Powers of Attorney Can Be Used to Avoid Arbitration

A general power of attorney is an important document for all of us to have. It is also important to have a clause in it prohibiting arbitration agreements. A general power of attorney is very broad and provides extensive powers to the person or organization you appoint as your agent. These powers usually include: handling banking transactions, exercising stock rights , handling U.S. ,securities, buying and selling property, entering safety deposit boxes, pursuing and settling claims, buying, managing or selling real estate and entering into contracts.

The list can be endless- basically it gives the ‘attorney in fact’ or the ‘agent’ the power to act on your behalf. A general power of attorney is usually used to allow your agent to handle all of your affairs during a period of time when you are unable to do so. For example, when you are traveling out of the state or country or when you are physically or mentally unable to handle your affairs. A general power of attorney is frequently included as part of an estate plan to make sure that you have covered the possibility that you might need someone to handle your financial affairs if you are unable to do so.

One clause that I always recommend to my clients is that they put a clause in the power of attorney that prohibits the agent from entering into any agreement which has an arbitration clause in it. Arbitration is generally not good for the consumer. If a business has put an arbitration clause in a printed form agreement, it has been drafted to protect the business not you. In my work representing residents in nursing homes I have found arbitration agreements forged by the facility, signed by person who did not have a power of attorney and are demented. They are not capable of understand what the agreement means but there is their signature on a 3 page contract with legal jargon, small print and waivers of jury trials.

Here is the clause I recommend: NO POWER TO AGREE TO BINDING ARBITRATION. Although I have given my attorney-in-fact this general and durable power of attorney, I specifically withhold from my attorney-in-fact the power to agree or consent to binding arbitration, or to agree to any other process that would preclude the right to have a jury decide any issue in controversy concerning my person or my property; this does not, however, preclude non-binding alternative dispute resolution processes such as mediation.

If you do not have a power of attorney, I would urge you to see an attorney and get one soon. Ask that attorney to put the clause prohibiting the signing of arbitration in the power of attorney.