Tag Archive for: mediation

SETTLEMENT AND THE BOTTOM LINE

/by

The offer on the table was a good one, but the attorney thought there was hope for something better. Then I took the attorney through the “what if’s.”

Expenses Matter
How much will it cost to bring this case to trial? What about experts’ fees? I asked the attorney to create two financial statements, one that showed the net financial result now versus the likely result after more litigation. Viewed in the most favorable light, more litigation produced the same financial benefit in the end. And if the result was not so favorable, prolonging the stress and financial outlay would have a negative financial result.

Attorney’s Fees
It costs money to run a law office. In a contingent fee practice, there is a lot of outgo before the reward comes in. When an attorney’s resources are at capacity, the choice is to turn away business or expand staff and space, thereby increasing the cost of running the office.

I asked the lawyer what his hourly fee would be if he kept litigating. “I’m on contingency. It’s the same.” “No,” I explained, “when your fee is contingent, the longer you work, the lower your hourly rate.”

For what appeared to be an ego-driven motive, not only was this attorney determined to keep fighting the client’s case for no foreseeable financial benefit, he was undermining his own financial stake in the matter.

Part of my job as mediator is helping parties, adjusters, and their lawyers see the full range of issues and possible results.

SIBLING HATE

/by
A Minnesota appellate case shows how damaging intra-family business disputes can be.

The four Lund siblings had inherited equal shares of a trust holding a chain of grocery stores. The oldest sibling sued to force a buy-out of her shares on the ground that she had a reasonable expectation of financial independence and liquidity. She alleged breach of fiduciary duty, unfairly prejudicial conduct, and civil conspiracy. Defendants, including her CEO/brother, claimed that the requested buy-out elevated one sibling’s interests over the others’ and would force the company to take on debt to finance the buy-out. The court threw out some of the claims, but the case continued on the unfairly prejudicial conduct and equitable relief claims.

The sibs could not agree on a buy-out price, so a trial ensued during which the opposing expert’s valuations were about sixty million dollars apart. In Solomon-like fashion, the court picked a number roughly halfway in between.

But they weren’t done yet. Both sides appealed. The appellate court largely upheld the trial court, except that the trial court had denied the defendant’s claim that they be reimbursed their $800,000 in legal fees from the trust property. Ruling that the lower court had employed an incorrect standard, that issue was remanded for further proceedings. The Minnesota Supreme Court recently declined review.

The Real Cost
After five years of litigation, the plaintiff won her case. If the defense spent $800,000 in legal fees, the plaintiff probably spent a similar amount, perhaps more—a lot more—if the fee agreement included a contingency kicker.

Undoubtedly, the litigation created friction among the siblings, the full extent of which the public is unlikely to learn. This kind of animosity affects younger generations, too, and ravages family gatherings.

The judge ordered and the parties agreed to mediation. Obviously, it didn’t take. During the trial, the judge implored the parties to settle, quoting the New Testament and philosopher Reinhold Niebuhr.

Mediation offered an escape from the costs, animosity and stress of litigation. As these harms escalate, parties who previously rejected settlement may revise their view of what they really need. A benefit of mediation is that parties can agree to solutions, such as family counseling, that a judge is powerless to require.

The Lesson
There is no limit on how often parties can come to mediation. If the first mediation was unsuccessful, a second–or third–one may produce results as parties get new information and adjust their views. Mediation can occur while an appeal is pending. At this point, the parties know the full extent of the evidence and the likely outcome. Cases resolve in appellate mediation more often than not. Mediation can limit the damage to the family and its business.

ONE THING LIARS ARE REALLY GOOD AT

/by

While not every liar is really good at lying, many are. In fact, they are so good, that the trier of fact—be that jury or judge—often find them to be credible, more credible than your evidence.

Humans are actually poor judges of each other’s honesty. While we think we can look someone in the eye or study their body language, statistically these clues are worthless. As mentioned in another post, author Malcolm Gladwell in his book How to Talk to Strangers demonstrates how bad we are at interpreting each other’s thoughts based on observable clues.

Good liars will swear an oath to tell the truth and then brazenly lie. The trier of fact’s ability to judge a witness’ honesty is unreliable. When cases turn on s/he said—s/he said situations, going to trial is a big gamble.

Mediation is the better choice.

WHEN SMALL BUSINESS CO-OWNERS FIGHT

/by

Disputes among co-owners in a closely-held business can arise over a number of issues, such as day-to-day control, compensation, or access to information. Left unresolved, these arguments can fester and eventually destroy the business.

