Arbritration » Kenneth Strongman, Esq.

FINRA’s Initial Prehearing Conference

May 142013

Prehearing Conference

To maximize the efficient administration of a case by the panel, FINRA schedules an Initial Prehearing Conference (IPHC). The IPHC will normally be held by telephone.

FINRA will notify the parties and arbitrators of the date and time of the IPHC at least 20-days prior to the phone conference. At the conference, the panel will schedule evidentiary hearing dates; set discovery, briefing, and motions deadlines; and, address other preliminary matters.

Proper preparation requires that arbitrators review all filed claims, answers, specific motions and responsive papers prior to the conference. Arbitrators will also review the Codes of Arbitration Procedure and FINRA procedural guidelines before the conference.

Sometimes the parties may wish to opt out of the conference. This is permitted if they jointly provide the FINRA Director with the following information:

A statement that the parties accept the arbitration panel;
A statement concerning whether any other prehearing conferences will be held and if so, for each prehearing conference, a minimum of four mutually agreeable dates and times, and whether the chairperson or the full panel will preside;
A minimum of four sets of mutually agreeable regular hearing dates;
A discovery schedule;
A list of all anticipated motions, with filing, response and reply due dates; and
A determination of whether briefs will be submitted and if so, the due dates for the briefs and any reply briefs.

About the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator. He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment. He is also a Mediator and Arbitrator for FINRA.

Arbitration, then Mediation, a way to blend them both.

Arbritration, Mediation Comments Off

May 012013

Many view mediation as a one-way street. You conduct a mediation to settle a law suite. Nothing could be further from the truth. There are many ways to blend mediation with the legal system or blending it with other alternative dispute resolution processes to reduce or resolve conflict.

One way is to blend arbitration and mediation so that the participants have the benefits of both arbitration and mediation.

The process begins with binding arbitration before a single arbitrator. At the conclusion of the arbitration session, the arbitrator immediately issues a binding decision and proceeds to seal it so neither the parties nor council know the result.

Immediately following the arbitration, mediation is conducted by a different neutral. This mediator, like the parties, also does not know the content of the sealed arbitration decision. If the mediation ends in a settlement, the arbitration decision is destroyed and the parties never learn how it turned out. However, if the mediation does not result in a settlement, the arbitration award is unsealed and disclosed, at which time it becomes final and binding.

This process of sealing the decision and potentially destroying the arbitration decision, if a settlement is reached, is negotiated between the parties and the arbitrator. It is accomplished in the arbitration service agreement. The length of time allowed for mediation must also be explicitly outlined in the agreement to arbitrate.

There are significant advantages to this arbitration-mediation model. First, it brings prompt finality to the litigation process, either though a binding arbitration award, or else through a mediated settlement.

The procedure also diminishes the overall cost of litigation. The actual cost of presenting a case in arbitration is significantly lower that a one to two week trial, stipulations between the parties can further streamline and simplify the issues. Medical expert opinion can be presented through medical reports, declarations and records.

There are other benefits beyond cost savings. The arbitration-mediation process encourages a more cooperative, less adversarial framework for resolving cases. The protocol allows parties and key claims personnel, such as the adjuster in charge of the file, to see how key witnesses present themselves at the binding arbitration prior to engaging in mediated settlement discussions. It also solves the case at a much earlier date that the potential four-year wait until trial.

I want to resolve the dispute, but the other party’s demands are unreasonable. What should I do?

Arbritration, FAQ, Mediation Comments Off

Apr 152013

Don’t let yourself get stuck refusing to make what you believe is a reasonable settlement offer or demand based on your opinion that the opposing party has made an unreasonable one! Instead, attempt to resolve disputes based on your reasonable evaluation. It is my job as mediator to assess, based on all the information presented, “the realm of the reasonable” in the context of potential resolution of each specific dispute and to bring the parties to that range.

Challenging the Arbitrator: Challenge for Cause

Arbritration Comments Off

Apr 092013

In a FINRA Arbitration, parties are permitted to challenge the appointment of an arbitrator to their case. Parties may challenge the arbitrator directly by filing a Motion to Recuse. Alternatively, a party’s challenge may be made directly to FINRA in the form of a Challenge for Cause or by filing a Director’s Authority to Remove request.

