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New Rules Of Professional Conduct For California Lawyers

                                                 New Considerations in Settlement and Case Management 

The California Supreme Court has approved new rules of professional conduct for attorneys licensed in California which go into effect November 1, 2018. These rules generally expand the existing settlement ethics rules. Violation of the rules can lead to a range of disciplinary actions, including disbarment. Here are the ones which affect people trying to settle a case.

Client Communication
Prior Rule 3-500 in a single sentence required lawyers to keep clients reasonably informed about significant developments. New Rule 1.4 is more detailed. Now there’s a two-way street: the lawyer must reasonably consult with the client about how to achieve the client’s goals. What’s more, the lawyer must also inform the client about what the lawyer cannot legally or ethically do even if it’s what the client expects.

Prior Rule 3-510 required lawyers to promptly communicate the specifics of a written settlement offer. A California lawyer need only pass along a spoken settlement offer if the lawyer deems the offer significant. New Rule 1.4.1 preserves this distinction.

In evaluating settlement offers or making other decisions about the representation, the Comment to new Rule 2.1 clarifies that a lawyer can initiate advice to a client on relevant, non-legal issues, such as moral, economic, social and political factors.

Diligence
Prior Rule 3-110 defined “competence” as including diligence. Now a separate Rule 1.3 prohibits a lawyer from “intentionally, repeatedly, recklessly or with gross negligence” failing to act with reasonable diligence.

New Rule 3.2 says “a lawyer shall not use means that have no substantial purpose other than to delay or prolong the proceeding or to cause needless expense.” Now an ethical rule may apply to needless court appearances and continuances and improperly postponed treatment.

Truthfulness
New Rule 4.1 prohibits lawyers from knowingly making a false statement of material fact or law to a third person, i.e., someone who is not a client, such as an opposing party or witness. A lawyer cannot knowingly incorporate or affirm the truth of someone else’s false statement. A nondisclosure is the equivalent of a lie if the lawyer makes a partially true but misleading material statement or omission. On the other hand, the Comment to the Rule clarifies that there is no affirmative duty to inform an opponent of relevant facts. Representations about case value are not statements of fact or law.California Business and Professions Code sec. 6068(d) requires lawyers to represent clients with methods which are “consistent with truth.” A lawyer who intentionally deceives the court or any party can be charged with a misdemeanor. This statute remains in effect.Everybody Who Acts For the Firm
Prior Rule 3-110 included within the duty of competence a duty to properly supervise lawyers and non-attorneys or agents. New rules 5.1, 5.2, and 5.3 expand on that and provide for vicarious liability for a breach. A subordinate lawyer has an independent duty to follow the rules, but is not responsible for following instructions when there is an arguable question of professional duty.

 

Documenting the Mediated Agreement

Almost all of my mediations end with agreement to a Compromise and Release. Parties often bring a partially completed Compromise & Release form, DWC-CA form 10214(c), to the mediation. That’s great. But when considerations prevent execution of a final agreement at the mediation, a Memorandum of Understanding, known as an M.O.U., can be invaluable.

What Is It
After working hard to come to terms, you don’t want to let the passage of time blur people’s memories or minimize their commitment. Participants should not leave the mediation without a record of their agreements.

A Memorandum of Understanding memorializes the skeleton terms agreed upon at the mediation. Parties sign off at the mediation. The M.O.U. might specify a timeline or conditions.

If It’s Complicated
Some settlements are complicated, requiring many addenda. Unanticipated issues may have arisen and been resolved at the mediation. Parties need to return to their offices to draft the final settlement document. The M.O.U. should specify the basic terms as well as deadlines for completion of the initial settlement document, exchange of revisions, and submission to the WCAB.
Conditional Agreements
Some agreements are conditional, usually upon CMS approval of a Medicare Set-Aside allocation. Attorneys may address this issue by doing everything but the walk-through, including signatures, pending approval. This leaves a potentially dangerous loophole when unforeseen events occur during the waiting period.Another way to document a conditional agreement is through an M.O.U. Unlike the agreement which sits in a file drawer, an M.O.U. can specifically address the condition, including what will happen if the condition cannot be fulfilled. For example, if CMS comes back with a higher amount, and the parties do not assent to that amount within a specified time, they can agree to return to mediation.

