Arbitration & Litigation Process

Arbitration: How It Works and How It Protects Your Privacy

Retain Your Privacy

Compared with resolving a dispute in court, one of the most appealing features of the arbitration or mediation process is its private nature. 

When a complaint is filed in court, its contents and all subsequent filings are immediately a matter of public record. The complaint itself becomes a public document, available to all prying eyes. In arbitration, however, the Statement of Claim (similar to a court complaint) is not a public document. There is no central courthouse or office where an interested person could go and read the Statement of Claim. If someone visited the Financial Industry Regulatory Authority’s (FINRA) offices to review a Statement of Claim, they would be turned away. 

Secondly, while cases litigated in court are characterized by time-consuming and expensive discovery, arbitrations generally do not involve the same degree of discovery. In fact, depositions rarely occur in arbitration. Good thing — when you are deposed, you are required to sit with a court reporter and answer hours, or even days, of questions from the opposing lawyer. The process is intrusive, unpleasant and stressful for you. And because there will likely be a written transcript of the deposition, many eyes may have the opportunity to read it. Not so with most arbitration cases.

Thirdly, unless the arbitration proceeds to a final hearing, both the Statement of Claim and any settlement agreement will be confidential. Typically, only the involved parties and regulators will have knowledge of the amount of any settlement. The settlement amount could potentially become part of a public regulatory record, but this rarely occurs. Even if it did, neither details of a Statement of Claim nor the underlying facts would become public.


Evaluating the Claim

Before I accept a case, I evaluate its strengths and weaknesses. I will meet with you in-person, regardless of your location, because I believe it’s important to determine how well we can work together.

I start by asking you for all documents that I believe are relevant to your case. Depending on the facts, I may need to speak with other people who have knowledge of your case, including your accountant. Once I have met with you and any key witnesses, as well as reviewed your documents, I will be able to tell you whether I will accept your case. With more than 27 years of experience representing brokers and investors, I am able to accurately assess whether we are likely to succeed.

If I accept your case, we will discuss a fee agreement.  Generally, you will not be charged for time I spend reviewing your case to determine whether I will accept it on a contingency fee basis. All fee agreements, whether contingency or otherwise, will be in writing. If I believe in the strength of your case, I am likely to offer to advance the expenses necessary to prosecute your case.


 Choosing the Forum

Assuming that your contract with your financial advisor requires that your claims be resolved in arbitration administered by FINRA, that is where we will file.  Your arbitration will likely take place at the FINRA location closest to your home. If you have not signed an arbitration agreement, then we will decide whether your interests will be better served in court or in arbitration.


 Early Settlement Negotiations

Occasionally, securities firms engage in settlement negotiations before beginning arbitration. Some investors achieve fair settlements, or compromises, early in the pursuit of their claims. However, this is the exception, not the rule. Settlements can occur through direct negotiation between attorneys or through formal mediation.  Mediations can occur at any time during the process and are usually voluntary and non-binding. The parties simply agree on a specific mediator, whose role is to help the parties achieve a fair and reasonable settlement. 


Filing the Claim

If an early resolution is not possible, and you are contractually obligated to arbitrate, we will work closely together to prepare a Statement of Claim. Once the Statement of Claim is finalized, I will file it with FINRA. The filing is private and not posted in public records.


Preparing for the Arbitration Hearing

Once claims are filed, final arbitration hearings will likely occur in about one year. Between the time of filing and the final arbitration hearing, we will devote a substantial effort toward preparation. I will meet with you and other witnesses as often as necessary to prepare. A limited amount of discovery and motion practice will occur, typically limited to the exchange of documents. The likelihood of any deposition occurring is very remote.

Pursuant to FINRA Rule 12510:

Depositions are strongly discouraged in arbitration. Upon motion of a party, the panel may permit depositions, but only under very limited circumstances, including:

•  To preserve the testimony of ill or dying witnesses;

•  To accommodate essential witnesses who are unable or unwilling to travel long distances     for a hearing and may not otherwise be required to participate in the hearing;

•  To expedite large or complex cases; and

•  If the panel determines that extraordinary circumstances exist.

 Because you are unlikely to be deposed, your privacy can be protected.


Communicating With Me

At all stages of the process, I make every effort to be accessible. You are welcome to call me on my cell phone whenever necessary. If I am unavailable when you call, I will call you back as quickly as possible. We will meet in-person as often as needed.


Settlement Negotiations

Settlement negotiations can occur at any stage in the process. As noted above, settlements can occur through direct negotiation between attorneys, or as the product of a formal mediation. As noted above, mediations are confidential. 


Final Arbitration Hearing

If the parties are unable to reach a mutually agreeable settlement, a final arbitration hearing might occur. There is no predetermined length for an arbitration hearing – that will depend on the facts and circumstances of your case.  At the conclusion of the arbitration hearing, the arbitrators will render a final decision by which, with limited exceptions, the parties are bound to abide.