Arbitration & Mediation

In the paperwork that many investors sign, brokers may include an agreement that requires disputes to be resolved outside the court system. In these cases, if an individual tries to file a lawsuit against a negligent or fraudulent financial adviser or stockbroker, the court will refer the claim to arbitration. Fortunately, an experienced attorney can help investors level the playing field. Experienced securities fraud attorney Steve A. Buchwalter has represented clients in Ventura County and throughout Southern California in mediation and arbitration with their brokers.

Mediation is a protracted negotiation that takes place over the course of hours or days. The process is run by a neutral third party, called a mediator. He or she takes turns talking to each participant and encouraging the parties to reach a compromise. If they are able to resolve their differences, they enter into a binding contract that memorializes the agreement.

The parties are free to negotiate themselves or hire counsel to handle the negotiation. Usually, they are required to personally attend the proceedings or at least send an agent with the authority to settle. Participants are not required to settle, however, as long as they make a good faith effort to negotiate.

Arbitration is another method of resolving disputes outside court, but it more closely resembles a conventional trial than mediation. In an arbitration hearing, the parties make their case to an arbitrator, who can be thought of as the judge of the hearing. After hearing the evidence and considering the parties’ arguments, the arbitrator makes a ruling. If the arbitration is “binding,” the decision may be final.

As in mediation, the parties can be represented by attorneys, or they can represent themselves. The procedural rules governing arbitration hearings are usually more relaxed than in court.

Both mediation and arbitration are designed to resolve disputes without the need for costly litigation, and in many cases they yield fair results. However, there are times when arbitration and mediation favor one party over the other. This is especially true in instances where the parties are not on equal footing in terms of financial resources or sophistication. An investment firm with extensive industry knowledge and virtually unlimited resources has an inherent advantage over the average investor in both mediation and arbitration.

Additionally, many companies use the same mediators or arbitrators for all of their cases. Due to the familiarity of this individual with the company and the prospect of recurring business, a person paid to be a neutral third party may develop a bias. Fortunately, a securities attorney’s industry knowledge can help an investor protect his or her rights in arbitration or mediation with negligent or fraudulent brokers.

Investors facing arbitration or mediation with their brokers should consider hiring an experienced attorney to represent them. Even if the dispute resolution method is not binding, regrouping from an adverse result is much more difficult than presenting a strong case from the beginning. Securities fraud lawyer Steve A. Buchwalter has years of experience both in the financial industry and as a representative of investors in arbitration and mediation. To talk about your upcoming dispute resolution process, call (818) 501-8987 or visit our contact page.