adr » 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.

Teaching youth how to resolve conflicts.

Conflict Resolution, Mediation, Speaking & Training 1 Response »

May 072013

I’m privileged to be an adult staff member for a National Youth Leadership Training (NYLT) course. It is a very satisfying experience and a lot of fun. One key topic on the course is how to resolve conflicts as a leader. This blog is adapted from this course.

Leading the youth through this necessary topic allows me to bring my professional expertise in settling disputes to the more practical issues of conflict resolution. The course can be applied to any situation as a young person or adult.

The learning objectives of the conflict resolution course are:

Know and articulate several ways that good leadership can minimize conflict.
Understand how the acronym E.A.R. can be used as a tool for resolving conflicts (Express, Address, Resolve).
Use several communications skills important for resolving conflicts
Know when, as a leader, the resolution of a conflict is beyond your expertise and how to seek help in resolving the conflict.

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.

Task #16: At what point did you first have any realization of betrayal, bad faith, or loss of confidence?

Mediation, Preliminary Tasks for a Mediation Comments Off

Apr 222013

The resolution of a dispute does not just occur on the day of the mediation. Each participant to mediation needs to prepare their own strategy for negotiation in the settlement. Based on my experience as a mediator, these are a collection of tasks each participant needs to complete and to discuss with their council and the mediator before the mediation.

In the previous task, you spent time determining the trust and goodwill that supported your original agreements. Now we need to look at the point when you had your first realization of betrayal, bad faith, or loss of confidence. This is generally one specific point of time and place. It might have been building in the back of your mind for some time, but there is usually a point that you change your mind about the relationship with the other party. It can be as simple as one phone call not returned, or a dirty look. It is often after miss communication between the parties.

Knowing when this missed communication occurred will be helpful to you in the mediation. In one of my mediations, it was obviously a missed communication between the parties. Both parties knew what the problem was and when it occurred. With that knowledge they were able to correct the problem, restore trust and goodwill between themselves and quickly settle the dispute.

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.

Task #15: How did you evaluate the trust and goodwill that supported your original agreements?

Mediation, Preliminary Tasks for a Mediation Comments Off

Mar 252013

Particularly in business disputes whether they are real estate, construction defect, general business or even intellectual property issues, there would have been a meeting of the minds before the deal was done. That is the essence of a contract. To get to meeting of the minds you would have had to evaluate the other party and their proposal. More specifically you have to decide if you can trust them to carry out their side of the bargain. With this task you need to go back and look at the trust and good will that was developed when you made the contract. What made you trust them in the first place? What did they say and or do to generate your trust in them?

This is important because you may want an ongoing relationship with them after this dispute is resolved. On the other hand you may not want to have a business relationship with them but out of necessity be forced to have a business relationship.

By evaluating the good will you will be able to see what was good in the original deal. It will also help you evaluate the eventual settlement agreement that you and they will be developing within the mediation.

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.

Starlings v Blueberries – Last Friday’s ABA Representation in Mediation Competition

General, Mediation Comments Off

Feb 272013

Last Friday I participated in the ABA Representation in Mediation Competition. I was one of the judges of the competition. It was a two day event held at Berkeley Law in Boalt Hall at the University of California, Berkeley Campus.

As Alternative Dispute Resolution (ADR) becomes more integrated in courts and pre-trial procedure, it has been my experience that attorneys will have all of their cases referred to these processes. Therefore, it is important that attorneys adequately represent their clients in this ADR environment. The competition was designed to acquaint the law student with advocacy in mediation. The focus of this competition is on attorney representation of clients in mediation. Judging criteria are geared toward examining the effective combination and use of advocacy and collaborative problem-solving skills.

The judging criterion was designed to reward those participants who use an effective combination of advocacy skills and a problem-solving approach in the mediation. The problem solving approach is defined as one in which negotiators learn about each other’s interests and BATNA (Best Alternative To A Negotiated Agreement), brainstorm options, and select and shape a solution that meets their interests and, where appropriate, objective standards. Participants were not expected to sacrifice their client’s interests in order to be collaborative.

The round that I judged consisted of a 75-minute mediation session involving a community dispute involving starlings and blueberries. At the close of the mediation session, there was a 10-minute period during which each team analyzed its performance in private, followed by a 20-minute self-analysis period (10 minutes per team) for each team to evaluate its own performance in the presence of the judges, but outside the other team’s presence.

I was impressed by the attorney advocates willingness to let their client talk. They were confident in their own abilities to allow the opposition to ask direct questions of their clients. This was refreshing. One of my chief obstacles in mediation is the attorneys putting on shows for their clients benefit. They forget that their clients will usually have to deal with each other long after the dispute is resolved.

The 1^stplace team in this competition automatically advanced to the National Competition. There were teams from all over the west. Some came as far away as North Dakota. I will never know where any team came from. It would have been a disqualifying breach of the rules to know the law school identity of a team. Only if a team from the west wins the national competition will I have a hint that I was able to judge their abilities.

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