It was late afternoon of the first day of the hearing. Claimant’s counsel was wrapping up the examination of his first and only witness that day, the broker. The broker fought him throughout the day, but Counsel was confident that he had effectively controlled the witness and locked him into favorable testimony that presented a plausible, if not persuasive scenario that the broker harmed the Claimant. Counsel felt that he had a good day. Counsel began switching focus and transitioning to his next witness, the expert, to build on the broker’s testimony.
At the head of the table, a couple of the arbitrators were also anticipating the end of the broker’s examination, but for different reasons. The end of the broker’s examination was bringing to an end, in their view, a painful, at times mind-numbing waste of time. They had struggled to follow what to them was Counsel’s disjointed questioning, using predominantly leading questions that skipped around topics without regard to chronological order. They heard plenty of testimony of events and dates, but the arbitrators had a hard time putting it together. They had a headache and the end of the broker’s examination would be an aspirin.2
Calling the broker as the first witness is a common strategy used by Claimant’s counsel.3 The apparent thinking is that the Claimant has an advantage as the broker testifies without knowing what the Claimant is going to say and may lock himself into potentially harmful testimony. If Claimant can damage the broker’s credibility at the outset, or lock the broker into unfavorable testimony, then the Claimant’s case gains momentum.
*218 Counsel expects the broker’s examination to be difficult. Counsel’s approach to the broker’s examination will include using leading questions to control the witness and other techniques to keep the broker off balance. Those techniques can be effective in controlling a hostile witness, but they can also create the conditions for a disjointed and confusing examination in the eyes of the arbitrators.
If the arbitrators are not following, or are confused by the broker’s examination, then they may become impatient, bored, and even angry.4 If that happens, then they are tuning you out and you have lost a valuable opportunity to get Claimant’s story across. In fact, you have taken a step backwards.5
This article presents tips to minimize your risk of presenting a disjointed examination of the broker. Following these tips will prevent you from alienating and/or confusing the arbitrators, and thereby maximize the value of calling the broker first:
1. RESPECT YOUR ARBITRATORS.
a. Approach every aspect of the hearing, including the broker’s examination, with empathy for the arbitrators. Arbitrators want to do a good job, which to them means that they will use their best efforts to compare assertions of the parties, evaluate the evidence including determining credibility, and apply the appropriate legal and/or equitable principles to render an Award. Arbitrators like, and the Claimant cannot win without, a good and compelling story showing that Claimant is a victim of wrongful conduct. A good story is usually told in a logical sequence and with easy to follow packets of information that paint a clear and cohesive picture of Claimant’s case for the arbitrators. Counsel’s ability to orchestrate and present that good story is critical to winning an Award. Claimant may have a good story, but it is ineffective if the arbitrators cannot follow and understand *219 it. Your goal is to help the arbitrators do their job.6
b. Determine each arbitrator’s experience with FINRA arbitration, arbitration in general, and litigation. A panel with rookie arbitrators might require some style adjustment compared with a more experienced panel. A panel of lawyers is less likely to be confused or put off by lawyer tactics than a layman.
c. Take into account that counsel and the arbitrators start the hearing with vastly different perspectives, information, and understanding about the case. From counsel’s perspective, everything about Claimant’s case makes sense. Counsel has been living the case and knows the case backwards and forwards and how each discrete segment of the case fits within Claimant’s story. Counsel can tell Claimant’s story in a disjointed and nonchronological fashion and still understand it. For example, in a suitability case, counsel can first discuss the discreet issues relating to the purchase of the investment underlying the dispute and then easily switch gears and go backwards on a timeline and discuss how the Claimant and broker met and the circumstances leading up to the purchase of the investment. On the other hand, the arbitrators start the hearing with very limited knowledge of the case gleaned from the Statement of Claim, the initial prehearing conference, and motions. It may make sense to start your examination with foundational questions to establish facts before getting into impeachment materials.
