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Friday, March 14, 2014

How to Win Friends and Influence People in Mediation: Part One

Dale Carnegie’s best-seller How to Win Friends & Influence People, first published in 1937, is still the go-to book for people looking to improve their social and emotional intelligence. Since I’m interested in these topics, I thought it might be a good idea to become familiar with what Mr. Carnegie had written on the subject.

While paging through the chapters, I realized that many of the same principles enunciated by Carnegie apply equally to the mediation field. I found the first three sections of the book to be most useful. For this blog article, I am concentrating on the first section, called “Fundamental Techniques in Handling People.” I’ve listed the principles of Part One of the book below, with a few comments of my own on applying each section to the mediation field:

Part One: Fundamental Techniques in Handling People:

  1. Don’t Criticize, Condemn or Complain
Carnegie says that criticism usually backfires, since it makes people (that’s you and me) resentful and feel belittled. Once belittled, a person is not likely to want to work with you. Instead, try to understand what is behind the behavior that you are critical of, and to fix that problem instead.

Application to Mediation – Attack the problem, not the person. This means that while a problem with an individual may have brought you to the mediation table, it is not fruitful to criticize the other party personally or his/her comments or behavior. Instead, focus on the problem itself, and try to understand what caused a party to react in a certain way.

  1. Give Honest, Sincere, Appreciation
One of our deepest desires is the need to feel important. People crave sincere appreciation since they so rarely get it. If you want to improve someone’s behavior, find one thing that person does well and compliment him or her on it, especially in earshot of others. You needn’t be dramatic; make sure the compliment is sincere rather than simple flattery.
Application to Mediation – This advice is as helpful to the mediator as to the parties. The mediator should try to find ways to give a compliment to each of the parties, either by highlighting when a party says something positive about another party, by recognizing a party’s decision to share some information that might have been particularly difficult for that person to share, or by actively encouraging the parties to speak about the things that went right with the relationship before it went sour.

  1. Arouse in the other person an eager want
Figure out what the customer wants or needs, and then show him or her how your services can be used to satisfy the goals. Carnegie gave the example of using the proper bait – a fish would not be attracted to a fresh, luscious strawberry, but it would gobble down a worm.

Application to Mediation – Differentiate between a party’s positions and interests and provide a reality check. A person’s position might appear to be that she won’t settle unless she gets “X” dollars, often fueled by unrealistic expectations. But a secondary interest may be to move forward and put this dispute behind her. As a mediator, you can help the party see that she might not have a “slam-dunk” case after all and that there are other alternatives which parties can create for themselves. Mediation gives parties an opportunity to find their own solution to the problem. Once parties realize the benefit of this process, they are likely to want to use it again.
In future blog articles, I’ll tackle the other sections of Dale Carnegie’s book, including “Six Ways to Make People Like You,” and “How to Win People to Your Way of Thinking.”

If you have any questions about this article or about mediation or arbitration, feel free to contact me at linda@alpertmediation.com.

Alpert Mediation, All Rights Reserved, Copyright 2014

 

 

Friday, March 22, 2013

Dialogue Leading to Transformation


Imagine that you start to receive hate-filled emails and tweets from someone belonging to an extremist group on the fringes of society. Most of us would probably block such a person’s emails, or possibly respond in kind. But imagine that instead of responding in knee-jerk fashion, you engaged in dialogue with this individual. And imagine that as a result of the dialogue, the other person begins to question their hate-filled belief system, leaves the extremist group, renounces their causeless hatred, and ventures forth on a new path. It sounds too incredible to be true, but this transformation actually happened. You can hear more about it in a CBC interview of the parties which aired recently on WNYC and is available here: http://www.cbc.ca/q/2013/03/19/leaving-the-westboro-baptist-church/.

During the interview, Megan Phelps-Roper, the granddaughter of Greg Phelps, the infamous founder of the Kansas-based Westboro Baptist Church, admitted that she had sent a nasty tweet to David Abitbol, a Canadian web developer and founder of the “Jewlicious” blog, because he was listed as one of the most prominent Jews in the blogosphere. Instead of ignoring the tweet or blocking her, David responded to the tweet with humor and deflection. Megan continued to tweet with David, eventually having longer conversations by email. The two actually met in person while her family picketed Jewlicious events. David continued to engage her in dialogue during those meetings, and even provided her with snacks.
As a result of their conversations, Megan began to question some of the contradictions in her church’s doctrine. She began to think for herself, and that led her to question whether her church’s view of the world was the only view. Last November, she and her sister Grace took a huge leap of faith, leaving the church.