Not only are small business co-owners like a family– they are likely to be members of an actual family. While we know that family-owned small businesses tend to weather management storms better than businesses which lack that link, family dysfunctions can seep into management of the business.

Co-owner mediations can seem more like divorce negotiations than business disputes. A mediator can calm parties’ anger, help resolve the current dispute, and create a plan to manage future disagreements so the business survives.

When you are in the middle of a co-owner dispute maelstrom, call me to discuss whether mediation can help. It’s free and completely private under California’s strict mediation confidentiality laws.

The One Thing You Can Control in Negotiation

/by

Here’s a basic fact of life. People like to feel in control, whether it’s at their workplace, at home, or in a negotiation. But we are seldom in sole control of any of those situations, and that’s how disputes arise and continue. Though the result of a negotiation is not completely under your control, your preparation is.

Start by defining the pivotal issues. There are seldom more than five, usually just one or two. Determine the specific range of results your side needs to bring the matter to conclusion.

Imagine the circumstances from your opponent’s point of view. Be specific. What is the hot button? It’s usually not just money. The emotional or reputational costs as well as the financial drain of drawn-out proceedings may be factors. Many litigants feel they have been disrespected. Sometimes a carefully worded apology goes a long way towards bridging a negotiation gap. What does this person really need?

It Takes More Than Two
Bringing everyone together for mediation shows a serious intent to resolve the dispute. Make sure the real decision-makers are attending. That might be a corporate higher-up like a claims manager, but it might also be a family member.

Using the mediator as a buffer between parties can magnify the effectiveness of your message. Your opponent may have brushed off your arguments before, but will listen to them when they come from the mediator.

You cannot completely control a negotiation. The opposing party could surprise you in a number of ways. Your own client may surprise you. But thorough preparation will help you manage a negotiation. You are the one person you know you can control.

Was King Solomon Right?

/by

Judgment of Solomon – Nicholas Poussin

Pretty much everyone knows the bible story about King Solomon. Two women claimed they were the mother of an infant after a different child had died. Solomon ordered the baby to be split in half and divided between them. One woman agreed; the other would rather abandon her claim. Solomon then knew that the one who put the baby’s welfare ahead of her own interests was the true mother.

Splitting the Baby
Attorneys and claim professionals complain about judges who decide cases where it appears the result does nothing more than equally divide the difference between the parties’ positions. Complaints about “baby-splitters” are loudest when the defendant or employer maintains no money should be awarded at all.

Pay Attention to the Midpoint
In mediation, the parties are in control of the outcome. As mediator, I facilitate the negotiation, gradually narrowing the negotiation gap until the parties can agree on terms to resolve their dispute.

Each demand and offer sends a message. Smart negotiators pay attention to how the midpoint changes with each round of negotiation. Cases do often resolve at the midpoint between the first reasonable settlement proposals.

Some negotiators start with an extreme position intended as an anchor. Anchoring communicates what your ballpark is. However, if the proposal is so unreasonable as to be ridiculous, no one will take it seriously, and the midpoint is not predictive.

Is There Ever A Time to Split the Baby?
When the negotiators’ positions are close, they may agree to split the difference. Often cases settle near but not exactly at the midpoint to avoid the appearance of a baby-split.

Sometimes the parties would accept a compromise at the midpoint, but are unwilling to let the opponent know this because they fear the disclosure would not resolve the dispute. When I see a likely resolution that the parties are not willing to put on the table themselves, I may make a “mediator’s proposal.” My proposal rarely suggests an even split, but like Solomon’s suggested result, it does resolve the dispute.

COVID-19 IS MESSING THIS UP, TOO

/by

HOW CCP 599 HELPS AND HURTS

Due to the pandemic, very few cases are being tried. Reports from the legal community indicate that the absence of an imminent trial date is inducing parties to put off settlement as well.

A History of Procrastination
Lawyers have always seemed to have a reason why it’s too early to settle a case. They need to get another report, look under every rock for new information, research the heck out of every issue whether or not it is pivotal. Traditionally, discovery cut-offs and upcoming trial dates have put up a big stop sign to that process in civil cases. Without that stop sign, some workers compensation cases continue for decades.

Human nature being what it is, litigants tend to wait to the last minute to undertake the tasks necessary to close a case. The global pandemic has aggravated our proclivity to procrastinate.