2. IMPORTANCE OF OPENING STATEMENT.
a. Claimant has the advantage in an arbitration hearing of going first and making a critical first impression on the arbitrators. Claimant has the arbitrators’ full attention and the arbitrators are eager to hear the case.7 Present a detailed opening statement that serves as a framework for the arbitrators to follow the Claimant’s story. Be chronological and include a timeline for the arbitrators to follow the case and provide structure to your *220 presentation and the broker’s testimony. A timeline is a must for a suitability case, as the events in the claim focus around timing issues such as the reasonableness of the broker’s recommendations at the time they were made.
b. Be confident in telling the arbitrators what the broker will be forced to admit. While you may feel that such an opening will telegraph your moves to the Respondent, and want to hold back, now is the time to capture the arbitrators’ attention and get them thinking favorably about the wrong done to Claimant.
c. Weave in key/important elements of the broker’s testimony including key words that will help the arbitrators process the broker’s testimony. Your opening should also highlight important elements of other witnesses’ testimony, along with what the documentary evidence shows.
3. BE ORGANIZED AND PREPARED.
a. Keep the broker’s examination moving crisply. Delays and constant pauses disrupt the arbitrators’ train of thought and diminish the impact of your evidence. Have the documents or other evidence that lock in what you know the broker must say at your fingertips so the arbitrators do not have to wait for you to spring them on the broker to prove his/her unreliability.
b. Put your exhibits in binders and in the order that you intend to use them. Some counsel arrange document binders in bates stamp order, which may be the result of the order in which documents were received in discovery or copied by the copying service. It may be easier to locate documents that are in strict numerical order, but it is distracting to arbitrators to constantly flip among exhibits that are scattered throughout multiple binders while trying to follow testimony at the same time.
4. QUESTIONS.
a. Be aware of the challenges of examining a hostile witness and plan accordingly. Calling the broker first is akin to cross-examination. Counsel should already know the answers to most of the questions he is posing by virtue of documents or other evidence produced in discovery. Counsel’s goal is to control the witness by using concise leading questions that call for “yes” or ““no” type answers. In other words, Counsel is the one testifying through carefully crafted questions with which the broker must agree.8 *221 Most people (especially non-lawyers) are not used to digesting information from a cross-examination format.9 In fact, the arbitration hearing may be the only time that the arbitrators encounter this form of information presentation during their professional careers. Thus, counsel should be aware that some arbitrators may have difficulty and are expending valuable mental energy just to follow the testimony instead of fully understanding it. Additionally, counsel may be asking questions that seem out of logical or chronological sequence to keep the broker off balance. Such tactics may help control the witness, and in some instances advance the Claimant’s case, but it makes the broker’s testimony harder to follow for the arbitrators.10
An experienced Chair or panelist can explain to the other arbitrators the nature of examining a “hostile witness” and why such tactics are necessary and expected. Nonetheless, those arbitrators may simply not appreciate litigation tactics and cannot get over their thinking, “why won’t counsel just let the broker tell his story” and feel frustrated by the process. Some arbitrators may even think that the confusion created by limiting the broker’s testimony though leading questions and not sticking to a time line is intended to hide the weakness of Claimant’s case and suppress the truth.11
*222b. Do not be overly cautious in asking non-leading questions that give the broker an opportunity to tell parts of his story.12 There may be a temptation, and in some instances, warranted, not to ask open-ended questions (i.e., “why?”). You want to control the broker’s testimony and limit the broker’s opportunities for lengthy self-serving answers, and you cannot depend on the panel to limit the broker’s response, especially if your question opened the door.
The broker, however, will get to tell his story anyway when examined by Respondent’s counsel.13 You should be able to get information helpful to Claimant’s case and having the broker tell his story in a more open ended manner may alleviate the arbitrators’ concerns that your extensive use of leading questions was somehow intended to suppress the truth.