As David said during the interview, “you can have an argument on the internet, and change hearts and minds.” The key to the process is to keep the door of dialogue open. The message here is not to overreact to a person’s extreme stance (as difficult as that may be). If you can present a different view of facts and continue to let your own humanity shine through, we have the chance to witness a miraculous transformation.

If you have any questions about this article or about mediation or arbitration, feel free to contact me at linda@alpertmediation.com.

Alpert Mediation, All Rights Reserved, Copyright 2013

Thursday, January 24, 2013

Mediation from A to Z


For my January 2013 post, I have written a synopsis of the varied tasks undertaken by mediators. Here they are, in A to Z order:

Achieve agreement
Broker breaches
Clarify conflicts
Discuss disagreements
Evaluate embroilments
Facilitate friendship
Garner generosity
Help harmonize
Incentivize issue-resolution
Jump into jams
Kindle knowledge
Link lessons
Mediate misunderstandings
Nix nay-sayers
Open opportunities
Prod parties
Resolve rows
Share suggestions
Tackle troublesome issues
Underscore unity
Verify values
Write well
Exude excellence
Yearn for yields
Zero in on zones of agreement

Can you think of any others I've missed? Please let me know, I had a lot of fun coming up with these examples.

If you have any questions about this post or about alternative dispute resolution in general, feel free to contact me at linda@alpertmediation.com.

Alpert Mediation, All Rights Reserved, Copyright 2013

Thursday, October 18, 2012

Failure to Comply With Arbitration Discovery Orders May Lead to Serious Penalties


If you think that arbitration discovery orders are not as official or binding as court orders, think again; FINRA panels have ordered sanctions against customers, firms and associated persons ranging from monetary penalties to dismissal of claims due to failure to comply with discovery orders, and these decisions have been upheld in court.

FINRA’s Rule 12511(a), dealing with discovery sanctions in customer cases for claims filed on or after April 16, 2007, states that “failure to cooperate” in required discovery exchanges “may result in sanctions.” Panels may issue sanctions both for failure to comply with the discovery provisions (absent substantial justification for same) and for “frivolously objecting” to production. Paragraph (b) of the same rule gives panels the authority to dismiss “a claim, defense or proceeding with prejudice . . . for intentional and material failure to comply with a discovery order of the panel if prior warnings or sanctions have proven ineffective.” There is a similar provision for cases dealing with “industry” claims (between brokers and employees), which is FINRA Rule 13511.

FINRA Rule 12212(c) gives authority to customer-based panels to dismiss “a claim, defense or arbitration with prejudice as a sanction for material and intentional failure to comply with an order of the panel if prior warnings or sanctions have proven ineffective.” The same rule for industry panels is contained in FINRA Rule 13212.

Over the past few years, panels have increasingly used these rules to sanction parties and to dismiss claims. Following are a sampling of such cases:

1. In Laurence Pilgeram as trustee v. Morgan Stanley Smith Barney, FINRA Case #10-04909, the respondent firm moved to dismiss the customer’s claim prior to the hearing due to the customer’s failure to produce documents ordered eight months earlier by the Las Vegas-based arbitrator. In October 2012, the arbitrator granted the motion and assessed the hearing session fees against the customer.

2. In Tushar Patel v. optionsXpress, Inc., FINRA Case #10-04834, a Providence, RI panel in July 2012 granted the respondent firms’ pre-hearing motion to dismiss the customer’s unauthorized trading and negligence claims pursuant to FINRA Rule 12212(c). The panel stated that the dismissal was based on Patel’s failure to produce any discovery during a one year period, despite his obtaining a postponement of the hearing ostensibly to comply with discovery orders. The panel also assessed the entire $2,700 cost of pre-hearing session fees against Patel.

3. In Stavros Oscar Cid and Teresa Cid JTWROS v. John Joseph Abadiotakis and Citigroup Global Markets, Inc., FINRA Case #10-04784, an unauthorized trading/suitability case, the New York-based panel made a pre-hearing ruling that the customers owed the firm a sanction of $10,000 for their failure to comply with discovery and for failing to appear at the first scheduled hearing date. When the customers did not appear at the hearing date scheduled for six months later (despite their counsel’s appearance), the panel granted Citigroup’s motion to dismiss. The panel’s July 2012 award specifically stated that the dismissal was a sanction pursuant to FINRA Rule 12212(c) for failing to adequately respond to discovery orders and for claimants’ non-appearance at the hearing. The panel also assessed half the hearing session fees and all the adjournment fees against claimants.