When do cases settle? Legal and claims professionals have always referred to the ubiquitous last-minute settlements as happening “on the courthouse steps.” As trial dates get pushed further and further back on courts’ calendars, parties put off settlement longer.

CCP 599 Makes Procrastination Easy
When the global pandemic forced courthouses to close their doors, the California legislature recognized the obstacles to litigants’ ability to move their cases forward. The response was Code of Civil Procedure 599. This new section delays most civil litigation deadlines during the official COVID-19 state of emergency and for 180 days thereafter. If a deadline had not passed by March 19, 2020, the continuance or postponement of a trial date extended that deadline. That includes discovery cut-offs and dates for identification of expert witnesses and motions for summary judgment. Notably, the court retains the power to order litigation deadlines. Parties can also agree to self-impose deadlines which would otherwise be suspended.

At the beginning of the pandemic, no one had any idea how long this suspension would last or how we would all learn to conduct much of the court’s business remotely. Still, 599 remains in place. Some lawyers and claims professionals report that the absence of a hard deadline has resulted in fewer settlements.

Blessing or Curse?
In the last year, we have learned to manage litigation pretty well without setting foot in the courthouse. Doctors have resumed seeing patients. The suspension of many hard deadlines provided breathing room while we figured it all out. These are blessings.

On the flip side, cases are backing up. After courthouse life returns to a version of normal, it will take a long time to work through the backup. Once 599 expires, there will be a rush to undertake long-delayed tasks critical to settlement. Things could get kind of crazy, and that’s the curse.

What to Do Now
Before any more time passes, look at those files to see what can be done to set them up for settlement. Almost all mediations are now occurring remotely. Let’s settle those cases promptly, so you can better manage your caseload once the state of emergency is lifted.

A Real Life Lesson Why It’s Almost Always Better To Settle

/by
LaQuan Tremell Taylor’s injuries were horrific. The 27-year-old veteran, was robbed, carjacked, and shot in the parking lot of a Kroger grocery store in Atlanta, Georgia. After three weeks in a coma, roughly a year in the hospital, multiple surgeries, and millions of dollars of treatment, plaintiff’s spinal cord injury left him a partial paraplegic with scars over his entire body and continuing pain. Kroger was the primary defendant in his suit for the store’s negligent failure to maintain adequate security.
Kroger’s insurance stacked thusly:
$3,000,000 self-insured retention (SIR)
$2,000,00 ACE American Insurance Company.
$25,000,000 Starr Surplus Lines Insurance Company
$25,000,000 Great American Insurance Company Of New York
Excess above Great American: XL Insurance America and Chubb Group of Insurance CompaniesPlaintiff’s pre-trial demands were within Starr’s coverage limit. But Starr refused to settle. The final judgment exceeded 61 million dollars. It appears that Starr did not attempt to mediate a settlement until after judgment was enteredNotwithstanding its ill-advised choice, Starr refused to pay more than its policy limit to satisfy the judgment. Great American settled the case and on February 11, 2021 sued Starr for reimbursement. The complaint for declaratory judgment alleges that Starr had acted in bad faith and was “stubbornly litigious.” Great American has asked for reimbursement of its settlement contribution plus attorney fees and expenses.

I see many cases that, like the Taylor case, clearly have the potential to “blow up.” Cases settle when parties are willing to spend the necessary time in good faith mediation and make reasonable settlement proposals. When parties are “stubbornly litigious”, the results can be disastrous.

And Then There’s . . .
In workers compensation cases, being “stubbornly litigious” can mean denying requested medical treatment. Often, though, alternative treatments end up being more expensive in the long run. Patients who cannot get treatment through the usual process sometimes end up in emergency rooms, incurring a much larger bill.
 

Authorizing a quick, “expensive” treatment can lead to early claim closure and a less costly claim overall. Sometimes the injured worker ends up undergoing the procedure which was originally requested anyway. And don’t forget the administrative expenses of utilization and bill review.Patients aren’t doctors. Patients are not writing the Requests for Authorization. Almost every patient will prefer conservative treatment to life-threatening surgery. Sure, there are malingerers and patients who exaggerate their pain in the hope of scoring heavy-duty medication or just gaining attention. And, yes, some doctors overtreat to increase their fees. Independent doctors, claims personnel, and defense attorneys have heightened their awareness of those patterns.

