Why Mediation?

As the parties prepare for arbitration and gain a better understanding of the strengths and weaknesses of each side’s case, one or both parties may suggest that they attempt to settle the case and avoid a full arbitration hearing.  As a first step, the attorneys for each party, in consultation with their clients, may attempt to directly negotiate a settlement.  If this proves to be unsuccessful, mediation may be considered.

What is Mediation?

Mediation is an informal dispute resolution process in which a neutral third-party – a mediator – attempts to guide the parties toward a settlement.  Although parties are free to choose anyone to serve as a mediator, many choose to utilize FINRA’s mediation program.

FINRA Mediation Process

1

Initiate a Mediation

If the parties agree to submit their dispute to FINRA mediation, they can simply ask FINRA for a referral to mediation.

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FINRA Mediation Process

Mediator Selection

Upon receiving a request for mediation, FINRA sends to the parties a list of proposed mediators and disclosure reports containing each candidate’s hourly fee, educational background, and employment experience.  The disclosure reports also list the number and types of cases each candidate has mediated and indicate how many of those cases settled.  Based on this information, the parties jointly select a mediator and inform FINRA of their decision.

3

Mediation Brief

Before the mediation, the parties may provide the mediator with account statements, profit and loss analyses, and other key documents to help the mediator better understand the case.  Depending on the complexity of the case and the nature of the claims, the parties may also choose to submit mediation briefs in advance of the mediation.  In those briefs, each party explains its position and gives the mediator a preview of the dispute.

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FINRA Mediation Process

Mediation

Mediation sessions typically last one day, and are scheduled at a time and place agreeable to both parties.  Typically attending a mediation are the parties, their attorneys, and the mediator.  Although mediators have discretion as to how the mediation is conducted, many mediators begin with a joint meeting in one conference room with all of the parties and their attorneys.  The mediator may begin by explaining how the mediation will proceed, reminding the parties that mediation is a confidential process, and inviting the attorneys to give opening statements.

At this point, the mediator may separate the parties into different conference rooms and meet with each side privately.  The mediator will then proceed to shuttle back and forth between the parties, listening to their arguments and commenting on the strengths and weaknesses of each side’s position.  The mediator will also candidly discuss settlement expectations with each party, and will facilitate the exchange of settlement offers.

This process will continue until a settlement is reached or the parties agree that they are at an impasse.  If mediation is unsuccessful and no settlement is reached, then the arbitration case simply resumes as if nothing happened.