4. In John Boelke v. Paulson Investment Company, Inc., FINRA Case #11-01172, involving a pro se associated person claim against a member firm, the Ft. Lauderdale-based panel in March 2012 granted the firm’s motion to dismiss with prejudice and granted sanctions due to Boelke’s apparent non-responsiveness (failure to communicate, failure to comply with discovery order, and failure to appear at the hearing). The panel granted the firm’s counterclaim for $25,000 in attorneys’ fees and $1,873 in costs as well as $3,900.00 in hearing session fees against Boelke.

It’s not just individuals who are being hit with discovery sanctions. In the case of Meri Ramazio and Tamara Smolchek v. Merrill Lynch Pierce Fenner & Smith Inc., FINRA Case #10-04432, a Boca Raton arbitration panel in an employment-related deferred compensation case slammed Merrill Lynch for its initial failure to comply with the panel’s order requiring it to turn over a privilege log to the claimants. Merrill was penalized to the tune of $1,000 per hour until the privilege log was produced (resulting in an initial discovery sanction of $3,500). The arbitration award contained an additional discovery sanction of $100,000 ($50,000 payable to each claimant). Merrill was also sanctioned for introducing into evidence medical records that the panel forbade it from using, resulting in a $10,000 award to claimant Tamara Smolchek for that misdeed. The arbitration panel also awarded $5,150,000 in regular and $5,000,000 in punitive damages against Merrill on claimants’ employment-related claims, and ordered it to pay the entire hearing session fees of $38,900. Merrill’s petition to vacate the arbitration order was denied by Florida’s federal court in the Southern District (Merrill Lynch v. Smolchek and Ramazio, 2012 WL 4056092, S.D. Fla, Sept. 17, 2012, and is now on appeal to the Eleventh Circuit.

Courts generally grant deference to decisions of arbitration panels, and have upheld such sanctions. For example, in  D. Weckstein & Co. Inc. v. Bui, 2009 NY Slip Op 3292 (NY Supreme Court Jun 11, 2009), the court upheld an award that granted sanctions and attorneys fees of $36,034.67 to a brokerage firm after the claimant failed to comply with the panel’s discovery orders. The court noted that under New York law, courts will not disturb a panel’s rational decision, even for errors of law or fact, unless the award “violated a strong public policy, was totally irrational, or the arbitrator in making the award clearly exceeded a [specific statutory] limitation. . .”

In Freedom Investors Corporation v. Kahal Shomrei Hadath and Sydney V. Pinter, No. 11 Civ 5975 (S.D.N.Y., Feb. 7, 2012), involving a margin credit dispute, the Southern District court in New York upheld an arbitration panel’s award granting $5,000 as a discovery sanction against the customers Kahal and Pinter due to their failure to produce documents ordered by the panel. The court also upheld the $149,223 in damages assessed against the customers.

More recently, in the case of In Re Bear, Stearns & Co. Inc. et al v. International Capital & Management Company LLC, 32 Misc. 3d 607 (Sup Ct., NY Co. 2011), aff’d, 2012 NY Slip Op 06546 (App Div, 1st Dept. Oct. 2, 2012), the court held that a panel did not exceed its powers or violate public policy when it awarded Bear, Stearns $316,922.53 in attorney fees it incurred in connection with ICMC’s prosecution and withdrawal of fraud claims just before trial. The court found that the panel had awarded counsel fees to Bear, Stearns as a sanction for discovery abuse at least twice during the arbitration, and ICMC had paid the fees without objection. It further noted that a party cannot avoid the assessment of attorney fees simply by withdrawing its claim for same during the hearing’s closing arguments.

The takeaway from this is that parties and their counsel need to take discovery orders seriously. A party failing to prepare a good-faith response to a discovery request, or failing to comply with a panel’s order, faces significant penalties for non-compliance. Arbitrators have granted monetary sanctions and motions to dismiss for failure to produce discovery, and courts have been upholding the panels’ decisions.

If you have any questions about this article or about alternative dispute resolution, feel free to contact me at linda@alpertmediation.com.

Alpert Mediation, All Rights Reserved, Copyright 2012

Thursday, July 5, 2012

TEN TIPS FOR EFFECTIVELY ORGANIZING YOUR EVIDENCE

This article is for all you litigators out there and for those who support them at arbitration hearings. My goal is to encourage all those with document-intensive cases to take the time to design an organized evidence binder before the hearing.

