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Daniel R. Solin is a middle-aged solo attorney with more business than he can handle on the claimant side of what he believes is a hot new practice niche: securities fraud arbitration. He is not alone in such an embarrassment of riches. Not with an historical $4 trillion of individual and institutional investment losses over the past two years — an alarming statistic he came across in researching “Does Your Broker Owe You Money?” slated for release in August by Alpha Books. Solin issues something of a summons to junior lawyers. “I have this feeling that we’re too insular a group,” said Solin of his longtime colleagues in the specialty practice of securities fraud. “We all know each other, and I don’t see a lot of young people coming into this area. “I’d like to see new blood taking a new look — with enthusiasm. It takes a passion.” For young lawyers with a working knowledge of high finance and low finaglers — young lawyers yearning to breathe free beneath their very own shingle — Solin suggests that now is the time to seize the day. “Somebody who’s reasonably acute and who reads the literature can get up to speed rather quickly,” said Solin. “All the people I’ve spoken to have far more business than they can cope with.” He suggested that young lawyers might begin a solo practice with claimant referrals from established securities fraud practitioners. “You can have a virtual law firm. You don’t need much of an office,” said Solin. “You can work anywhere. These are arbitrations. You can go to almost any state.” The bulk of arbitration claims are filed with the National Association of Securities Dealers, with the balance going before a hearing board of the New York Stock Exchange. On the claimant side of things, would-be practitioners are advised that contingency fees are the norm: 30 to 40 percent of awarded recovery. That or nothing. There are up-front costs to be borne, too, such as filing fees that range from $1,500 to $1,800, plus daily fees for expert witnesses, pre-hearing conferences, and the hearing sessions themselves. Each such fee can easily run to several hundred dollars per day, split between the parties. BROKERS’ ATTORNEYS On the respondent side, brokers more commonly retain attorneys on a standard hourly basis. There are hybrid arrangements as well, combining a lower percentage of recovery monies with lowered hourly pay. By way of literature, Solin strongly recommends a fellow lawyer’s book, which he termed “the bible” of securities fraud arbitration: the two-volume, 1,800-page “Securities Arbitration Procedures Manual” by David E. Robbins, now in its fifth printing from Lexis Law Publishing. Robbins shares Solin’s passion for the practice. But he cautioned those who would enter the field that securities fraud is full of uncertainties. “It’s satisfying. You can really help people,” said Robbins, a partner in the firm New York firm Kaufmann, Feiner, Yamin, Gildin & Robbins, which handles cases for both claimants and respondents. “That’s sort of scoffed at, but it’s true. You can really help. “But the rulings are inconsistent because it’s arbitration, and they don’t have to follow the law,” Robbins noted. “And there’s no appeal. You either win or lose.” If a young lawyer were to think of working the more financially secure respondent side of the securities fraud aisle, Robbins offered a warning: “You find the more experienced lawyers on the defense side. So what does that tell you? Brokerage firms are not going out and hiring young lawyers.” A likely suspect for the new blood Solin talks about would be Mr. X, a 30-something lawyer with a major Manhattan financial institution who requested anonymity. While Mr. X said hanging out a shingle on the basis of referrals was an attractive idea, he had philosophical reservations about landing in a sort of gilded ghetto of specialized practice. “First, let me say that people best prepared to do this work [securities fraud] are people like me. I cut my teeth on the evil empire of corporations. “All right, so I know there’s a lot of work out there. I mean, you know it’s bad when they’re going after Merrill Lynch,” said Mr. X, referring to New York Attorney General Eliot Spitzer’s investigation of Merrill Lynch & Co. and other several other Wall Street brokerage houses. “Only Eliot Spitzer, a guy born to wealth, could do that. So when that happens, it’s pretty broad, and it isn’t just political. “But the study of law and the practice of law ought to be generalized activities. What happens when you get into this specialized area and you’re successful, and you’re making zillions of dollars — and then somebody needs you to draft a will? You’re going to just drop all those big pay-off clients?” Robert Heim, the former assistant regional enforcement director in the New York office of the Securities and Exchange Commission, suggested that arbitration in securities fraud was likely to provide plentiful business for the foreseeable future. “It’s definitely a growing field, with filings increasing every year, particularly in this market,” said Heim, now a partner with New York’s Meyers & Heim, which represents both institutional and individual clients, hedge funds and brokerage firms. “Sometimes a bull market can cover up problems such as negligence, with the riskiness of certain investments only coming to light when the market is down.” In representing claimants, said Heim, the key to a successful arbitration lies in “weeding out promising cases from sour grapes.” Dabbling in the market, after all, is “like going to Las Vegas,” as Solin put it. Odds against winning can be high. CAUSES OF ACTION But in trying to bargain back at least some of a claimant’s losses, said Heim, there are basic causes of action: churning, suitability and misrepresentation. As an example of churning — excessive trading of stock shares by brokers who collect commissions for each turnover — Solin cited a case he is currently handling for a group of 10 working-class investors. In about three months, he claims, the broker turned over stock in the group’s portfolio 173 times on an annualized basis. He was then fired. The next broker turned over stock 80 times. The collective result: a 90 percent loss of investment capital. “A turnover rate of three is suspicious,” said Solin. Brokers are required by industry regulation and the general legal standards of fiduciary relationships to act in suitable accordance with the investment objectives and capabilities of their clients. A claim of misrepresentation is not so clearly brought. “That’s the trickiest type of case,” said Heim, referring to misrepresentation. “A lot of times, it’s the customer’s word against the broker’s word. Rarely is there anything in writing. “So, in this instance you evaluate the credibility of the customer and the background of the broker,” he said. “For instance, does the broker have prior disciplinary actions against him?” Evaluation, said Robbins, is an essential that comes from experience. In his annual lectures to securities fraud clinics at Brooklyn Law School and Fordham University School of Law, Robbins said he makes the following point to students: “The hardest thing is evaluating the merits of a case. What will take me 10 minutes will take you two years.” Daunting as Robbins’ counsel may be, Craig A. Landy sees inevitable growth in the ranks of solo practitioners drawn to securities fraud — people like Mr. X. “We often think of small firms or solos as people coming right out of law school, but the majority are lawyers with quite a bit of experience under their belts,” said Landy, president of the New York County Lawyers’ Association and a partner in New York’s Landy & Seymour. But even experienced lawyers need instruction in setting up shop on their own, said Landy. Accordingly, the County Bar has set up a group mentoring seminar series in which veteran solos will discuss housekeeping basics. Seminars will be held for six Wednesday evenings at County Bar headquarters, 14 Vesey Street, from May 22 through June 26. Mr. X might attend, with a bit of his own counsel to share: “A lot of lawyers aren’t aggressive enough to do securities fraud.”

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