FINRA, Regulatory Notice 07-57: Representation of Parties in Arbitration and Mediation (Nov. 2007)  

Brief Summary
The Financial Industry Regulatory Authority (“FINRA”) has amended its arbitration and mediation code to allow representation by attorneys licensed anywhere in the United States and by non-attorneys, subject to state regulations on the unauthorized practice of law (“UPL”).

Complete Summary
FINRA is the successor to the National Association of Securities Dealers (“NASD”). It derives its authority from the SEC, and is responsible for regulating arbitration and mediation involving securities dealers. FINRA’s preexisting dispute resolution rule did not provide sufficient guidance on who could be a legal representative in dispute resolution proceedings.

In identically worded amendments to the arbitration and mediation procedures, the new rules allow for self-representation, representation by an attorney licensed anywhere in the United States, or representation by others. Representation by others is not permitted, however, where prohibited by state law.

The Executive Summary attached to these provisions notes that representation by non-attorneys might include relatives, friends or law students. The Executive Summary also notes that mediators or arbitrators do not bear the burden of verifying the representative’s suitability. This burden falls on the opposing party.

Significance of Opinion
Under these new provisions, licensed American attorneys in good standing need no longer be concerned about UPL in these proceedings. On the other hand, the law of many states may prohibit the practice of law by non-attorney friends, relatives or law students in an arbitration proceeding. Cf. D. Ryan Nayar, Unauthorized Practice of Law in Private Arbitral Proceedings: A Jurisdictional Survey, 6 J. Am. Arb. 1 (2007).

To view or download information related to this alert, click on "Download PDF"

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.