As a FINRA arbitrator, I am usually at the receiving end of reams of paper. Some of you probably think that if the documents are three-hole punched, placed into binders and tabbed, that is sufficient organization for the hearing. Maybe you can get away with that for a case with fewer than thirty pages of documents. But if you will be introducing a binder-full of documents, and want to develop a cohesive theory of your case, you need to spend a little more time on this process. It is counter-productive to throw together emails, memos, statements, and other items helter-skelter, with nary a thought given to those of us who have to quickly find the information while at the same time listening to the witness testify.
Friends, it is not enough to have bate-stamped the pages or to simply put the pages behind numbered tabs. The pages themselves must also be placed in a consecutive numerical order. This seems so obvious yet is so often ignored. As litigators, the last thing you want to do is spend time trying to find the right page about which to ask the witness a question, and then wait for the arbitrators until they are (literally) on the same page as you. Counting and numbering pages is not a glamorous part of the job, but it is important all the same. It is well worth it to explain to your support staff what needs to be done, and then to supervise them to ensure it is done properly.

To avoid this time-sapping problem, please take a moment before copying your exhibits to do the following:
1)    Make one complete set of all documents you plan to use during the direct and cross-examination of witnesses at the hearing.

2)    Keeping in mind your planned examination of the witnesses, organize the documents so that the testimony will flow from one page to the next. Yes, this means you have to plan out your line of questioning ahead of time.

3)    Use tabs to segregate each set of exhibits; it is fine to have more than one document per exhibit tab so long as the pages are numbered.

4)    One you’ve placed the documents into their respective tabs, NUMBER THEM (even if they are already bate-stamped) consecutively within the tab.

5)    Make sufficient copies of the numbered exhibits and place them into binders so that there is an exhibit binder for each arbitrator, a “witness” binder, and a binder for opposing counsel. Of course, make your own binder as well. For a typical three-person arbitration panel, that means you will need six binders. You may want to consider creating an extra seventh binder for those unexpected calamities (i.e. when you or someone else spills coffee or water all over your exhibits, or the pages that were supposed to be double-sided are only printed on the “odd” side).

6)    If there are documents that you are unsure about using as exhibits, keep them organized in a separate folder, and have enough copies available for everyone. This way, if you do decide to enter them into evidence, you will not have to stop the flow of the arbitration to make copies “mid-stream.” Both arbitrators and parties will appreciate this time-saving preparation.

7)    To save time, please confer with opposing counsel to stipulate to exhibits that you know will likely be used by both sides.

8)    If possible, create a joint binder of those pre-stipulated documents for the arbitrators, and label the front of the binder “Joint Exhibits”. Creating a joint binder means you will have to work together to negotiate who will be responsible for putting together the binder and getting it to the hearing (which requires a certain level of trust that it will be done properly), but you will ultimately save paper and time as well as contribute to a more smoothly-run hearing.

9)    For those exhibits not jointly stipulated to, place a label on the front cover of each binder, indicating whether the exhibit binder is that of Claimant or Respondent.

10) As a nice finishing touch, label the front of each arbitrator binder with the arbitrator’s name.

Although this requires some extra thought, planning and effort, if you take these small steps, I guarantee you’ll have a happier arbitration panel as well as a more efficient hearing.
As always, I welcome your questions or comments. For more information, you may email me at linda@alpertmediation.com or call me at 914-584-6738.


Alpert Mediation, All Rights Reserved, Copyright  2012


Tuesday, March 20, 2012

Fee Shifting - The New Paradigm

Message to securities customers and their counsel: do your due diligence homework before bringing an arbitration claim. If you don’t have the evidence to prove your case, you may have to pay your opposing counsel’s fees and costs.

Breaking with long-standing tradition, some recent FINRA arbitration panels have assessed costs, attorneys’ fees and expert fees against investors who filed claims ruled to be unreasonable. In the case of Jamie Davis v. WFP Securities Corporation et al., FINRA #10-00507, the California-based panel wrote a full-blown “reasoned award”, citing statutory authority and case law for their decision to dismiss the case and award fees. After dismissing the claims on the merits and finding the claims time-barred by California law, the panel awarded to the Respondent firm and brokers their costs and expert witness fees in the amount of $135,755.89 plus 10% interest, running from the date of the award until the award is paid in full. The amount of costs and expert witness fees listed here presumably includes Respondents’ attorneys fees, which makes the case unusual since attorneys fees are typically not recoverable as “costs.”[1]

The arbitration panel was clearly concerned about the evidence they heard (presumably from Respondents) showing that Claimant had filed the same or similar claims in multiple locations, and had already received compensation on some of those claims. FINRA’s Rule 12209 deals with the issue of parties bringing simultaneous claims in multiple proceedings. According to this rule, “[D]uring an arbitration, no party may bring any suit, legal action, or proceeding against any other party that concerns or that would resolve any of the matters raised in the arbitration.” The panel’s reasoned award pointed out that Claimant’s initiation of proceedings in multiple forums was an attempt to go for a “double recovery,” and was prohibited by FINRA rules.

