Many investors are surprised to learn that they typically cannot bring their claims against brokerage firms in court, but instead pursue their claims in binding arbitration through the Financial Industry Regulatory Authority, known as FINRA.
Arbitration against brokerage firms is mandatory based on arbitration clauses that are contained in almost every brokerage firm agreement that customers sign. Because arbitration is considered a private process, and not a legal proceeding, it is possible in some circumstances for non-lawyers to represent investors, and effectively act as legal counsel, even though they are not actually licensed to practice law.
In recent years, various businesses that are comprised of non-lawyers have been marketing themselves to investors as an alternative to hiring a traditional lawyer to represent them in brokerage firm disputes in FINRA arbitration. In our many years of experience representing investors, we can tell you that cases against brokerage firms are complicated, and involve many different legal issues. We believe that investors make a big mistake when they hire non-lawyers to represent them in FINRA arbitration.
Historically, arbitrators use customs and norms to resolve these disputes, but today, arbitration is very different. Complex statutory claims and sophisticated legal arguments are often an issue. The more complex the case, the more likely it is that the parties are involved in expansive discovery practice and pre-hearing motions. FINRA arbitration in particular has evolved into a complex legal process. Most FINRA arbitrators are lawyers, and most arbitration hearings most closely resemble a trial you see in court – opening statements, examinations, cross-examination of witnesses, evidentiary objections, and closing arguments.
Tellingly, in all the cases where we have represented investors, we have never encountered a non-lawyer representing a brokerage firm. In every case, an experienced securities arbitration attorney has defended the brokerage firm against our clients’ claims. You should demand the same level of skill, knowledge, and experience for yourself.