Don’t lose sight of the forest for the trees. Like Starr Surplus Insurance, a “stubbornly litigious” stance can end up costing you more in the end.

Are You Serious?

/by
The #1 predictor of mediation success is whether the participants have come with a seriousness of purpose. They understand that mediation is their best chance to avoid delay and expense, not to mention a bad result. They have readied themselves to settle the case.

Why Are You Here?
Sure, the court may have ordered the parties to mediation. Look at this as a blessing. You might have struggled to get your opponent to the negotiating table. Now the court has done this for you. Moreover, instead of having to deal with insincere posturing, the mediator can filter communications to get to the crux of the dispute.The participant who only comes to mediation because “opposing counsel wanted to do this” is throwing away an opportunity and dishonoring the client.Have You Prepared?
Mediation helps parties resolve disputes efficiently. Yet, both attorneys and their clients often show up for mediation completely unprepared. Being prepared doesn’t just mean knowing the facts and law of your case, though some mediation participants even disdain this basic step.

Before coming to mediation, double-check whether you have followed the mediator’s pre-mediation instructions and requirements. This is doubly important in an era of remote video mediation.

Evaluation is Key
Take the time to thoroughly evaluate your case. Don’t think you can come in with an extreme number and wing it. Be prepared to explain your proposal, including why it is reasonable. What calculations were involved? Have you researched similar issues online so you can show how those precedents apply or are different?

The next step is to educate the client about that evaluation and plan your negotiation. Make sure you know who can grant settlement authority and line it up in advance of the mediation. The ultimate checkwriter should attend the mediation.

Come to mediation ready to settle, and chances are high you will.

Remote Mediation with Non-English Speakers

/by

You’re ready for your remote video mediation. Everyone has the latest version of the technology and knows how to join. You rehearsed with your client; maybe you did a practice session with the mediator. You submitted the mediation confidentiality form and contact form. Now you can concentrate on the facts and the law.

Wait–What about the Interpreter?
At the beginning of every remote mediation, I confirm that everyone present has signed off on the confidentiality agreement. Yet, sometimes, against all the rules, someone else is there. Often, it’s a family member who is “just there to interpret.”

It’s inconvenient, but perhaps not a major issue. Just as would happen with an in-person mediation, someone who does have a role in the mediation can execute the confidentiality acknowledgement at the last minute. But some family members refuse documented participation in any court proceeding. Sometimes the party lacks the technology to return a signed document immediately.

Usually, the attorney can interpret for the client. Of course, the attorney is bound by confidentiality rules, but this arrangement often omits a few steps.

Get the Client What the Client Needs
An English language confidentiality agreement executed by a party who clearly needs an interpreter raises questions. Did the client sign a document without understanding it? If the attorney or a family member interpreted, that should be documented within the agreement. The person who interpreted should be a signatory, e.g.,

I translated this document and read it to Plaintiff in Spanish:___________________________________

The Settlement Agreement
Attorneys on both sides of the conflict should be concerned about the validity of an English-language settlement agreement when one or more signatories are not fluent in English. Nobody wants to be in in court after the fact because someone is contesting the agreement. The document should be read to the non-English speaker, and the interpreter needs to disclose and sign off on the settlement document. Ideally, lawyers will also provide a written translation of the document. Google Translate can create it quickly, but not necessarily with 100% accuracy.

The ultimate protection is to bring in a certified court interpreter by video or telephone and at the time of signing the settlement document.

Translating to Everyday English

You may think all the mediation participants are speaking English, but you have failed to realize that at least some of you are speaking a foreign language. The most common foreign language used in mediation is Lawyer, and Adjuster is also common. In some mediations, everyone except the claimant is speaking Insurance, but no one has thought to provide a translation.

While the professionals in the room are speaking one of these languages, the clients are often mystified, simply trusting that their counsel is looking out for them. Sometimes, though, a client’s inability to understand becomes apparent near the end of the day.

I have heard of mediations where, when it was all over, the client asked, “What just happened?” In one of my mediations, as the attorneys were finalizing the details of the settlement, the claimant asked me how a particular issue was being resolved—an issue that hadn’t been addressed at all. I had to make sure the attorneys addressed this concern with the claimant and each other.

Professionals who use jargon regularly can easily forget that people outside their closed community don’t understand what the professionals are talking about. Just as you would provide an interpreter to translate an international language, make sure everyone understands what is being said in the languages of Lawyer, Adjuster or Insurance.