Tips for a Successful Securities Mediation
Securities arbitration is a proven method for resolving disputes in the securities industry. It is a quicker and more cost-effective alternative to traditional court proceedings. With increasing frequency, investors and advisors are turning to mediation to make the process even more effective.
Mediation is a form of alternative dispute resolution that helps parties resolve conflicts without going to court. In mediation, a neutral third party, called a mediator, helps the parties reach a mutually acceptable solution to their dispute. Mediation is a voluntary process, and the parties have control over the outcome of the process. In this article, we will discuss two types of mediation: Facilitative and Evaluative mediation.
To make the most of the securities mediation process, it is important to have a clear understanding of the strategies and techniques that are most effective.
At the outset, keep in mind that the mediation of a FINRA arbitration claim does not delay the arbitration hearing. The mediator will conduct the mediation before the arbitration hearings begin, and the hearings themselves will not be adjourned without the consent of all of the parties.
Mediation is a form of alternative dispute resolution (ADR) that helps parties resolve conflicts without going to court. In mediation, a neutral third party, called a mediator, helps the parties reach a mutually acceptable solution to their dispute. Mediation is a voluntary process, and the parties have control over the outcome of the process.
Types of Mediation
Facilitative mediation is a form of mediation in which the mediator acts as a facilitator, helping the parties communicate with each other, identify issues, and explore options for resolving their dispute. The mediator does not offer any opinions or make any decisions for the parties. Instead, the mediator’s role is to guide the parties toward a mutually acceptable solution.
Evaluative mediation is a form of mediation in which the mediator evaluates the strengths and weaknesses of each party’s case and offers opinions on the likely outcome of the dispute. The mediator’s role is to help the parties reach a settlement that is consistent with the legal standards and principles.
How Mediation Works
Regardless of the type of mediation in the typical mediation, the mediator typically holds a preliminary meeting with all parties, where the mediator discusses the process, reminds everyone that the mediation and anything said during the mediation are confidential, and encourages the parties to communicate with each other. The mediator may also identify issues and interests that need to be addressed to resolve the dispute.
Doing anything more than that at the joint session is usually counterproductive. Some attorneys want to make the equivalent of an opening statement, which is often perceived as confrontational by the other party. This is not the path to a successful resolution. At the same time, giving an opening statement is one of the few opportunities the attorney has to speak directly to the adverse party. I am not a fan of opening statements in mediation, but they can be helpful in the proper case.
The mediator then meets with each side separately, going back and forth between rooms during the course of the day.
In facilitative mediation, the mediator does not offer any opinions or make any decisions for the parties. Instead, the mediator helps the parties explore their options and come up with a mutually acceptable solution. The parties have control over the outcome of the process, and the mediator does not impose any solutions on the parties.
In evaluative mediation, after meeting with each party, the mediator evaluates the strengths and weaknesses of each party’s case and offers opinions on the likely outcome of the dispute. This is where using a mediator with securities arbitration experience is important. Clients will listen to an independent third party who has represented parties in similar disputes, or who has sat as an arbitrator or who is familiar with recent arbitration awards and court cases.
The mediator’s opinions are not binding on the parties, but they can be persuasive in helping the parties reach a settlement. The parties have control over the outcome of the process, and the mediator does not impose any solutions on the parties.
Factors to Consider when Choosing a Mediator
Some of the factors to consider when choosing a mediator include:
- Experience: Look for a mediator who has experience in securities rules and regulations. Some of the best mediators are attorneys who represent parties in FINRA arbitrations, or who have served on numerous arbitration panels. You are looking for someone who is not only a qualified mediator but who has the breadth and scope of experience in the field in order for him or her to make quality recommendations.
- Communication Skills: Look for a mediator who has good communication skills and can help the parties communicate with each other.
- Cost: Look for a mediator who offers reasonable fees for their services.
- Availability: Look for a mediator who is available to mediate your dispute in a timely manner. Don’t ignore this one. The best securities mediators are booked weeks in advance. The longer you wait to retain the mediator, the farther out the session will be held.
One of the biggest mistakes I see in mediation is when a party does not adequately prepare for the mediation. Often some parties, and unfortunately some inexperienced attorneys, treat the mediation as a discussion of the case, and come to the mediation without documents, or a game plan. That is not the way to get a successful result at mediation.
You need to have copies of key documents – any agreements that you are relying on, emails, and other documents that establish your position. Don’t go overboard, keep it simple, and do not inundate the mediator with reams of documents. You are looking to establish the important facts, not prove every minute detail of your claim or defense. You can always follow up with additional documents if necessary.
If you have the right mediator, you don’t need legal briefs. The mediator will know the elements of the causes of action that are relevant to the case. However, if there is compelling legal precedent, by all means, have a copy of the decision with you.
Different mediators have different styles, but most will request, and appreciate, a mediator memorandum, delivered before the mediation session. Do not skip this step, and simply providing a copy of the complaint and answer is not sufficient.
While the mediator may discuss the case with your attorney before the mediation session, a memorandum detailing the issues, and your position will go a long way toward showing the mediator that your position has merit.
Seek Expert Advice
Securities law can be complex and difficult to navigate. It is important to seek expert advice from a qualified securities attorney to ensure that you fully understand your rights and obligations during the securities mediation process. A good securities attorney can provide you with guidance and support throughout the process and help you reach a successful resolution.
In conclusion, securities mediation is an effective method for resolving disputes in the securities industry. By following these strategies and techniques, you can ensure a successful and productive securities mediation process
Frequently Asked Questions (FAQs)
Q1. What happens if the parties cannot reach a settlement in mediation?
If the parties cannot reach a settlement in mediation, they continue with the pending arbitration.
Q2. How long does mediation typically take?
The length of the mediation process depends on the complexity of the dispute and the parties willingness to work together. Securities mediation sessions typically last a full day, perhaps more.
Q3. Is the mediator’s opinion binding on the parties in evaluative mediation?
No, the mediator’s opinion is not binding on the parties in evaluative mediation. The parties have control over the outcome of the process, and the mediator does not impose any solutions on the parties.
Q4. Is mediation always confidential?
Yes, mediation is always confidential. The parties can avoid the publicity and expense of court proceedings, and the mediator does not disclose any information from the mediation process to anyone outside of the process.
Before answering an arbitration, or attending a mediation, call Sallah Astarita & Cox, LLC at 212-509-6544. With decades of experience, we can help you reach an acceptable resolution. Our work is nationwide; the call is free.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.