The panel also dismissed Claimant’s claims under California’s applicable statutes of limitations. The limitations periods for the claims in issue ran from one to four years. Although the award was not clear as to the date of the specific purchases in issue, the panel noted that the claim was filed on February 1, 2010, and stated that Claimant had notice of the risks as of April 13, 2005. This meant that Claimant filed her claim too late, i.e. more than four years after having known of the potential conflict between the oral representations by the broker and the risk factors laid out in the private placement memorandum. Thus, under California law, the claims were time-barred.

In another unique twist, the panel dismissed Claimant’s expert witness Douglas J. Schultz from appearing and testifying at the arbitration due to Claimant’s and the expert’s non-compliance with several discovery orders and with the panel’s written and oral warnings. The panel reasoned that the Claimant’s failure to obey the discovery orders prejudiced Respondents in preparing their case-in-chief. Ironically, prior to the hearing, the panel had denied Respondents’ earlier motions for sanctions regarding Claimant’s discovery violations and forum-shopping (although the earlier denial seems to have been based on Respondents’ alleged failure to follow FINRA’s procedural rules regarding the motions filed, rather than on the merits of the motions).

In the case of Karl Heinrich Vogelbach, MD et al v. Quincy Cass Associates, Inc. and Jens Spitta, FINRA #10-04022, another recent California-based panel similarly found that Claimants had no basis for their garden-variety securities law claims. The panel’s decision stated that Claimants’ claims were “frivolous” and that the bringing of the arbitration was “a bad faith abuse” of the arbitration process. The panel ordered Claimants to jointly and severally repay the Respondents $75,000 out of $110,000 of attorneys’ fees and expenses plus an additional $6,000 out of a total of $7,200 in arbitration hearing session fees.

The case is particularly interesting in its refusal to find any liability for trades conducted by Claimants away from the firm, even if Claimants relied upon the advice of the Respondent broker in making those trades. The lack of a contractual relationship was apparently a key factor in the Panel’s decision. The trades which Karl Vogelbach placed in his self-directed account at T.D. Ameritrade were considered by the Panel to be Karl’s independent decisions alone; the Panel found no proximate causation between the advice by Respondents and the trades Karl placed there. Similarly, claims involving trades placed by Claimant Andrew Vogelbach (presumably a relative of Karl) were dismissed because they took place at another firm, and outside the knowledge of the broker.

Although these cases may have been unusually egregious examples of bad faith by Claimants, the message being sent by these panels is clear – don’t bring a meritless claim, or you might be liable for your opponent’s fees, at least in California and other states with similar fee-shifting statutes.

As an alternative, consider the benefits of mediation – lower costs, a more efficient process, a decision to which both sides agree, and a result which can be kept confidential. If you have any questions about this article or about mediation or arbitration, feel free to contact me at linda@alpertmediation.com.

Alpert Mediation, All Rights Reserved, Copyright 2012



[1] Under California Code of Civil Procedure Section 1032, a prevailing party is entitled to recover its costs in any “action or proceeding.” Since the FINRA arbitration is a proceeding, and since the Respondent firm and brokers were the prevailing parties, the panel apparently decided Respondents should be entitled to recover all its costs of defending the case.

Saturday, November 19, 2011

When Is a Win Not a Win? (Or How Win-Win Becomes Lose-Lose)

A recent decision in Ohio state court shows how winners can also be losers. In Patrick R. Murray v. Citigroup Global Markets, Inc., Dist. Court, N.D. Ohio, W. Div. (Nov. 14, 2011), Case No. 3:09 CV 1514, Judge Katz was asked to rule on whether to confirm an arbitration award in favor of Citigroup Global Markets Inc. (CGMI) against a former broker, Patrick Murray (Murray).