Getting to MOU

Mediation allows parties to address issues outside the jurisdiction and procedures of the WCAB and to fashion creative solutions.

If you have despaired of closing that troublesome,  decades-old claim, turn to mediation.

Take the bull by the horns, and the result may well be an M.O.U.

What’s Wrong With Telephone Negotiation?

A litigation analysis found that lawyers used telephone negotiation in 72% of the cases studied resulting in settlement only 35% of the time. That means that phone negotiation sessions or other settlement processes had to be used multiple times to get to settlement. We can assume that repetition resulted in a loss of time and money for the participants.

In contrast, mediation resulted in resolution 100% of the time in the studied cases. Yet, lawyers used mediation in only 2% of the cases.

Lack of Visual Information
You can’t share documents or other visuals over the phone. Even if all participants to the call are supposed to have the documents in their possession, you can’t be positive they are actually looking at it, even if they say they are, or if it’s the right one.

Body language provides visual cues to the negotiator about how things are going. Facial expressions can show surprise, anger, or anxiety as parties exchange information. You can’t look someone in the eye over the phone. Without the visuals, it may be easier for people to dissemble. Likewise, over the phone you are unable to enhance your own message with gestures or other body language. In mediation, the mediator interprets participants’ body language to better facilitate negotiation.

Getting Negotiators to Pay Attention
Listening is hard work. When negotiators use the phone, they may not be focused. There could be active interference, e.g., flashing lights and text messages on the phone, incoming emails, other notifications from multiple devices, or co-workers coming by. Even without those distractions, people’s attention may drift.

Technology Can Get In the Way
What about using Facetime, WhatsApp, Skype or another video call utility? Theoretically, this could overcome some of the deficits of voice-only negotiation. On the other hand, have you seen the hilarious Tripp & Tyler video about video conference calls? Even when the technology is working perfectly, body language can be difficult to interpret or convey through video.

Video conferencing might be helpful during mediation if, for example, the adjuster or injured worker is in another state and unable to travel to the mediation, assuming the principal negotiators are physically present.

What About Meeting At The Board?
Meeting at the board could resolve some of these issues if the parties come with adequate authority, fully prepared, with all relevant information available to them, and with no time pressures.

How often does that happen?

New Year, New You? It’s Your Decision

“New year, new you.” How many times have we heard that one?

Yet, the same problems that vexed us in December are still there in January. You may be planning to lose weight, save money, or spend more time with family. But what are you doing about a new approach to resolve your ugliest workers compensation claims?

Start by identifying claims that are ripe for closure. Look at the injured worker’s birth date; if the injured worker has reached age 61 and isn’t already on SSDI, it’s time to get serious. Is the claim more than five years old? Are you spending time and money with frequent WCAB trips?

Workers Compensation professionals often have a to-do list which actually impedes claim closure. The content of that additional report may be completely predictable. You could settle without it. Meanwhile frustration, disputes, and expense increase.

Call me to talk about whether the time is right for mediation. There’s never a charge for that discussion.

THE ONE THING TO DO TO MAXIMIZE WORKERS COMP MEDIATION SUCCESS

Preparing a mediation brief is the one thing you can do to maximize the likelihood of a successful mediation. The goal in mediation is to define issues and resolve them. You can get a head start by alerting your mediator to the issues and suggesting why those issues tilt in your favor.

Lack of a brief unnecessarily lengthens the mediation. Your mediator is probably being paid according to how much time is spent in mediation. Effective resource management dictates you don’t want the mediator to have to spend the first hour—or two or three—digging out the issues.

Mediation can be an exhausting process. People get cantankerous which makes negotiation more difficult. Short-cutting the mediation by defining issues in advance can keep participants at their best.

The brief need not be formal. A letter may be adequate. If you are in doubt about how formal your brief must be, contact the mediator and ask.

A party who does not brief the issues may be allowing the other side to define the discourse. Send your brief to the mediator far enough ahead of the mediation so the mediator has adequate time to review it.

