FINRA | PhloxADR
By Dr. Justin Wood, Th.d., CJME

This is a blog post of a letter I write FINRA in response to their questions asking advise on the proposed elimination of non-attorney representatives in arbitration.

I would like to comment on NAR (non-attorney representative) firms, individuals or others that participate in arbitration.  ADR (alternative dispute resolution) was created as a means to be fair, less formal, less expensive, less combative, more beneficial and more expeditious to participants; while at the same time, reducing the burden cast upon the taxpayer and overloaded court system. Anytime we look to restrict or prevent a NAR, firm or otherwise, access to participation in an ADR process, we must first ask ourselves: are we doing this for personal gain or benefit to the process and is our intervention perverting the original intent established by SCOTUS?

ADR was not intended nor created to employ juris doctoral representatives and is counterproductive to jurisprudence as ADR, including arbitration, is not based upon interpretation of law and at most citation of statutory law. Statutory and common laws do govern our society, but ADR was created to resolve disputes to which jurisprudence is not in question or that which can be resolved via third-party neutral intervention.

When we restrict, FINRA or State or other, the rights to an effective ADR process in which would impede the intended purpose; we spit in the face of SCOTUS and the American people. Chief Justice Warren Burger and the clear headed legislative representatives within the states established ADR with the aforementioned original premise and said such intended purpose should not be infringed by scholarly distortion but in fact be sustained by reinforcement of ethical practice standards.

Let me elaborate upon my reasoning based upon FINRA’s stated activities report as follows:

  1. using the forum as a vehicle to employ inappropriate business practices;
  2. requiring retainer agreements that reflect a non-refundable fee of $25,000;
  3. representing parties in hearing locations where state law prohibits such representation or, in the alternative, handling only small claims (decided on written submissions) to avoid hearing locations in which the unauthorized practice of law would become an issue;
  4. signing required arbitration submission agreements with the name of the NAR firm to avoid naming an individual representative who could be engaging in the unauthorized practice of law;
  5. pursuing frivolous or stale claims to attempt to elicit settlements; or
  6. breaching confidentiality provisions in settlement agreements by posting a picture of the settlement check to market the NAR firm’s services.

Sighting issues above (1, 2, 5, 6) appear to be ethical issues which through simple industry standards and/or third-party credentialing processes; such as that established by FINRA, the American Bar Association (ABA), Texas Mediator Credentialing Association (TMCA), and Great Plains Mediation and Arbitration (GPMAA), would be curtailed. Establishing guidelines in which a set standard should be followed and then produce these standards to the participants; FINRA will have performed due diligence and any further intervention would violate the party’s freedom of choice established within ADR. Primarily, it exceeds FINRA’s scope to force participants into a practice that exceeds their God given free will which has already been set and cited by SCOTUS.

Now in respect to the problematic situations listed above (3, 4); these situations are, within my purview, governmental intrusion of people’s rights and freedoms which were established by SCOTUS; thus, illegal awaiting the indomitable appeal. ADR was established for the people’s choice and said choice has been perverted by meddling, whether or not, the intentions were solicitous or devious.

In conclusion, I do support NAR as an option for parties to choose, with the prerequisite, parties need information on fair and ethical practices. FINRA should not curtail nor encourage the elimination of NAR parties to proceed over or represent within an ADR process as said process was created by SCOTUS for a fair, inexpensive, less formal, and expeditious dispute resolution process.

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