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How Enforcable is a Mediated Settlement?

One of the advantages of mediation is that the parties agree to their own settlements, unlike a trial, where a jury or a judge will impose their own settlement on the parties in a judgment.  But what happens when a party tries to either get out of a deal or go back to the court to try some related items?

Well, a Florida appeals court recently decided a case on this topic.  Robert and Terry Spring sued a medical transport company as a result of injuries sustained in an auto accident.  The parties, along with the respective insurance companies, attended a mediation in March 2006 at which a settlement was reached.  The Springs received $600,000 in compensation from 3 insurance carriers.

As is usual practice in a settlement, a general release, hold harmless and indemnity agreement was incorporated to release the suit.  The release read, “It is expressly understood and agreed that the acceptance of said consideration is in compromise of disputed claims, and that this General Release is not an admission of liability or negligence on the part of the released parties, but is made for the purposes of terminating the above-referenced dispute and preclude any litigation between the parties.”

After signing the final agreement, one of the insurance companies wanted to seek reimbursement of attorneys fees from another insurance company for their defense of the insured.  The trial and appellate courts both denied their claim, stating that: (1) in their general release they’ve given up all claims and did not make an exception for legal fees, (2) they had the opportunity to incorporate that exception into the settlement since they participated in it and (3) the plain language of the release rules.

So, the lesson here?  Understand what you are agreeing to and make sure you’ve taken all of your interests into account.

The Skills of Negotiating

Mediation at its core is about negotiating an agreement with the help of the mediator.  While the mediator is (or should be) an expert at negotiating, it is helpful for each of the parties to a mediation to understand basic negotiating skills.

I generally do not talk about international conflict and mediation. It is a far different style of mediation than is done with either commercial or family and divorce cases; the main difference being the mediator generally does have an interest in the outcome and will use that interest to hammer on the parties to get an outcome favorable to the mediator, not necessarily the parties. For instance, during the Camp David Accords of 1978-79 that led to the Egyptian-Israel peace treaty, President Carter used the hammer of US aid (cut to the Israelis and given to the Egyptians) to force the parties into an agreement. Arguments can be made whether the treaty has been good or bad for both sides.  The analogy in a civil mediation would be telling the parties that if they did not come to an agreement, my charges would be 10 times higher than if they did.

However, international conflict can be useful for insights into negotiating. In Riyadh this week, the Arab League summit is being held. The Saudi king has re-proposed his solution to the Israeli-Arab conflict, which was originally proposed by the Saudis in 2002. It was rejected by Israel for two main reasons: (1) it would require Israel to withdraw to borders (the 1967 “green” line) that are not very defensible (Israel would be 8 miles wide at its center) and (2) it would allow for the “right of return” of Palestinian refugees from both the 1948 and 1967 wars to their original homes.

There are two main ways of negotiating, positional and interest-based. Positional bargaining is what you do when you buy a car or sell/buy an item in a market. You haggle over pricing with no reasoning behind it. Interest based bargaining incorporates what each parties actually wants…it’s underlying reasoning behind what the position is. For instance, in the aforementioned Camp David accord, Israel’s primary interest in conquering the Sinai was to have it act as a buffer against a military attack. The deal that was structured took that interest into account by making the territory largely demilitarized after its return to Egypt.

So, getting back to the Saudi proposal, I’m wondering what the purpose of re-introducing it is. It is certainly not to get a peace deal (most likely, it’s for public Arab consumption as well as to placate the Bush Administration). Israel faces two existential threats…one military and the other demographic. Israel has proven many times they can take care of themselves militarily (especially in an existential war), so their biggest worry is that the Jewish majority would become a minority by allowing the return of millions of Palestinians. In a democracy, this would functionally erase Israel from existance at the ballot box. Hence this is an item Israel would never agree to and thus makes the proposal a total non-starter.

Further, I was even more puzzled by this quote from the Arab League’s Secretary-General: “They tell us to amend it, but we tell them to accept it first, then we can sit down at the negotiating table.” Typically, you negotiate the details first, then there is acceptance of the agreement/proposal. He’s got it backwards…accept it then we’ll talk. What is there to talk about if you’ve already accepted the proposal?

So, the lessons here for other types of negotiations and mediation (at least if you want to be effective)? Understand what your adversary in a negotiation wants and why. Leave all options open, but get your red lines out in the open early and tell the other side why they are red lines. Making take-it-or-leave-it offers (or outrageous offers) has its dangers. The other side may just leave the table and you’re left negotiating with yourself (which is kind of like playing hold ’em poker against yourself). Even worse, the other side may get so insulted that you can’t get the negotiations started again.

Things to think about when you negotiate.

“The Office” Mediates

Here’s a scene from NBC’s comedy “The Office” where mediation is used (in a comic way) to try and resolve an office dispute.

