What to Know About Individual Arbitration

When Attempting to Persuade Arbitrators,
a Dozen Victims are Better Than One.

“So okay,” you say. “Group cases sound like they’re better than class actions.  But what if I had a really big loss and have the money to afford litigation costs. Wouldn’t I be better off suing on my own than being part of a group?” Not necessarily.

It’s true that when a lawyer is yours alone, he or she will advance your interests alone.  It’s also true that a group representation presents a few potential conflict situations for your lawyer.

For instance, if a Respondent has very few assets or is facing insolvency, numerous Claimants may be competing for access to limited funds. An attorney representing you alone will have no impediment to rushing ahead and seeking to recover as much as he can for you, without regard to whether anything is left for other victims. But a lawyer undertaking a Multi-Client Representation can’t grab funds for you while cutting out his other clients.

It’s also conceivable that at some point in a Group Matter, you or another member of the client group might wish to follow a course of action different from that which the attorney and the remaining clients wish to pursue. This can be resolved in various ways, whether by compromise on the part of the dissenting client or by counsel’s taking of steps to accomplish the dissenting client’s individual goal or, if those measures are impracticable, protecting the client’s interests while assisting him or her in obtaining new counsel. But if the conflict can’t be resolved in a manner satisfactory to all clients, the attorney might have to completely withdraw from the Multi-Claimant Representation.

Thus, group representation is not perfect and carries with it at least a potential for conflicts to arise. Nevertheless, multi-claimant arbitrations provide at least four significant advantages over single-claimant proceedings.

Multi-Claimant Arbitration

First, there are economies of scale in that each group member saves money by sharing the same expert witness and obtaining and copying core documents one time instead of a dozen.  Second, when multiple claimants pursue recovery against the same broker, their collective memories and combined records result in their lawyers having an early and fairly complete picture of what led to the claimants’ losses. Third, claimants who join in a group matter usually have had similar experiences with the broker and will corroborate each other’s testimony, making arbitrators far more likely to find their testimony credible and to award adequate compensation. Finally, brokerage firms are particularly motivated to settle a group case because a confidential group settlement can both simultaneously eliminate numerous complaints and reduce the risk of adverse publicity for the firm.

These advantages of group arbitration over individual proceedings are fairly powerful inducements for even the wealthiest claimants and those with the biggest losses to join with other victims. In particular, the corroborative effect of multiple victims testifying before a single panel of arbitrators makes recovery a good deal more certain than if one pursued recovery in a separate proceeding.

We should say in conclusion that group cases don’t come along every day. They usually occur only when a single financial professional or firm has sold the same bad investments to many customers. Even then, group cases don’t happen unless lots of people learn through word of mouth or media coverage that other aggrieved investors like themselves exist, have come forward, and are willing to fight. But when all of the necessary elements align, group arbitration enables victims to recover far more money than they typically could recover in either a class action or a stand-alone proceeding.

Our investment litigation team has the extensive experience and deep knowledge needed to guide large numbers of unrelated victims through the group arbitration process. If you’ve suffered investment losses and know of other victims, please contact us to discuss the potential of a putting together a group case. If you’ve lost money and believe the same broker has victimized others in the same way, we may be able to put you into an existing group or to find other victims with whom you can join. Contact our FINRA attorneys Hugh Berkson or Jay Salamon at (866) 932-1295, or reach us through the consultation form on the right of this page. We’ve helped hundreds of aggrieved investors. Talk to us about how we can help you.

Part 1: Group Arbitrations

Part 2: Securities Class Actions