Opinion ID: 1729155
Heading Depth: 1
Heading Rank: 1

Heading: proposed opinion

Text: The Committee held a public hearing on the matter in June 1996, where both oral and written testimony was received. Following the hearing, the Committee voted to issue a proposed opinion which finds that non-lawyer representatives in securities arbitration who accept compensation for their services are engaged in the unlicensed and unauthorized practice of law, and that the public is actually being harmed and has the potential for being harmed in the future by this practice. Several nonlawyer securities arbitration representatives filed comments as interested parties in opposition to the proposed opinion. The Standing Committee's proposed opinion is expressly limited to the narrow circumstances in which a securities investor with a claim or claims against a broker is represented before, during or after a securities arbitration to resolve the claim by a nonlawyer retained for compensation. [1] The Committee maintains that a claimant in a securities arbitration is seeking, through a contested and adversarial proceeding, monetary damages allegedly lost as a result of the broker's wrongdoing. The Committee notes that although the investment amount at issue in some cases is substantial, even relatively small claims are significant to modest, individual investors, and, hence, regardless of the amount at issue, these cases clearly implicate the important legal rights of the investor. The Committee is of the opinion that a nonlawyer who is retained to represent an investor in securities arbitration for compensation is engaged in the unauthorized practice at each of the three stages of representation. Specifically, the Committee finds that the advice given and services rendered before the arbitration affects an investor's legal rights because the representative must determine: (1) whether the investor is compelled to arbitrate under any investor-broker agreement; (2) the effect of eligibility rules and statutes of limitations; (3) the scope of the arbitrator's authority; (4) whether to arbitrate or settle the dispute before filing a claim; (5) the merits of specific claims or defenses; (6) whether attorneys or expert witnesses should be hired to assist in the arbitration; (7) whether the investor should file a petition to stay the arbitration; and (8) the possibility of related or alternative civil actions. The proposed opinion further details that a nonlawyer representative also is engaged in the unlicensed practice of law during the course of the arbitration proceeding because the representation requires, among other things: (1) conducting discovery and any related depositions; (2) presenting evidence; raising objections; examinations of witness and void dire of experts and opening and closing arguments; and (3) preparing and filing the initial written statements of claims, answers and counter-claims, as well as written and oral motions and legal memoranda concerning the claims at issue. As to the third stage of representation, the proposed opinion notes that nonlawyer representatives in securities arbitration are engaged in the unlicensed practice of law even after the arbitration proceeding has concluded because any arbitration award or judgment can be confirmed, vacated or collected only through an action at law and not through further arbitration or some alternative proceeding. Finally, the Committee notes that the nonlawyer representative in a securities arbitration has overstepped proper bounds because at each of these stages, and throughout the entirety of the representation, the investor places great reliance on the representative to properly prepare and present his or her case.