According to FINRA rules, a party may file a challenge for cause to remove an arbitrator from the case before the first hearing session begins. Once a party files a challenge for cause, all opposing parties are entitled to submit a response. FINRA staff, on behalf of the Director of Arbitration, will review the challenge for cause and responses filed, if any, to determine whether to remove the arbitrator.

The rule provides that a challenge for cause to remove an arbitrator will be granted where it is reasonable to infer, based on information known at the time of the request, that the arbitrator is biased, lacks impartiality or has a direct or indirect interest in the outcome of the arbitration. The interest or bias must be direct, definite and capable of reasonable demonstration, rather than remote or speculative. Close questions regarding challenges to an arbitrator by a customer will be resolved in favor of the customer.

I’ve been in mediation and there was so much conflict that nothing got done. Wouldn’t I be better off just going to court?

Arbritration, FAQ, Mediation Comments Off

Mar 182013

This is an option, but you may not resolve your dispute. Mediation is not about coming to the table as friends to avoid conflict and confrontation, as many professionals would have you believe. It’s about resolving disputes. Inherent in the concept of “dispute” is conflict and without confrontation of that conflict head-on, there may be settlement, but there may be no true resolution.

In some disputes, settlement itself may be enough, but in most, in addition to the economic or performance related issues, there is an undercurrent of emotion, and both sides often perceive themselves as a “victim” in the dispute. Those complaining of a wrong see themselves as the aggrieved party. Those responding, because they often believe they are involved in the dispute needlessly, feel abused by the claimant and the dispute process, particularly when facing the burdens of litigation.

You may wish to avoid confrontation at the outset but may find, as the process continues, that you want to express yourself to other parties. Make sure you talk to me as your mediator to allow this flexibility. In a truly meaningful mediation, in addition to providing valuable information to you about the dispute, I will guide you safely through confrontation of the conflict to resolution.

Remember that Mediation is Conflict at its best.

Challenging the Arbitrator: Motions to Recuse

Arbritration Comments Off

Mar 052013

There needs to be an absolute appearance of being impartial.

In the event that all parties ask an arbitrator to recuse from the panel, the arbitrator should honor the request and recuse. Recusal under these circumstances is required under the Code of Ethics.

If fewer than all parties request that an arbitrator recuse themselves from the panel, an arbitrator should do so unless, after carefully considering the matter, the arbitrator determines that the reason for the challenge is not substantial, and the arbitrator can nevertheless act and decide the case impartially and fairly.

Arbitrators will not feel offended if they are asked to recuse themselves from a case since such requests are generally not based on the ability or competence of an arbitrator. In some instances, an arbitrator may voluntarily choose to withdraw from a case. Even if the case has already proceeded, it may be less expensive for the parties if an arbitrator steps down in the middle of the proceeding than for the parties to complete the proceeding and file a motion to vacate the award. However, whether arbitrators choose to step down should be balanced by the significance of the disclosure, the disclosed relationships and the prejudice to the parties.

The Role of the Arbitrator: Duty to Disclose

Arbritration, Ethics Comments Off

Feb 052013

There is a duty to disclose everything.

Arbitrators must be impartial in both appearance and in fact. Therefore, arbitrators submit detailed biographical information at the time they join FINRA’s arbitrator roster. The information collected from the application is compiled to create an Arbitrator Disclosure Report (Disclosure Report). During the arbitrator selection process, the individual parties are given the opportunity to review the Disclosure Report of each proposed arbitrator.

The Disclosure Report lists previous FINRA awards rendered by the arbitrator, and also lists the current cases to which the arbitrator is assigned.

To ensure that the arbitrators’ Disclosure Reports are accurate and up-to-date, FINRA sends the arbitrators their Disclosure Report each time the arbitrator is appointed to a case. Arbitrators will update the report at that time. The arbitrator’s duty to disclose is continuous and imperative. Disclosure includes any relationship, experience and background information that may affect—or even appear to affect—the arbitrator’s ability to be impartial and the parties’ belief that the arbitrator will be able to render a fair decision.