In the underlying FINRA Arbitration, Citigroup Global Markets Inc. d/b/a/ Smith Barney v. Patrick Murray, #09-03430, CGMI sued Murray for $272,207, the balance he owed under a $1,508,401 promissory note issued in July 2000. This type of note is known in the industry as a “forgivable loan” because each year, a set portion of the note is forgiven on the note’s anniversary. Murray counterclaimed for $160,164.00 in assets he forfeited from the “CAP” Plan (Capital Appreciation Plan) when he left the firm in April 2009. The CAP plan provided restricted stock awards that vested over time, but unvested stock awards were deemed forfeited upon leaving the firm.

A panel of three arbitrators awarded CGMI the pro-rated balance Murray still owed on the note of $40,153 plus two years of interest at 10%, for a net total of about $48,184. However, the panel also awarded Murray $25,705.95 in compensatory damages, for a net recovery to CGMI of about $22,478.

CGMI moved to confirm the award, and Murray moved to vacate and for other relief. The court granted CGMI’s motion to confirm as well as its motion to strike an attempt by Murray to re-litigate part of the arbitration case in court. It gave brokerage firms some helpful language for future motions to confirm, when it stated that in Ohio, an irrational arbitration award provides no basis for review on appeal. The only ground for review was under the doctrine known as “manifest disregard of the law.” The court stated that it “does not have authority to re-litigate facts when reviewing an arbitration award for manifest disregard of the law.” Courts must enforce an award even if the award was based on an error of fact (citing to Bd. Of County Comm’rs of Lawrence County, Ohio v. L. Robert Kimball & Assocs., 860 F. 2d 683, 688 (6th Cir. 1988). The court further noted it would defeat the main purposes of arbitration (to provide a quicker and less costly resolution and reduce court congestion) were the court to insert itself into the case as a new fact-finder. The court would not permit Murray to re-try the case.

So, you may ask, how is this not a win for CGMI? From a monetary perspective, as well as a time and energy perspective, it is a pyrrhic victory. Here’s why:

The arbitration included ten pre-hearing sessions over a 14 month period as well as14 hearing sessions over an 8-day period. The pre-hearing sessions included at least two contested motions. Here’s a chart of the fees allegedly paid by the parties as set forth in the underlying FINRA award:
  
FEES PAID BY PARTIES
TYPE OF FEE
MURRAY
CGMI
CLAIM/COUNTERCLAIM FEE
$      600
$    2,125
MEMBER FEE
            0
$    2,750
HEARING SESSION FEES
$   7,065
$  18,260
DISCOVERY-RELATED MOTION FEES
            0
$       200
CONTESTED MOTION FOR SUBPOENA FEE
$         40
$       160



TOTAL TO FINRA
$    7,705
$   23,495
TOTAL ATTORNEY FEES
$104,975
$   69,533
TOTAL FEES
$136,175
$ 116,523

In total, Murray spent at least $136,175 for a recovery of $25,705.95, which was reduced by his requirement that he pay to CGMI $40,153 plus interest. Thus, he spent $136,175 in FINRA fees and attorney fees and eight days in arbitration to find out that he still owed CGMI $22,478. By this estimate, Murray is now down by $158,653.

CGMI spent at least $116,523 to recover $40,153 plus about $8,031 in interest. However, since the panel determined that it owed $25,705.95 to Murray, CGMI actually spent over $116,523 to recover a net total of only $22,478. It outspent its recovery by well over $94,000.

Of course, this does not include the extra thousands of dollars that had to be spent by both parties on the motions to vacate/confirm the arbitration award in Ohio state court. We also don’t know whether Murray is currently employed and/or financially solvent or whether the $22,478 judgment that CGMI won is even collectible.

This case somehow spiraled out of control. It was simply not cost-effective for either party to take the case all the way to a hearing, given the dollars at stake and the total fees assessed. While neither the court opinion nor FINRA arbitration award mention whether the parties tried to mediate, it is typically FINRA’s practice to remind parties that mediation is an available alternative. This matter should have been settled before the arbitration hearing. Had the parties made a good-faith effort to negotiate either on their own or with the help of a mediator, the parties could have created a better outcome at a much lower cost, in a quicker timeframe, and with much less stress. The parties could have moved on with their lives.

In this time of economic uncertainty, one thing is clear: spending these kinds of sums for this type of outcome is just not common sense. The next time you are faced with a similar problem, do yourself a favor and give mediation a try. And if your client, your supervisor, or opposing counsel balks and wants to fight the case on principal, show them how much both sides paid and “won” here, and ask them if the rewards really outweigh the risks and costs.

If you have any questions about arbitration or mediation, feel free to contact me at linda@alpertmediation.com.