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FINRA Dispute Resolution Services (“DRS”) posted case statistics through the end of October, with the overall arbitration case filing trends continuing from prior months but with a confirmed major change in mediation stats.

In brief, the headlines are: 1) overall arbitration filings through October – 2,527 cases –  are down 26% (had been -27% in September); 2) cumulative customer claims, which had been off 2%, are now down 5% from 2020; 3) industry disputes remain way down at minus 48%; 4) mediation cases are really surging; and 5) for the fourteenth month in a row, pending cases declined. Overall arbitration turnaround times were 14.9 months, with hearing cases now taking 17.1 months. Also, there are now 8,466 DRS arbitrators, 4,015 public and 4,451 non-public.

What’s Going on With Mediation Filings?

Nine out of ten mediation cases (89%) continue to result in a settlement. Of greater interest: there were 513 mediation cases in agreement, a significant 47% increase over 2020 (and an improvement from September’s already impressive plus 29%). This is the third month in a row with a significant increase in monthly and cumulative mediation filings. We were not yet sure what’s fueling the surge, but we had a hunch that the resumption of in-person hearings in August is somehow linked to it.

Rather than guessing, we went right to the source and asked FINRA. 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.

What COVID Backlog?

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 fourteen months, however, have each experienced declines in pending cases, reflecting a 1,195-case reduction from last year’s high water mark. Pending cases through October stand at 4,420, a decrease of 123 cases from September. This now leaves a cumulative decrease of 561 pending cases since the onset of the COVID-19 pandemic in March 2020. Stated differently, closed cases are up 18% this year, while pending cases are down 20%.

(ed: *Again, kudos to FINRA DRS for eliminating the backlog. **Our thanks to Mr. Berry for providing insights on what’s fueling the surge in mediations. ***Overall and hearing processing times have ticked up a bit the past few months. Wonder if the resumption of in-person hearings in August is somehow linked to it, too? One clue: the number of virtual hearings or motions for them have been declining.)

This post first appeared on the Securities Arbitration Alert blog.  The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.

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