Anyone who has handled FINRA arbitrations, from the compliance officer to in-house counsel, you have probably had to deal with a problem arbitrator. How many of you have had arbitrators sleep through the proceedings? How many have had arbitrators who simply turn out to know absolutely nothing?
I suspect that the answers to these questions are an unfortunate yes. What would you do if one of your arbitrators was suspended for the unauthorized practice of law? This is the issue current winding its way through the federal courts in Philadelphia.
In this case that is on appeal, one of the arbitrators had this issue and the parties consents to have the remaining two panel members decide the case. The losing party is now claiming on appeal that it was denied its right to a panel of three arbitrators.
From my perspective the result of the case is less important than the lessons to be learned. For one, FINRA over the past year has taken a more proactive approach to assessing its arbitrator pool. Practitioners also have tools at our disposal.
When ranking your arbitrator selections, you should perform independent research separate and apart from the packet FINRA provides. When your panel is selected, you should do the same sort of research because you still have the opportunity to object to the appointment of one or more of the panelists.
For example, a simple Google search can reveal a wealth of information. Also, you should search the state and federal courts in the jurisdiction in which the arbitrator resides.
These are just a couple of resources that you can use, but nothing is perfect. The key is to do something so that you can hopefully avoid the problem of having an arbitrator removed mid-hearing. That is certainly not something anyone bargained for when you proceed to arbitration.
* photo from freedigitalphotos.net