How to Persuade your Spouse to Mediate a Divorce

You’ve decide that you want to get divorced, but you don’t want to go through the adversarial court process of litigation.  How do you persuade your spouse to go through mediation?

There are a plethora of reasons why divorce is beneficial to both parties — especially if any children are involved.  Many of them are listed on my website.  These reasons should be compelling to your soon-to-be-ex.  Now Katherine E. Stoner talks about this topic in her book, “Divorce without Court: A Guide to the Mediation & Collaborative Divorce”.

Stoner says it is critical for the spouse proposing mediation to do his or her homework about the processes — speak to people who are knowledgeable about the options before making a suggestion. Research costs and availability of experts to help you, then offer to share all this information with your spouse.  Give only neutral reasons for suggesting mediation and stress that they are inexpensive ways to reach a fair and amicable settlement, Stoner advises.  “Don’t try a hard sell,” she warns in her book.

Rather, show your willingness to be flexible from the beginning by asking your spouse’s opinion.  “Then back off and wait for your spouse’s answer,” Stoner writes, since this approach generally has a more positive outcome than pushing.

There’s no sense threatening to take your spouse to court and leave him or her penniless if your offer to mediate or collaborate is turned down, she points out. Either one is a voluntary procedure, so making ultimatums is fruitless.

Even if your spouse has turned down these alternatives, keep trying.  “No matter how far along you are in the process of getting a divorce, mediating an agreement on the remaining issues — or settling them collaboratively — can save time and money,” Stoner writes.

(With thanks to Inside Bay Area.com)

Judges Part 2

In NJ, we do not elect our judges.  They are appointed by the Governor and confirmed by the legislature.  Many other states do have elected judges (there are pluses and minuses to both systems).  In Pennsylvania’s Centre County, several judicial candidates were interviewed for the local paper, the Centre Daily.  Two of them had interesting things to say about the role of mediation in divorce.

Jonathan Grine: “A hearing in front of the court is inherently an adversarial process. As a result, I would be a proponent of implementing mandatory mediation with skilled and neutral mediators prior to the occurrence of a custody hearing. I believe that not only is mediation in these circumstances an opportunity for a less invasive way than litigation to solve the issues that arise in child custody, but mediation also has the opportunity to bring families together for what is in the best interests of their children rather than breaking them apart through a bitter court dispute.”

Steve Lachman: “In custody litigation, the court’s guiding light is the promotion of the best interests of the child. However, the courts are caught in the middle of two struggles. Where a child has been classified as a dependent child because of abuse, neglect, or other family problem, there is a tension between parental rights and the commonwealth’s interest in protecting the best interest of the child. In the other case, the courts are the intermediary between competing parents in a divorce action. Children are at risk of being victims in both scenarios. While delay in resolving custody may leave children in a disruptive limbo, we should not rush the process so as to wrongfully jeopardize parental rights.

“The courts can take positive actions to improve the process. In both divorce and dependency scenarios, increased use of guardians ad litem can assure the interest of the child is represented. In divorces, mediation may help forge common ground between the parents.”

Judge Advocates for Mediation in Divorces

According to a March 4 L.A. Times article, retired Family Court Judge Roderic Duncan has written a book entitled  “A Judge’s Guide to Divorce: Uncommon Advice from the Bench”.  The upshot of the book is that traditional divorce brings out the worst in people and the result is that couples end up supporting the college aspirations of their attorney’s children rather than their own kids.

Contentious divorces easily can cost $100,000 in attorney fees and take more than a year to complete, Duncan said. And the outcome is rarely as good as when couples sit down and cooperate.  His book cites several examples of divorces that have spanned decades and demanded legal fees approaching $500,000. And still 80% of the apparent “winners” left court saying that they didn’t get what they wanted, he said.

“Going to court isn’t efficient. It’s way too costly, it takes too much time of everyone involved, and it creates stress and discord between people,” he said. “If it’s discord between just a husband and wife, that happens. But if there are children, that discord spills over to them and that’s just not fair.”

Duncan contends that a successful mediation can take eight to 10 hours and cost less than $5,000. Better yet, the nature of mediation ensures that any settlement works for both sides because nothing is settled until there’s agreement, he added. And judges habitually will rubber-stamp any reasonable agreement that has been accepted by both sides.

Divorce and Taxes

Well, it’s tax time here in the US.  If you are recently divorced, or are planning a divorce, here is a helpful article in Forbes magazine that discusses the tax effects of divorce.  Keep in mind that much of this does not apply for Civil Unions, as the federal government does not recognize marriages or marriage-like relationships between people of the same gender.

Medical Malpractice Mediation

The University of Pittsburgh has one of the most prestigious medical schools as well as one of the finest hospitals in the US.  But even the best doctors and hospitals will find themselves as a target in a medical malpractice suit.  Showing why Pittsburgh remains among the most progressive hospitals in the country, they have embarked on an aggressive mediation program to head off malpractice suits and help enable a different type of healing.

