conflict resolution » 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.

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.

With the right tools we can handle more conflict.

Conflict Resolution, Mediation Comments Off

Mar 122013

Mediation is conflict at its best. All of the tools, I, as a mediator brings to the mediation help manage the conflict to a great resolution.

Management expert Margaret Heffernan postulated five counterintuitive guidelines learned in her years running businesses and organizations in her TEDGlobal 2012 presentation.

Her insight has great implications for successful mediations. I have always contended that mediation is conflict at it best and her insight bares this out. Heffernan has developed five guidelines for productive disagreement.

Appoint a devil’s advocate
Find allies
Listen for what is NOT being said
Imagine you cannot do what you all want to do
After a decision is made, declare a cooling off period

These are counter intuitive guidelines because it is assumed in mediation as well as life that we need to avoid conflict; smooth it over if we have to and compromise if all else fails. Our job is not to avoid, smooth over or compromise, it is to find a better way.

Explains Heffernan: “All of these guidelines are neutral and designed to aid exploration rather than judgment. There’s never any reason not to try these — who doesn’t want to make better decisions?”

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.

In Conflict, it is never a bad idea to have a cooling off period

Conflict Resolution, Mediation Comments Off

Feb 122013

Margaret Heffernan final counterintuitive idea to encourage healthy conflict would be after a decision is made, declare a cooling off period. Her suggestion is to ask everyone to go home and think about the decision on their own as well as discuss it with their associates. Then come back after a prescribed amount of time and ask the group: does the decision still look great?

In the real world that is a great idea but not always practical. That is why I prefer to allocate the entire day to my mediations. It allows everyone time to cool off through out the day and to make the emotional journey towards a great settlement. It is still an emotional journey even if the dispute is a multi-million dollar construction defect case or paten infringement case.

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.

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