Dallas Business Journal
Lawyers: Arbitration not Living Up to Its Rep
By Dave Moore¦Staff Writer
Local lawyers are citing a recent case as an example of why arbitration isn’t living up to
its reputation for being quicker and cheaper than the jury trial system.
In August 2001, a pair of North Texas residents filed suit against American Investment
Services Inc., claiming that the firm mishandled their investments. The investment
group in April 2002 sold all its assets to Birmingham, Alabama – based SAL Financial
Services Inc. and became insolvent.
The two residents, Ralph Nugent and Marc Chambers, then pursued SAL to recover
their assets, only to be faced with a prolonged arbitration that led to a $300,000 award in
their favor. Now Nugent and Chambers must await a federal court decision on SAL’s
request to vacate the arbitration board’s award.
Nugent and Chambers signed contracts that include arbitration agreements when they
hired the investment firm to handle their money. Such is a common practice of the
National Association of Securities Dealers, and its member companies.
Fort Worth lawyer Jason Stephens, one of the lawyers representing Nugent and
Chambers, conceded that American investment Services’ insolvency would have
delayed any legal dispute, but he argues that arbitration slowed the process more than a
jury trial system. Stephens is with law firm Stephens & Anderson LLP.
“I don’t think the NASD has established control over the arbitration process,” Stephens
said. “It’s a little bit willy nilly, if you will. It kind of floats along.”
Dallas attorney David Clouston, who also is representing Nugent and Chambers, said
the request by AIS to vacate the arbitration board’s ruling is very frustrating. Clouston
is with the Dallas Office of Patton Boggs LLP.
The arbitration process “was invented by the investment industry,” Clouston said.
“When they don’t like the results, they’re the ones who appeal it.”
In its Nov. 6 motion to vacate the arbitration board’s