The mediation program is beneficial to both sides.  Both sides get cost containment (nothing is worse than spending $X to win $X or avoid paying anything).  The hospital estimates that $50,000 per case is saved by going through mediation.  But non-monetary issues can also be handled in a mediation, such as an apology (whic I’ve discussed in previous posts), plaques, monuments or rooms being named after the patient as well as assuring additional training for hospital staff.  None of these non-monetary outcomes would ever happen in a courtroom.

The University of Pittsburgh Medical Center has mediated 77 cases from 2004 through mid January 2007.  68 of those mediated cases resulted in settlements.  That’s an 88% success rate.  The 12% who did not settle did not lose their rights to sue.

This program was based on one at Johns Hopkins Hospital in Baltimore, another of the country’s great hospitals.  Drexel and University of Michigan hospitals also have similar programs.

The Disappearing Jury Trial

An article in the Maine Sunday Telegram brings up an interesting point about trials.  The trend at all levels in civil cases is that fewer and fewer cases are making it to trial and more and more are settling beforehand.  Of all the cases filed, depending on jurisdictions, less than 5% make it to a trial.  This means that more than 95% of cases settle.

In NJ, roughly 1/3rd of civil cases referred by the court for mediation settle directly in mediation.  I would estimate that another 1/3rd settle as a result of what happened in mediation, but does not get reported in those statistics.  This is why states have mediation programs.

In mediation, clients are given a lot to think about in a short period of time.  Sometimes it takes more than a few hours to assimilate the new information.  Most litigants look at their case as “I’m right, they’re wrong”.  A good mediator will help them see the gray in their cases (as well as the weaknesses) and properly assess the risks in going to trial.  I often ask clients why they think that their case is so unique that they will be among the less than 5% that make it to trial.

The longer a case goes until a settlement, the less likely it will happen.  When litigants have to spend money on discovery and depositions, they tend to become more entrenched.  That’s why mediation happens early in the process.  It gets information exchanged between the parties and risks assessed early.

Trials involve risks.  Trials involve biases (by jurors and judges).  Trials involve performances (by attorneys and witnesses).  A mediated settlement provides surety.  You know what you’re going to get.  And no one has forced this resolution on you…you’ve voluntarily agreed to it.

Under-used Mediation in UK Wastes Millions of Pounds

Reuters reports that in the UK, millions of pounds of taxpayers’ money is being wasted by family breakdown cases being dragged through the courts instead of entering the mediation process.

The National Audit Office (NAO) said a third of people who had been through a family breakdown had not been told mediation was an option, despite attorneys and legal advisers having a duty to do so.  Some 42 percent of them said they would have been willing to try it — a move that would have saved the taxpayer 10 million pounds.

Mediation allows couples who are splitting up to try to come to an agreement over issues such as custody of children with the help of a trained professional — without having to negotiate through solicitors or going to court.

But attorneys stand to lose potential fees if a case is settled out of court, and the NAO called for those with a significantly lower number of cases which go to mediation to be investigated.  If there is no good reason for the low take-up, they should have their contracts curtailed, it said.

Sir John Bourn, head of the NAO, said: “The Legal Services Commission (LSC) needs to publicise the advantages of mediation and remove the financial disincentives to solicitors of recommending this option to their clients.

“Mediation can provide a less adversarial route than the courts for many families involved in a breakdown and result in savings in legal aid of over 10 million pounds a year.”

Professional mediation is generally cheaper, quicker and less acrimonious than court intervention, and research shows it secures better outcomes, particularly for children.

On average, a mediated case takes 100 days to resolve and costs 752 pounds, compared to 435 days and 1,682 pounds in cases where mediation is not used, according to the NAO report. (This cost ratio is roughly the same as in the US.)

However, take-up of mediation in cases funded by legal aid is around 20 percent.

Only 29,000 out of 149,000 people attempting to resolve their family dispute tried mediation between October 2004 and March 2006.

Edward Leigh MP, chairman of the Committee of Public Accounts to which the NAO reports, said the findings were “worrying”.

“Confrontation in court cannot always be avoided, but the alternative of mediation should be pursued wherever possible — to the benefit of the disputing individuals and, also the taxpayer,” he said.

“The LSC must crack down on solicitors who are neglecting their duties in briefing their clients about mediation, and instead are happy to jump straight into the courtroom, leaving the taxpayer to pick up the bill.”

The Conservative party said it was “shocking” that the government had not done more to increase the use of mediation.

“This just goes to show how much potential there is to improve the legal aid system by concentrating on alternative dispute resolution,” said the party’s constitutional affairs spokesman Oliver Heald.