The mediation brief you send the mediator is confidential. You decide whether to share it with the opposing party. Information disclosed to the mediator during mediation is not discoverable. The mediator cannot be subpoenaed. This allows you to control when to disclose your “smoking gun”—maybe not until trial.

Some parties prepare two briefs: one for the opposing party and one for the mediator. More commonly, a party prepares just one, but may decide to waive confidentiality of the brief during mediation.

Settlement Season

settlement-seasonHere we are in the fourth quarter of the year or as some call it, settlement season. Workers Compensation cases seem to drag on, but as year-end approaches, everyone in the system suddenly wants to get claims off the books. There is good reason.

Claimants on the road to settlement often want to complete a buy-out in time to get cash for the holiday season. Carriers have to report to state insurance departments how many claims are open at year-end. Self-insureds want to avoid funding a bond for another year.

If you haven’t previously mediated a Workers Compensation claim, you might feel a bit intimidated. You don’t have to commit to a settlement in advance of mediation. In fact, many mediations start with parties insisting the claim will not settle.  Yet, the majority of those mediated claims do result in settlement.

Parties just need to agree to sit together with the mediator to discuss the issues. Once everyone is on board, a mediation can be scheduled quickly. Unlike a WCAB hearing, participants can take all the time they need.

When parties collaborate in mediation to define issues, they often find themselves resolving those issues. Minimally, everyone will be on a firmer basis to move forward.

Shuttle Diplomacy

Some parties refuse to meet with the other side. For whatever reason, they do not trust them. When an Applicant’s Attorney told me, “She refuses to meet with them,” my response was “She doesn’t have to.”

Overcoming mistrust
Most of my mediations start with a joint session with all the participants in one room. But it doesn’t have to be that way. When mistrust prevents parties from defining and resolving issues, I meet with parties separately, a process called “caucusing.” We use separate rooms when space permits, or parties alternately enter and exit the mediation room. While in caucus, parties can lay out their concerns in confidence. I do not disclose what anyone said without permission. One of the cornerstones of mediation is confidentiality.

Shuttle Diplomacy
The term “shuttle diplomacy” was first applied in 1973 to Secretary of State Henry Kissinger’s separate meetings with leaders of Israel and Arab nations. Now we use the term generally when a mediator  keeps a negotiation going by moving between parties who will not meet with each other directly. To parties engaged in workers compensation litigation, their conflict has the same personal importance as an international dispute.
Shuttle diplomacy is a proven technique for achieving settlement even after the parties have lost all hope.

YOU HAVE TO GET OUT OF B-E-D TO SETTLE

Maybe being in BED- Blame, Excuses, Denial- is really what’s blocking your ability to close claims.
Blame
It’s easy to blame the other side. “The adjuster/ defense attorney/ applicant’s counsel isn’t paying attention.”  “They’re keeping the case going for the wrong reasons.” Whatever. The only person you can control is you. Without casting aspersions, start communicating anew keeping the end in sight. This might mean sending an email AND a letter, calling and maybe texting. Bring in your favored mediator AND file a DOR.
Excuses
Let go of the past. Maybe you made a mistake or missed an opportunity which would have set the claim on a better course. How much could you have settled that claim for 4 years ago? Resolve to start over today.

Denial
Get serious about evaluation. You can’t properly manage a claim if you shut your eyes to the true cost of keeping it open. In “old dog” cases, medical expenses almost always go up. Even when a drug is scheduled to go generic, a new, better, expensive drug becomes available. A settlement has to cover the injured worker’s future claim-related medical expense. Six percent is not a realistic discount rate. On the other hand, let’s be honest about what treatments the injured worker will actually use.

Get Out of B-E-D Now
Changing your attitude can change your results.

Maybe you made a mistake or missed an opportunity which would have set the claim on a better course. How much could you have settled that claim for 4 years ago? Resolve to start over today.

Tricks of the Settlement Trade

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Negotiations can founder when parties (and some mediators) don’t know the tricks that remove settlement obstacles.

