM, Jan 31, 2008 in Arbitration
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