In brief, the headlines are: 1) overall arbitration filings through November – 2,712 cases – are down 25% (they had been 26% in October); 2) cumulative customer claims remain down 5% from 2020; 3) industry disputes remain way down at minus 47%; 4) for the fifteenth month in a row, pending arbitration cases declined; and 5) mediation cases continue to surge. Overall arbitration turnaround times were 15.3 months, with hearing cases now taking 17.8 months. Also, there are now 8,269 DRS arbitrators, 3,974 public and 4,295 non-public.
Speaking of Mediation
There were 562 mediation cases in agreement through November, a significant 49% increase over 2020 (and an improvement from October’s already impressive plus 47%). With 49 mediations entered for November, this is the fourth month in a row with a significant increase in monthly and cumulative mediation filings. Recall that, as reported in SAA 2021-46 (Dec. 9), Director of Arbitration Rick Berry attributed the dramatic increase to: the return to in-person hearings; ending waiver of postponement fees for all cases (September 2021); comfort at being in person after inauguration of DRS’s mandatory vaccination policy; growing use of Zoom for mediations; and the return of Mediation Settlement Month. The strong settlement rate also continues, with nine out of ten mediation cases (88%) continuing to result in a settlement.
Pending Cases Continue to Decline
For months after the pandemic’s onset in March 2020, the pending cases stat built up to a high of 5,415 open cases in August 2020. The last fifteen months, however, have each experienced declines in pending cases, reflecting a 1,361-case reduction from last year’s high water mark. Closed cases are up 18% this year, while pending cases are down 22%. Again, kudos to FINRA DRS for eliminating the backlog.
Checking in on Virtual Hearings
It’s been a while since we reported on the virtual hearing stats. Cumulative FINRA “Virtual Arbitration Hearings” thru November: 589 arbitration cases have conducted one or more hearings via Zoom (243 customer cases and 346 industry cases). There are 467 total joint motions for virtual hearings (192 in customer cases and 275 in industry cases). While the August 2, 2021 return of in-person hearings at FINRA DRS will continue to erode use of virtual hearings, we don’t see this option ever going away entirely. Recall that our January 2021 feature article, A Funny Thing Happened on the Way to a Quiet Year in ADR: How a Pandemic Accelerated Profound, Lasting Changes, predicted this development: “[V]ideo hearings are here to stay: Having been exposed to the time and money benefits of online ADR and video hearings, some participants will never return to traditional case administration or in-person hearings in every arbitration or mediation…. Not every case will be a Zoom candidate. We see a hybrid, with some cases remaining all-virtual (think smaller, single-arbitrator cases), and others having at least some arbitrators, counsel, or witnesses participating remotely, especially those in a high-risk group. Mind you, virtual hearings are not a panacea, and resistance in some quarters will persist (‘I want to be there to see witness faces;’ ‘the case is too complicated;’ ‘I want to be sure the witness is not being coached’), but virtual hearings for at least parts of cases will eventually become the new normal.”
(ed: *Overall and hearing processing times have ticked up a bit the past few months. We again wonder if the resumption of in-person hearings in August is somehow linked to it, given that it is easier to schedule and “attend” virtual hearings than those conducted in-person. **For those readers wondering about the whereabouts of our usual quarterly analysis of the AAA’s consumer stats, the 3Q 2021 stats were only recently posted. Given where we are in the calendar, we decided to wait for the year-end database to be posted.)
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