Structured Settlements

Structured settlements are ideal for funding Medicare Set-Asides. Structured settlements provide tax-free periodic payments over a specified period of time, which can be for the life of the injured worker. The structure costs less than lump-sum funding, freeing up the balance of the employer’s authorized settlement amount for the injured worker’s other needs. What’s more, unlike with lump-sum funding, lifetime payments cannot be exhausted. The injured worker receives the amount paid by the employer plus income earned from professional investment management. This trick can help bridge a negotiation gap.

From time to time I hear that a structured settlement broker was not called in order to avoid expense. This reflects a fundamental misunderstanding of how structures work. There is no cost to consult a structured settlement broker. The structured settlement life insurance company (not any party) pays the broker a commission if a structure is placed.

A structured settlement is not the right choice for every case.  But workers compensation professionals should always investigate this no-risk option.

Special Needs Trusts

Many injured workers and their families rely on Medi-Cal for their non-industrial medical needs.  However, receipt of a large sum pursuant to a Compromise & Release can disqualify the injured worker’s entire family from receipt of these benefits until funds are spent down. Placing settlement funds in a Special Needs Trust allows the injured worker to retain public benefits and still C&R the claim.

Pooled Special Needs Trusts are similar to an attorney trust account in that the trustee pays expenses from a fund holding money for many participants. Compared to a single-beneficiary trust, pooled special needs trusts are inexpensive and quick to set up and administer.

Professional MSA Administration

Did you know professional MSA administration which protects the injured worker’s continued access to Medicare benefits is available for little or no cost? One of the biggest faults of the Medicare Set-Aside system is its reliance on self-administration. Administration mistakes can jeopardize the injured worker’s continued access to Medicare.

Injured workers are more often laborers than MBA’s.  Determining which expenses are Medicare-eligible is complicated and requires constant vigilance as policies change. To retain benefits, the MSA beneficiary must submit an annual report, a burden many injured workers cannot handle. Knowing who to call to obtain free or low-cost professional administration, including reporting, can mean the difference between an open claim and a Compromise & Release.

Reversionary Trusts

The reversionary trust is probably the least used settlement trick.  When parties disagree about future medical needs, a reversionary trust can satisfy both sides’ interests.  A reversionary trust can pay for claim-related medical expenses over a specified time.  If the money is not needed, at the conclusion of the trust the money reverts to the payer.

Some adjusters object that there is no way to account for refunded amounts without leaving the claim open. Applicants may balk at the lack of unfettered access to trust funds. I had one case where the prospect of a reversionary trust caused the claimant to reduce the demand on condition the money was paid in cash now; the case promptly settled.

With the right parties, a reversionary trust is a solution which allows everyone to be right. Or just raising the possibility can get parties to settle.

There Are Many More Tricks

Every workers compensation professional in the process from Notice of Injury to Compromise & Release has a distinct role. If you are considering closing the claim, it’s time to bring in the person whose focus is settlement, a knowledgeable mediator.

How Did You Get To That Number?

Case evaluation is part art and a lot of math. We’re not talking calculus; we’re talking arithmetic.

A surprisingly large number of lawyers tell me they’re bad at math. They’re not alone. CNN anchor Chris Cuomo recently got his math corrected by his co-anchor Michaela Pereira while discussing Powerball lottery numbers.
 

You can’t come up with a realistic evaluation of a Workers Compensation claim if you can’t quantify the component parts: Permanent Disability, Life Pension, and Medicare-eligible and non-Medicare-eligible Future Medical.

In mediation caucus, when parties give me their offer or demand I often ask, “How did you come up with that number?” I want their best argument that will convince the other side. The first answer I get is often vague, like “We thought it would settle the case.” Workers compensation professionals often neglect running the numbers. Getting parties to see the same numbers moves them to settlement.

I recently got a call about an offer in a personal injury case. I questioned the plaintiff’s attorney about what he thought this number represented. It didn’t sound right to me. “Did you ask them how they came up with that number?” No, he hadn’t. I suggested the attorney ask opposing counsel that question to allow movement forward toward settlement.

Random demands and offers are unlikely to settle a claim. Before you assume the other side is being unreasonable or you respond, ask: How Did You Get To That Number?