FINRA Arbitration & Mediation: 6 Reasons to Do Both
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Arbitration moves faster than regular litigation; most cases — not all, but most — are in hearing within one year.
As a FINRA arbitrator, I realize that there may be less time to fully explore mediation. As a FINRA mediator, I understand that the parties may feel their backs are “up against the wall” if they have a hearing date coming up fast. While FINRA arbitrators can grant extensions, the logistics of moving dates with all the parties and the three arbitrators can be a daunting task.
When mediating FINRA cases, I can use this knowledge to help encourage settlement during mediation, even if it’s only settlement of some, not all, of the issues at hand.
5. Your knowledge positions you to be chosen as a FINRA mediator.
The parties in a FINRA case have little choice regarding arbitrators; arbitrators’ names are provided on a list to the parties before the hearing. With limited ability to strike those names, their arbitrators are foisted upon the parties.
When choosing mediation, however, the reverse is true. The parties have a multitude of options including FINRA-trained mediators. Additionally, they may consider private mediators who run the gamut from dabbling in FINRA cases to devoting their mediation practices to the securities industry.
As a FINRA arbitrator, however, you are more likely to be chosen as a FINRA mediator because of your knowledge and experience.
6. You have more flexibility when working as a FINRA mediator.
Arbitrators are quite limited in the remedies that they can impose. There are usually money damages, attorney’s fees, and perhaps a question of interest, but the FINRA arbitrator’s options are strictly defined.
However, when I work as a FINRA mediator, I understand that my narrow alley is broadened to include many more options: timing of payment, method of payment, future contact, future employment, and many other more nebulous factors.
Because I know that these kinds of remedies are unavailable in a FINRA arbitration, I can help encourage a creative settlement during mediation that includes them. You are aware that FINRA arbitration awards are public.
FINRA arbitration awards are a matter of public record. They are available through the FINRA website and discussed and promulgated throughout the industry. Mediations are confidential and any resolution reached in mediation can be kept confidential.
This is a huge factor for well-known brokerage houses but even lesser-known parties care about safeguarding their reputation within their community. Understanding this difference can help a mediator push the case towards resolution.
As you can see, the two very different roles of acting as a FINRA arbitrator and mediator are complementary. The hats I wear as an FINRA arbitrator and a mediator are very different hats, but I am a better arbitrator for having worked as a mediator and a better mediator for having worked as an arbitrator.
Kim L. Kirn is a mediator and arbitrator at USA&M in St. Louis, part of Atlanta-based Miles Mediation & Arbitration.