Academic journal article Fordham Journal of Corporate & Financial Law

Developing a Law / Business Collaboration through Pace's Securities Arbitration Clinic*

Academic journal article Fordham Journal of Corporate & Financial Law

Developing a Law / Business Collaboration through Pace's Securities Arbitration Clinic*

Article excerpt


This article details an interdisciplinary collaboration between the Securities Arbitration Clinic at Pace Law School ("SAC") and the graduate program at Pace University's Lubin School of Business, designed and initiated by the authors. The purpose of the collaboration is to provide a co-curricular learning experience to both J.D. and graduate business students' while enhancing the pro bono legal services delivered by SAC to its clients. Part I of this article details the history of SAC before the authors initiated the collaboration, and the reasons SAC needed financial expertise. Part II of this article describes models of interdisciplinary collaboration, particularly between law and business degree programs, that the authors explored and considered before designing their own model. Part III explains the collaborative model adopted by SAC, and identifies the goals, benefits and limits of the chosen model. Finally, in Part IV, the authors offer guidance for other schools considering a similar collaboration. Part IV also illustrates how the authors' model meets the multiple needs of clients, law students and graduate business students.


A. History of the Securities Arbitration Clinic

SAC is a clinical law program in which students, for academic credit2 and under the supervision of law faculty, provide free legal assistance to small investors who have arbitrable disputes with their securities brokerage firms, but who are unable to obtain legal representation because of the small amount of their claims. Pace opened SAC in 19973 after Arthur Levitt, former Chairman of the securities and Exchange Commission, reached out to law schools in the Northeast to increase the accessibility of legal counsel to small investors.4 Although the SAC program at Pace started small (with one faculty supervisor and six law students), heavy student and client demand, coupled with a generous grant from the New York State Attorney General's Office,5 has fueled the expansion of the clinic.6 Currently, the clinic has three faculty supervisors,7 each devoting a portion of their teaching time to the clinic, and anywhere from eight to ten upper-level J.D. students each academic year.8

SAC's clients are small investors who meet SAC's eligibility standards.9 Once the students preliminarily determine that the client is eligible for representation, they initiate a detailed investigation of the client's claim of wrongdoing to evaluate its legal viability and evidentiary strength. This investigation typically includes telephonic and in-person interviews of clients, factual and legal research, a review of account documentation, and, where appropriate, witness interviews. The typical claims that customers allege revolve around sales practice violations by brokers, including unsuitable recommendations, churning, unauthorized trading and misrepresentations.10

If the clinic determines the claim has merit, i.e., one with a reasonable chance of resulting in some financial recovery through arbitration, and the client accepts the clinic's offer of representation,11 students then draft a Statement of Claim to file with either NASD Dispute Resolution (NASD-DR), or the New York Stock Exchange (NYSE) Arbitration Department, the two primary dispute resolution forums for customer-broker disputes in the securities industry.12 After the respondents serve their Answer, the parties engage in pre-hearing discovery, a process typically limited to the exchange of relevant documentation, and the selection of arbitrators. The parties then present evidence at a hearing,13 and the panel issues its decision in an arbitration award.14

Through this process, the clinic students have secured meaningful financial recoveries for their clients. The monies lost could have been the client's nest egg, retirement savings, children's college education funds, or small savings account. To a small investor, the loss of these funds is devastating. …

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