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Financial Advisor Litigation Goes Digital in the Age of COVID-19

Litigation & Dispute Resolution Alert Jonathan W. Hackbarth, Lauren E. Stine, Jordan D. Maglich, Amy L. Lenz

businessman using laptop computer

In response to the COVID-19 pandemic, arbitration tribunals and state and federal courts throughout the country have postponed hearings, stayed legal proceedings, and encouraged (or ordered) litigants to conduct hearings via electronic platforms such as Zoom. Needless to say, cross-examining a witness, attempting to convince a judge to enjoin a financial advisor from soliciting former clients, or conducting a final hearing over Zoom are not ideal. A firm recently learned as much after a FINRA arbitration panel entered an eight figure award against it. During the hearing, a portion of which was conducted via Zoom, one FINRA arbitrator allegedly reviewed other screens, another blocked her screen, and the third walked away from the screen during closing arguments.

Although litigating via Zoom or other electronic platforms should be avoided when possible, parties are increasingly being ordered to do so. When this is the case, litigants are well-advised to consider the following recommendations:

  1. Consider Your Electronic Presentation: At too many of our Zoom hearings, lawyers and witnesses have had a hard time being seen or heard (or both), which stymies advocacy and tends to annoy judges and arbitration panels. Before your hearing, it is well worth your time to ensure that background noise is minimized and that you have obtained appropriate lighting, camera angles, and presentation volume. The same goes for any witness you plan on calling at the hearing.
  2. Consider Using Smaller Exhibits: Large files can take a long time to load over electronic platforms and are more challenging to work with during the hearing. Consider using smaller exhibits or marking a sub-set of a larger document at your hearing.
  3. Have Access to Two Monitors: We recommend using two monitors at your electronic hearing. The first monitor should present the video feed of the hearing and the exhibit being presented to the witness, opposing counsel, and judge/arbitration panels. The second monitor should be used to privately review your notes and marked exhibits to aid in presenting your argument, questioning your witnesses, etc.
  4. Work with a Tech-Savvy Court Reporter or IT Personnel: Although some courts limit or prohibit litigants from using a court reporter of their choosing, other courts and arbitration panels do not (see, e.g., FINRA Code of Arbitration Procedure 12606). If possible, retain a court reporting service that has the ability to facilitate hearings over electronic platforms. IT personnel who have experience with electronic platforms, such as Zoom, and presenting documents over these systems can also be used, but this should be cleared with the court or arbitration panel well in advance of your hearing.
  5. Practice: For all electronic hearings, we recommend conducting multiple mock hearings over the electronic platform at issue to a coworker or client representative to ensure that you, your witnesses, and your exhibits present well. If you do hire a court reporter or work with IT personnel, we recommend incorporating these parties into your mock presentation just as you would at the actual hearing. We have found that conducting multiple mock electronic hearings was well worth the investment, particularly when it came to effectively presenting exhibits and questioning witnesses.
  6. Preserve the Record: We have found that it is much more common for people to talk over one another at electronic hearings as opposed to in-person hearings, which was challenging for the court reporter and had the potential to result in an incomplete record. When this inevitable jumble occurs, it is necessary to repeat your statement (or objection) and, if there is any doubt, confirm with the court reporter that it was noted for the record.
  7. Plan for Breaks and a Slower Pace: Participants to our electronic hearings have been more willing to take shorter but more frequent breaks, and the hearing itself has proceeded much slower than an in-person hearing given ongoing technology challenges. As a safe rule of thumb, plan to cover a little more than half the material at an electronic hearing as you would at an in-person hearing.
  8. Consider Using a Conference Room and Ethernet Connection: Wirelessly streaming a hearing from your home is not ideal for a number of reasons including the potential for background noise and slow internet connection speed. We have found that even the fastest wireless internet connection speeds appear choppy when loading exhibits via an electronic platform, but we have not encountered these issues while using a wired Ethernet connection. And if the presiding judge/panel allows it, it is ideal to present witnesses either in your conference room or, if space allows, in a nearby conference room at your office.
  9. Maintain a List of Your Exhibits: Court reporters' electronic exhibit programs we have used terminate at the conclusion of a hearing and exhibit lists and exhibits are not made available until the court reporter circulates the transcript. Therefore, we recommend that you keep a running list of exhibits introduced during the hearing and a description of each exhibit to allow you to access each as soon as the hearing concludes. At an electronic hearing, particularly a multi-day hearing, having immediate access to daily exhibits will give you a leg up at the next day's hearing.

For more information on litigating via Zoom or other electronic platforms, please contact your local Quarles & Brady attorney or:

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