A repeating question on my website comes from brokers who are named in an arbitration proceeding by a customer, and whose firm offers to provide an attorney to represent both the broker and the firm. The question is always, do I need my own attorney?
When Trust Issues and Financial Liability Complicate Joint Legal Representation
In some situations, even when no overt dispute exists between the broker and the firm, joint legal representation may not be appropriate—especially if the broker has left the firm. The issue isn’t always legal conflict; sometimes, it’s simply a lack of trust. If either party questions the loyalty or objectivity of the shared attorney, the integrity of the defense can suffer.
A deeper concern arises when the broker, under a contractual agreement, is personally liable for any financial losses stemming from the arbitration. In such cases, the broker may be required to cover the entire award amount and the legal fees—regardless of the arbitration outcome. That financial exposure significantly changes the stakes for the broker, and joint representation becomes increasingly risky.
Settlement Disputes and Diverging Legal Advice
This kind of financial responsibility often leads to a fear that the firm will pressure the broker to settle, even when the broker believes the claim is defensible. Since the attorney is chosen by the firm, the broker may reasonably worry that the lawyer will advocate for a quick settlement that serves the firm’s broader interests, not the broker’s individual position.
In other cases, brokers simply prefer to have someone in their corner—an attorney focused solely on their defense, without divided loyalties. They believe that having personal counsel provides better legal guidance, tailored to their role and risk in the dispute.
Why Joint Representation Is the Default in Most Cases
Still, there are valid reasons why joint representation remains the standard in securities arbitration, especially when the broker is still employed by the firm. Using separate attorneys can inadvertently signal to the opposing party that something is amiss. It might suggest to the customer—or their lawyer—that there is internal disagreement or division, and that perceived weakness can be exploited.
Customers may push harder in settlement discussions, refuse to negotiate, or demand inflated settlement amounts, believing that the defense is fractured. What might have been a manageable claim can quickly escalate if the opposing side senses an advantage.
The Problem With Having ‘Two Quarterbacks
Another significant drawback to separate legal teams is the potential for the lack of unified strategy. Arbitration is not an exact science; it requires cohesive decision-making, adaptability, and clarity. Having two lawyers leading the defense is like having two quarterbacks on the field at the same time—it’s confusing, inefficient, and often counterproductive.
Disagreements may arise over everything from which witnesses to call to how aggressively to cross-examine the claimant, or even what tone to strike during the hearing. When the defense is not synchronized, it can appear disjointed, undermining the overall credibility of the case.
Legal Fees and Increased Costs
Of course, cost is another factor. While hiring two attorneys doesn’t necessarily double the legal bill, there is a clear increase in fees and expenses. Even with a division of labor between counsel, overlap is inevitable. Both lawyers need to stay informed, review case materials, attend strategy meetings, and prepare for hearings.
In some cases, these additional costs may be justified. But it’s important to weigh them against the benefits and the likelihood that separate representation will genuinely change the outcome of the arbitration.
Are Two Attorneys Better Than One?
The argument in favor of separate counsel usually centers on the idea that an attorney dedicated exclusively to the broker will deliver a more focused and effective defense. There’s certainly logic to that. An independent lawyer has only one client—the broker—and therefore no reason to compromise on any decision.
But in practice, the legal positions of the firm and the broker are often so intertwined that representing one necessarily involves defending the other. Most of the time, attacking the broker undermines the firm’s defense and vice versa. In these scenarios, the benefits of separate representation may not justify the added complexity and cost.
A Real-World Example from a FINRA Enforcement Case
Consider an enforcement investigation I was involved in, which perfectly illustrated the value of independent representation. The regulator was examining a firm for alleged sales practice violations and extended the investigation to include the firm’s compliance officers and individual brokers. The firm had its own counsel, and so did the individuals.
As the investigation progressed, the firm decided to settle. Its lawyer encouraged the brokers and compliance officers to join the settlement to make the firm’s offer more appealing. But those individuals declined. They chose to fight, and the investigation was eventually dropped against them. Meanwhile, the firm paid a significant fine.
Had the firm’s attorney also represented the individuals, it’s possible that all parties would have settled unnecessarily. This case underscores how having a trusted, independent attorney can make a substantial difference in the outcome.
Choosing the Right Attorney for Your Situation
Ultimately, the most important factor in deciding whether to use separate counsel is trust. You must feel confident that your attorney understands the complexities of securities law, is familiar with arbitration and enforcement procedures, and is 100% committed to your interests.
In many cases, the firm’s attorney fits that description—whether they are in-house or outside counsel. But if you have doubts about their dedication, experience, or strategic approach, it’s time to have an honest conversation. Ask questions. Address your concerns directly. I have handled dozens of cases where I represented the firm and the broker, all without incident or controversy. But, if you are not satisfied, don’t hesitate to retain your own lawyer.
Yes, hiring another attorney comes with costs. But when your reputation, license, and financial future are at stake, those costs are often small compared to what you risk losing in arbitration.
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Mark J. Astarita is a partner in the national securities law firm of Sallah Astarita & Cox, LLC, and represents broker-dealers and individual brokers across the country in litigation, arbitration, and regulatory matters. He is the founder of The Securities Law Home Page (www.seclaw.com), and can be reached at www.seclaw.com or at 212-509-6544 This article was updated in March 2025.
Sallah Astarita & Cox, LLC - Securities Litigation Attorneys - former SEC Staff Attorneys and Brokerage Firm Counsel representing issuers, advisors and investors nationwide in securities investigations, disputes, and arbitrations, nationwide. Call 212-509-6544.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
