Page 5 - Alternative Dispute Resolution

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Alternative Dispute Resolution | MONDAY, NOVEMBER 17, 2014 | S5

and design, is a conidential process, and exchange” of certain “presumptively dis- mediation takes place too late (i.e., after to the other, without expressing his or her

parties (and mediators) generally cannot be coverable” documents within 60 days from those costs have already been incurred), own views as to the relative strengths and
compelled to disclose what takes place dur- the date that a respondent’s answer is due. then it may be more dificult to resolve a weaknesses of that information.
ing a mediation session. As such, the parties In addition, parties can serve supplemental matter at mediation.
If the parties’ mediation is being admin-
should consider whether there are regulatory requests for documents and information on The selection of a mediator is an important istered by FINRA, then FINRA will provide
or other “collateral” consequences that might opposing parties, and obtain subpoenas or part of this process, and must be the subject lists of “authorized” mediators. These lists
weigh against going to a inal hearing, where orders of production seeking records from of an agreement by the parties. In general, often include very capable and effective
a “record” will be made by witnesses testi- third parties (e.g., other inancial service the parties should require that a mediator mediators, but also may include mediators
fying under oath, and an arbitration panel irms with which a claimant may have done be experienced in the subject matter area who have relatively little experience in the
may make speciic indings as to the parties’ business). Depending on the complexity of to be covered, and that he or she be “evalu- securities area. Parties are not required to

conduct in a publicly available arbitration the parties’ claims and defenses, it may be
ative” in his or her approach to mediation.
use mediators from the FINRA list, and can
award. If, for example, the conduct at issue choose from a number of very qualified,
might (1) be the basis for a regulatory refer- experienced, evaluative—and hence, suc-
ral by an arbitrator to FINRA’s disciplinary cessful—securities mediators across the
arm or (2) disclose private or embarrassing country, who can be readily identiied by Because of inherent uncertainties and costs associated with secu-
aspects of a claimant’s personal or inancial asking experienced securities arbitration rities arbitration, many participants are turning to voluntary, non-
life, then a settled resolution, undertaken in counsel for recommendations.
a conidential mediation session, becomes binding mediation, before a qualiied, “neutral” mediator, in an efort

more attractive.
Attendance and Statements
to regain some control over the dispute resolution process and the
The question of “when” to mediate a partic- outcome of their cases.
ular case also must be considered. Given that After the parties have agreed on whether
one of the principal advantages of mediation and when to mediate, and mutually have
is a reduction of attorneys’ fees and costs, it selected their mediator, they must then
may seem that “the sooner the better” always turn their respective attention to the pro- necessary to substantially complete these That “evaluation” of the parties’ claims and
applies. That, however, is not always the case. cess of mediation. One threshold question discovery efforts before the parties really defenses by an experienced mediator—who
There are some matters that are relatively is who should attend the mediation. In gen- know enough about the case to effectively may also sit as an arbitrator in other cases,
simple enough to proceed to mediation at eral, respondents’ counsel will require that engage in mediation. That said, mediation and have a solid basis from which to advise

a very early stage (in some instances, even the claimants appear in person. Similarly, generally should take place with enough the parties as to how he or she might rule
before an actual arbitration claim is iled). claimants’ counsel will require that a repre- time left before the inal hearing so that the in a given case—is a big part of what the
However, in many cases, it will be dificult for sentative of the broker-dealer respondent parties can defer some of the “heavy lifting” parties are “buying” by agreeing to mediate.
the parties and their counsel to effectively with settlement authority be present. In addi- (and consequent fees and costs) associated Indeed, there are few things more frustrating
evaluate their claims and defenses without tion, claimants’ counsel may request that the with inal preparations for a hearing until than showing up to a mediation and deal-
irst having engaged in some material amount individual inancial advisor alleged to have after they determine whether the case can ing with a mediator who is purely “facilita-
of discovery. For example, FINRA Rule 12506 engaged in the conduct at issue be present. be resolved. Those cost savings can be an tive”—meaning that all he or she will do is
requires the parties to make a “voluntary
As noted above, there can be a » important element in mediation, and if the
convey the information provided by one side
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