Keep open ended questions focused on specific elements of the case. For example, a suitability case focuses on a bracketed time frame in the relationship between the Claimant and the broker--at or about the time the Claimant made the investment. In this regard, you can ask non-leading questions to explore facts and events surrounding and confined to that time frame. These questions can include:
What did the Claimant tell the broker about his financial and investing background;
What was the broker’s understanding of the Claimant’s investment objectives;
How did the broker come to understand Claimant’s investment objectives;
Explain the investment and why was it beneficial/suitable for the Claimant; and
Why did the broker suggest the investment to the Claimant?
The broker’s answers will help you present the Claimant’s case, and they may even create the inference of wrongdoing by the broker.
*223 CONCLUSION
The purpose of this article is not to evaluate the strategic merits of calling the broker as Claimant’s first witness. Rather, its purpose is to sensitize Claimant’s counsel to appreciate the advantages and downside risks of calling the broker first and to suggest ways to do so effectively. The upshot is that if Counsel’s strategy is to call the broker first, then Counsel needs to know what he is doing and do it well.
Footnotes
1 John Ohashi is a FINRA Arbitrator and Mediator. He was a public member on the FINRA National Arbitration and Mediation Committee (NAMC), where he was Chair of the Neutral Roster Subcommittee. He has also served on FINRA’s Neutral Roster and Arbitrator Training Materials Task Forces and has conducted the in person component of FINRA arbitrator training.
2 This scenario actually happened and I have served on several other cases with similar overtones.
3 Claimant’s and Respondent’s counsel have said calling the broker first is part of a strategy to: (1) show the broker harmed the Claimant; (2) followed by the expert witness who testifies how badly the broker harmed the Claimant; and (3) followed by the Claimant who testifies how he/she relied on the broker.
4 “Likeability” is important but is a topic for another article.
5 Respondent’s counsel will immediately follow-up your potentially disjointed examination of the broker with a traditional direct examination of a friendly witness. The testimony will come out in a controlled manner in an easy to follow narrative that shows the broker in the best light with testimony that the arbitrators may use to fill in the blanks left open from your examination.
6 The arbitrators will not show it but they appreciate counsel who help them do their job.
7 A study observed that judges were more likely to grant a favorable ruling at the very beginning of the work-day or after a food break. See Shai Danzigera, Jonathan Levavb, & Liora Avnaim-Pessoa, Extraneous Factors in Judicial Decisions, PROC. OF NAT’L ACAD. SCI. (2011), available at http:// lsolum.typepad.com/files/danzigerlevav-avnaim-pnas-2011.pdf (last visited Aug. 31, 2014).
8 Getting the broker to answer a series of leading questions with ““yes,” “yes,” “I agree” can create the impression that Claimant’s counsel and the broker are actually in agreement, which helps Claimant’s story.
9 Calling the broker first and developing Claimant’s case through cross-examination is different than the customary cross-examination of a witness who has just completed a direct examination. In a customary cross-examination, the questions, although leading, are tied to a topic raised during the witnesses’ direct examination and therefore have context. The arbitrators have a framework to evaluate the questions and answers during a customary cross-examination, which they do not have if the broker is called first.
10 Imagine counsel’s confusion if Claimant, in an initial meeting, told his or her story in a non-chronological, disjointed, and non-linear manner. By necessity, counsel would guide the client through a structured interview, probably using a chronological or other sequential order to help you make sense of the Claimant’s story. The arbitrators do not have that option.
11 See Tip 1 - Determine each arbitrator’s experience both with FINRA arbitration, arbitration in general, and litigation. A panel with rookie arbitrators might require some style adjustment compared with a more experienced panel. A panel of lawyers is less likely to be confused or put off by lawyer tactics than a layman.
12 There is no reason for a broker to be evasive. Respondent is at the hearing because Respondent thinks he/it has the better story and can win.
13 If you let the broker tell his story during Claimant’s case, then he may sound repetitive during Respondent’s case in chief.
