Home :: The Process
The Process
Evaluation of the Claim
Before initiating litigation or arbitration on behalf of any client, a lawyer will evaluate a claim in order to assess its strengths and weaknesses. David Weintraub uses his many years of experience representing brokers and investors in order to determine whether a given client is likely to succeed. Part of this process may involve retaining an outside consultant, or expert, to prepare a report reflecting the clients’ profits and losses. This report is then used as a “roadmap” to prepare a claim for filing.
Choosing the Forum
Assuming that the client chooses to pursue their claims, a determination must be made as to whether the client is contractually obligated to pursue his or her claims in arbitration. If the client does not have this contractual obligation, the client then has the choice of pursuing their claims in court or in arbitration. There are certain advantages and disadvantages to each forum. Overall, most investors, but not all, prefer to be in arbitration.
Filing the Claim
On occasion, brokerage firms are willing to engage in settlement negotiations prior to the initiation of legal action. Some investors are fortunate to be able to achieve fair settlements, or compromises, early in the pursuit of their claims. This is the exception, not the rule. Settlements can occur through direct negotiation between attorneys, or as the product of a formal mediation. Mediations can occur at any time during the process. Generally, mediations are voluntary and non-binding. The parties simply agree on a specific mediator, whose role is to help the parties achieve a fair and reasonable settlement.
Assuming that an early resolution is not possible, and that a client is contractually obligated to pursue their claims in arbitration, it is likely that the claim must be filed with the Financial Industry Regulatory Authority.
Once claims are filed, final arbitration hearings may occur within one year. At present, most claims are taking approximately 1 - 1 ½ years to reach final hearing before a panel of arbitrators. When a case is heard by a panel of three arbitrators, two of the arbitrators will be “public” persons, whereas one of the arbitrators will be affiliated with the securities industry. Between the time of filing, and the final arbitration hearing, a certain amount of limited discovery and motion practice will occur. It is very rare that depositions occur in arbitration. More typical is that the parties will exchange documents that are requested by the respective parties.
Given that each case has its unique facts and circumstances, the process will be slightly different in each case. Remember to ask your attorney early in the process what you can expect to occur along the way.
At the conclusion of the arbitration hearing, the arbitrators will render a final decision. With limited exceptions, the parties are bound to the arbitrators’ final decision. Assuming that the customer wins his or her claim, the brokerage firm is required to pay the award within a certain period. In some cases, the customer will be able to recover their attorney’s fees from the brokerage firm. Likewise, in some cases, when the broker wins, the broker will be able to recover their attorney’s fees from the customer. It is important that the client understands those circumstances pursuant to which the client may be required to pay attorneys fees to the brokerage firm’s attorneys. It is bad enough to lose a substantial amount of one’s investment; it only adds insult to injury to be required to pay your opponent’s attorney’s fees.
It is important to understand one’s rights, as well as the risks and rewards attendant to pursuing claims in litigation or arbitration. Make sure that your attorney answers all of your questions to your satisfaction. Good luck!