My Lawyer’s Not Licensed? The Unlicensed Practice Of Law In Arbitration And Mediation Of Securities Disputes

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As an investor, you should perform due diligence prior to having an out-of-state attorney represent you in a securities dispute. In an era where social media provides multiple channels for the advertising of an attorney’s skill sets, an investor should take heed before making the decision to engage out-of-state counsel to represent them.

For example, out-of-state attorneys must either hire local counsel or satisfy several requirements before appearing at the arbitration, or even at any mediation, of securities related matters in the following states: California, Florida, Illinois, New Jersey, and New York. For an out-of-state counsel to fully participate in an arbitration hearing of a securities related matter in California, FINRA provides the following guidelines and requirements:

  • Non-California counsel must submit a notice of intent to appear at the arbitration to the Western Regional Office of FINRA when the initial pleading is filed. The notice may take the form of a letter;
  • An out-of-state attorney must submit a completed Certificate;
  • FINRA Dispute Resolution reviews the Certificate submitted by the out-of-state attorney. If the out-of-state attorney does not complete the Certificate or file the Certificate with the initial pleading, the claim will be deemed deficient and will not be served on opposing parties and counsel until the out-of-state attorney has submitted a complete Certificate;
  • If FINRA Dispute Resolution approves the Certificate, it will mark the Certificate “Approved” and return it to the out-of-state attorney;
  • The out-of-state attorney files the approved Certificate with the State Bar of California, and serves it upon all parties and their counsel in the arbitration whose addresses are known to the attorney at the time the Certificate is filed; and
  • The California attorney has entered an appearance as counsel of record. The California attorney’s notice of appearance must be filed with the initial pleading, and should include the attorney’s California Bar number, and contact information.

While this list is not exhaustive, it is a good starting point for an investor seeking legal counsel in California.

In Florida, an out-of-state attorney may not represent an investor that is a resident or a citizen of the State of Florida for compensation in any FINRA Dispute Resolution Securities Arbitration proceeding. See Florida Bar re Advisory Opinion on Nonlawyer representation in Securities Arbitration, 696 So.2d 1178 (Fla. 1997); The Florida Bar v. Rapoport, 845 So.2d 874 (Fla. 2003) (where an out-of-state attorney was actively advertising his securities arbitration services in Florida newspapers as well as preparing, signing and filing securities arbitration claims for clients in the State of Florida).

Prudence requires the discerning investor to seek additional information prior to engaging a lawyer or a law firm. Information on FINRA’s website along with the appropriate state’s bar association will assist investors.

Topics:  FINRA, Pro Hac Vice, Professional License, Securities

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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