Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, March 11, 2013

Illinois Bar Association: Non-Attorney Representatives in FINRA Arbitrations Are Practicing Law

The Illinois State Bar Association recently issued an opinion stating that a nonlawyer's representation of parties in a FINRA arbitration generally constitutes the unauthorized practice of law. (Download Ill.13-03[1])  The inquiring attorney served as the chair of an arbitration panel that was hearing a dispute between customers and a brokerage firm and became aware that the customers were represented by a nonlawyer employee of a company, not a law firm, that regularly represents customers in FINRA arbitrations. 

The opinion letter notes that FINRA Arbitration Rule 12208 provides that parties may be represented by a nonlawyer "unless state law prohibits such representation."  In a thoughtful review of the policy implications as well as Illinois law, the bar association recognized that FINRA arbitrations do not "involve the same degree of legal complexities and formality" as a court proceeding, but "we nonetheless are of the strong belief that the actions of a party representative in a typical FINRA proceeding ... involves the giving of legal advice and the rendering of services requiring the use of legal knowledge or skill as to constitute the practice of law."

The opinion letter also states that the attorney/arbitrator who becomes aware of the nonlawyer's representation of a party should inform FINRA and, if necessary, notify the agency that has jurisdiction to investigate unauthorized practice of law in Illinois.  The opinion reassures, however, that "it is not our view...that an attorney having taken such steps could be said to be assisting the unauthorized practice should he or she not withdraw as an arbitrator in the event that the steps taken do not result in the discontinuation of the nonlawyer representation."

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