Let me say at the outset that I, myself, am an old (by most people’s definition, anyway), white man.  So, selfishly, I’ve got nothing against old, white men.  But, the fact is that FINRA arbitration panels are disproportionately populated by such guys.  And I am not sure that’s a good thing for the arbitral process.  Astute readers will recall a post from a couple of weeks ago in which I made the argument that if the parties to FINRA arbitrations do not perceive the process to be fair, then the whole system has to be judged to be a failure.  I suppose I am making the same point here.

Last week, my partner, Heidi VonderHeide, and I did a webinar[1] on what we were each thinking about FINRA here in early 2022.  One point I made was the oversized presence that old, white men have in the rolls of potential arbitrators.  In case after case, I was seeing the same thing, for better or for worse.

Yesterday, hot off of that pronouncement, I began the arbitrator ranking process for a new customer case that I am defending.  This process is relatively standardized: I look at who the potential arbitrator is, what they do (and have done) for a living, any prior awards, of course, and anything else I can dig up about them (from the internet, as well as from other lawyers who may have previously had cases with the same person).  Gender, race and age are simply demographic facts that are noted for each person.[2]  For me, the only one of the three that will cause me to automatically strike someone is age.  I simply will not – unless the alternatives are seriously worse, somehow – rank an 85-year old to be considered for chair in a case that I know will be tenaciously litigated.  I know the amount of energy and attention that is required from the chair in such cases, and, candidly, I don’t trust someone of that age to be able to do it well.  (I did an arbitration in New York about 20 years ago, with two super-old panelists, one of whom was the chair.  It is still the only case I ever handled in my career where two members of the hearing panel – yes, the two old guys – fell asleep at the same time.  One sleeper on the panel?  Well, that happens all the time; indeed, it is annoying but unsurprising.  But two?  At that point, it becomes a joke — the punchline to which is: drop a big stack of books on the floor, create a very loud noise, and pretend it was an accident.)

Anyway, there I was, ranking the potential chairperson.  I guess I can safely say chairman here, as all ten candidates were men.  As well, all ten were white (as best I can tell).  Finally, all ten were old.  How old?  Here are their ages:  64 (the baby in the group), 70, 72, 75, 75, 77, 77, 78, 80 and 85.  Average age = 75.3.  I don’t know what the average age of all FINRA arbitrators is, but it has to skew to “older,” in light of FINRA statistics that reveal that 71% of all FINRA arbitrators are age 61 and older.  (By the way, all ten of my chair candidates are lawyers, so there’s no diversity in occupation, either, although I admit I do prefer a lawyer to serve as chair.)

So, there you have it, my webinar thesis, if you will, embodied in a real case.  Utter lack of diversity.  Which is, at a minimum, ironic, given this statement on FINRA’s website by Rick Berry, the genuinely nice guy who runs FINRA Dispute Resolution:

It’s vitally important that our pool of arbitrators reflects the varied backgrounds of the parties who use the FINRA arbitration forum. We have bolstered our recruitment efforts, both in terms of increasing the numbers and diversity – in age, gender, race, and occupation – and continue working toward this goal.

I agree with Rick that arbitrators should be diverse.  Ultimately, it’s an issue of fairness, and there’s nothing more important than that.  And on this point, I am joining a chorus of voices already out there.  My friends at Bressler said last year, “Ensuring a diverse arbitration panel is crucial to improved decision-making through diversity of thought and approach. Different backgrounds bring different perspectives, which will ultimately lead to a more inclusive process.”

The then-president of PIABA – a group with which I hardly ever see eye-to-eye – wrote in 2014 that, “There is no question that having a pool of arbitrators with diverse backgrounds and experiences will result in improved decision making.”

Last year, the Washington Law Review published an article that asked, “How can an investor expect a fair consideration if it is both true that the industry controls the dispute resolution system and consumer investors who are not white males over the age of sixty are unlikely to see arbitrators with backgrounds like their own?”

There are tons more, all saying the same thing.  The point here is pretty obvious: as this particular pool of arbitrators amply demonstrates, given the complete lack of diversity in the ten chair candidates’ “age, gender, race, and occupation,” Rick Berry has not reached the point where he can begin to curtail his recruitment efforts.  So, go, Rick, go!



[1] It was part of a larger series of webinars offered by Ulmer, all of which are now available on demand.

[2] Gender and race are pretty easy to divine, but age takes a bit of a reasoned guess.  Here’s how I do it: I know how old I am, and when I graduated from college.  By comparing the year in which a potential arbitrator graduated college to my own graduation year, I can back into his or her current age pretty accurately.