There is a general sentiment that arbitrations favor the defense.  In fact, several years ago, there were several House and Senate bills supported by the trial lawyers that sought to amend the Federal Arbitration Act to end “forced” arbitrations.  In my experience, however, FINRA arbitrations may actually be making it easier for claimants to file claims and receive settlements.  Because FINRA does not generally permit depositions and document discovery is limited, discovery costs in FINRA arbitrations are generally lower than they would be otherwise.  However, certain limitations in the nature of FINRA arbitrations often provide an advantage to claimants. 

FINRA does not allow for motions to dismiss the statement of claim.  I have often seen statement of claims that say nothing and are just forms that are used over and over again.  Claimants can often allege fraud, misrepresentation and even claims that do not exist without setting forth any material facts.  Further, although the limited discovery does save costs, it often makes it very difficult to evaluate the strengths or weaknesses of the case or to position the case for a favorable settlement before trial.  There are also no motions for summary judgment.  As a result, FINRA arbitrations are perfect for claimants seeking to file a statement of claim and receive a quick settlement.

This is not to say that I am advocating jury trials. I know that juries are unpredictable and one of the benefits of the arbitration is that an arbitrator is generally sophisticated.  I also know that in certain cases, the limited discovery can save hundreds of thousands of dollars.  But, I often wonder if, in some cases, a federal bench trial would offer greater advantages to the industry than FINRA arbitrations.