When making disclosures, arbitrators consider all aspects of their professional and personal lives and disclose all ties between the arbitrator, the parties and the matter in dispute, no matter how remote they may seem. If there is a question about whether to make a disclosure then they are required to make it.

FINRA requires arbitrators to disclose any direct or indirect financial or personal interest in the outcome of the arbitration, as well as any existing or past, direct or indirect, financial, business, professional, family, social or other relationships with any of the parties, representatives, witnesses or co-panelists.

Arbitrators are also required to continually make reasonable efforts to inform themselves of relationships and interests including changes in their or their immediate family member’s employment, job functions or clients.

Here is the article that was just published in the Contra Costa Lawyer

Arbritration, Conflict Resolution, Mediation Comments Off

Jan 222013

Here is the article that was just published in the Contra Costa Lawyer, Volume 26, Number 1- January 2013. I am starting an exciting years as Chair of the ADR Section of the Contra Costa Bar Association.

Meet Your Section Leaders – Alternative Dispute Resolution

How has section membership benefited your practice?

I joined the ADR Section so that I could be on the cutting edge of the way we resolve disputes in our society, including the way we litigate in California. I did it so that my corporate clients would always benefit from the earliest thoughts and processes available and that my mediation practice would correspondingly expand and be the best it could be.

On my own, I would have had zero influence on the profession. As part of the ADR section, we collectively help direct the future of Alternative Dispute Resolution processes in Contra Costa and the State of California. This has allowed my practice to be in the forefront of ADR. Rarely will my general counsel clients be criticized for selecting me as a mediator. They are able to confidently tell their parties that they tried everything to avoid litigating and incurring additional legal fees and their company bosses can then assure their directors and shareholders that they have retained the best.

Besides being on the forefront of ADR, we are able to advise Courts and members of the Bar as to the best practices ADR has to offer. Currently, we are actively helping the Courts develop rules, policies and procedures to avoid having justice grind to a halt in our current Court budget crisis. I am also able to modify my practice to prepare for the coming changes in rules, policies and procedures.

At every one of our programs, be it a formal presentation or informal roundtable, I learn something new that will benefit my mediation practice in concrete ways. Every one of our events is designed to benefit the ADR practitioner – whether it be a roundtable on mediation practice marketing, or our yearly specialized class on How to Mediate with Self Represented Litigants.

Why should someone join the ADR Section?

By joining the section, ADR practitioners and those who participate in ADR as an advocate for their clients will benefit themselves and their clients in knowing the direction of dispute resolution in Contra Costa and the way litigation will occur in California in the continuing Court budget crisis

Ethical Obligations Regarding Information Security

Arbritration, Ethics Comments Off

Jan 082013

Focus on Security of Information

Documents and information in an arbitration case file are confidential. Arbitrators have an ethical duty to keep confidential all information obtained in connection with an arbitration or mediation. Information that needs to be protected includes, but is not limited to:

Social Security numbers;
Individual taxpayer identification numbers;
Driver’s license numbers;
Party and arbitrator addresses;
Brokerage, bank or other financial account numbers;
Criminal history information;
Fingerprint cards;
Expunged records;
Attorney-client communications; and
Medical records.

Arbitrators must exercise caution when using, transporting, storing and ultimately disposing of case materials. These actions must be handled in a manner that preserves the confidentiality of the information.

Ethical Reasons Not to Accept Appointment as an Arbitrator

Arbritration, Ethics Comments Off

Dec 042012

Ethical Decision Making

It is important to know when to say no. If an arbitrator has any doubt about whether they can be fair or impartial, the arbitrator should decline the appointment. For example, an arbitrator should refuse an appointment if the arbitrator has firmly held beliefs about the issue in dispute or about a named party to the dispute.

A major goal of arbitration is the prompt resolution of disputes. Thus, in accordance with Canon I (b)(4) of the Code of Ethics, an arbitrator should accept appointment only if fully satisfied: “that [they] can be available to commence the arbitration in accordance with the requirements of the proceeding and thereafter to devote the time and attention to its completion that the parties are reasonably entitled to expect.”

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