Archive for the ‘Alternative Dispute Resolution’ Category

Mediation: A Most Viable Option

Thursday, February 25th, 2010

More key, specific advantages of Mediation from FINRA:

  • Control—Mediation belongs to the parties. The disputing parties control the process, scheduling, costs, and outcome of the dispute.
  • Less Adversarial—The mediation process is informal. It is less confrontational than arbitration or litigation.
  • Preserves Options—Parties can enter into mediation without jeopardizing their option to arbitrate or litigate.
  • Swift Settlement—Most mediations are successfully concluded in a single day. Since mediation can be scheduled soon after a dispute arises, parties reach settlement much earlier than in arbitration or litigation. Many mediations conclude before a formal arbitration claim is filed.
  • Lower Cost —Mediation usually entails lower legal and preparatory costs, there is minimal interruption of business or personal life, lost productivity is kept to a minimum, and the fees and expenses of mediation are modest.”
  • Preservation of Business Relationships—By reaching an early resolution with minimal financial or other strain on either party, the chances for preserving business relationships are greatly enhanced.
  • Protects Privacy—Mediation offers greater confidentiality than arbitration.
  • Creative Solutions—Mediators help the parties craft creative solutions.
  • Low Risk—Settlement potential is high. The case proceeds quickly. The cost is modest and there are benefits even if a settlement is not reached.

Meditation is the choice of many parties when choosing to settle a business dispute. One particular reason why mediation has been so popular is that the parties have full control of the variables (process, costs, outcome). Even if there is not a full settlement made, the progress made in mediation proves to be invaluable because it leaves less difficulties to be resolved through any other forms of dispute resolution (arbitration/litigation). Mediation seems to resolve the key, collateral issues  the best, which saves a considerable amount of resources for both parties that are involved. Mediation thus streamlines the situation for the next step of alternative dispute resolution (depending on the complexity of the issue) or it resolves the issue altogether. On the local level, with situations arising between investors and individual clients, mediation is often the best option.

For more information on Mediation, click here.

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The Difference Between Mediation and Arbitration (specifially related to stock losses)

Thursday, February 25th, 2010

The Financial Industry Regulatory Authority (FINRA) provides a helpful overview of the main attributes of each of these dispute resolution processes.  Keep in mind that these non-legal processes are described in the context of securities disputes whether between a client and a broker-dealer or between a broker-dealer and one of its ex-brokers.  Ideally, there should be a good relationship between brokers and investors, but inevitably there are disagreements.  Arbitration and Mediation are examples of alternative dispute resolution processes that bypass the inconveniences an expense associated with a lawsuit filed in civil court.

Mediation and Arbitration are non-judicial processes for resolving disputes between parties.  In mediation, an impartial third party, known as the mediator, tries to help the parties to the dispute reach a resolution by focusing both parties on the critical issues.  Mediation is a voluntary process where the parties agree to ‘give it a try’ but the mediator cannot make any decisions or force any party to do anything.  In contrast, once the parties have agreed to submit their dispute to arbitration, the (hopefully) impartial arbitrator makes a decision that is binding on both sides.  The arbitrator listens to each party’s concerns and makes a decision based on each party’s presentation of their story.

The Financial Industry Regulatory Authority (FINRA) states that:

Meditation…

  • “Is voluntary. The parties also decide who the mediator will be, when the mediation will take place, and how the dispute will be settled.”
  • “Is informal. In mediation, an impartial person—the mediator—promotes negotiations between the disputing parties.”
  • “Is inexpensive. The mediation process is less expensive than arbitration or litigation.”
  • “Is non-binding. Unlike other forms of dispute resolution, such as arbitration and litigation, the mediator does not impose a solution or decide your case. Instead, the mediator guides or helps the parties to reach or create their own solution. Parties may still arbitrate their dispute if they are unable to agree on a settlement.”
  • “Is a “win-win” solution. The mediator’s role is to help the parties find a mutually acceptable solution to their controversy. Since the inception of the program in 1995, more than 6,000 cases have been filed in mediation. Parties who mediate at this forum resolve four out of every five disputes, an 80% settlement rate!!”

Arbitration…

  • “Is impartial. Based on the size of your claim, your dispute will be heard by one or more impartial arbitrators. Arbitrators are selected by the parties through an automated system that produces arbitrator lists. Parties may remove any listed arbitrator for any reason. They are encouraged to rank the remaining arbitrators, according to preference.”
  • “Is fair. During the hearing, parties make brief opening statements explaining what they intend to prove and what relief (e.g., money damages) is sought. Parties have the opportunity to present documents and witnesses in support of their positions, to object to documents and to question witnesses presented by other parties, and to make closing remarks to summarize their positions.”
  • “Is final and binding. Arbitrators evaluate the evidence and arguments presented and reach a final and binding decision (the “award”). Awards are only subject to court review on very limited grounds.”
  • “Is expedient. Arbitrators endeavor to render the award within 30 business days after the close of the proceeding.”

For more on these articles by FINRA, click here and here.

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Upcoming Updates on Arbitration and Mediation…

Thursday, February 25th, 2010

I will be writing a series of posts this week dedicated to the advantages of using mediation (as well as providing background information on arbitration). In today’s market, when fraudulent behavior in business matters is quite prevalent, it is necessary to know what options are available.  This week, there will be detailed posts on each of these topics:

1) The Differences Between Mediation and Arbitration

2) Mediation as the Most Viable Option

3) Breaking Misconceptions about Mediation

Of course, I will continue to post my views on the top news stories as well.

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