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Settlement with a Hug

Here’s a nice article about commercial mediation from the Charlotte Observer. I’ve done EEOC (employment discrimination) mediations and they are usually among the most emotional. Every mediation has a life of its own and predictions of outcome are usually futile or wrong. The bolding is my emphasis…

Here’s your final offer … and a hug

GUEST COLUMN

Stephen J. Dunn

It had been a long day. My client and I were drained. After hours of intense negotiation, it seemed as though we had reached an impasse.

We made our final offer and packed up our briefcases to leave, but just then our mediator returned and said, “Guys, she says she’ll do the deal. There’s just one more thing. She wants a hug.”

My client and I looked at each other and shrugged. This sort of thing happens only in mediation.

In virtually every lawsuit, at some point the parties participate in a mediated settlement conference. The mediator, a neutral third party trained in alternative dispute resolution, hears from both sides and attempts to facilitate a settlement. It is an informal process with no sworn testimony, no jury and no judge. The mediator has no authority to declare a winner, but only to work toward a resolution acceptable to all.

When it works, mediation brings an end to litigation. The parties sign an agreement, often drafted by the mediator on the spot, and shortly thereafter dismiss their claims.

Successful mediation circumvents the need for trial, reducing legal expenses and lessening the burden on the court. The parties cannot, however, be forced into a settlement. If there is an impasse, the lawsuit proceeds to trial and a judge or jury declares the winner.

By the time our mediator proposed settlement terms including a hug, my client and I had already been down a long road. My client was an employer who had been sued for sex discrimination by a former worker.

As is often the case in employment discrimination cases, the financial and emotional stakes were high.

The company sympathized with the plaintiff, a longtime employee with financial difficulties, but was adamant that her gender had nothing to do with the termination decision.

We had been through months of discovery and depositions. We felt good about the evidence, but there is always risk at trial and always a possibility of appeal.

A good mediator knows how to focus parties on their interests, not their dispute. Rather than debate who is likely to prevail in court, a skilled mediator highlights the flexibility and finality of settlement.

A company may wish to make payments over time. An employee may want certain language included in a reference letter. The parties may agree to keep the settlement confidential.

Mediation allows the parties to explore resolutions outside the scope of what a court can provide.

Over the course of several hours, our mediator had brought us close on a number of points, but the plaintiff still wanted more money than we were willing to pay. My client’s representative, a human resources director who had been friends with the plaintiff, was losing patience. We decided to make one final offer as a “take it or leave it” proposition. We never expected the counter offer of a hug.

I always tell my clients if you can give something to the other side and it does not cost you anything, you should do it.

In this instance, at the end of a long day and a long case, facing the prospect of a long road to come, the hug would not be a deal-breaker. We drew up the papers and my client gave the plaintiff a hug.

She wanted to give me a hug, too, and I agreed (even though it had not been negotiated into the bargain!). Within weeks, the case was dismissed and the parties went on with their lives.

A hug almost never settles a lawsuit, but a creative mediator finds ways for parties to come together beyond just dollars and cents.

Stephen J. Dunn is a partner in the Charlotte firm Van Hoy, Reutlinger, Adams & Dunn and specializes in representing employers.

Divorcing couples can save with mediation

Cynthia Fox, in the South Side Journal writes an excellent article about the benefits of mediation (excerpted):

One of the hardest things about divorce is its cost, not just emotionally and psychologically, but in cold hard cash.

A typical scenario is a husband, wife and two attorneys. Add the expense of outside experts if there are disputes over who can better parent their children or the valuation of an asset such as a business that one or both owns, and the bottom line is fees well into five figures for each party.

However, in my experience, anger and contentiousness drives up the cost more than any other factor. More anger equals more destruction, cutting deeply into the wealth and well-being of both parties. Deeply hurt litigants file too many motions, push issues beyond reason, are unable to compromise and often are so damaged that they emote endlessly in the lawyer’s office. The result: very large legal bills that anger them even more.All of this has led me to develop a new approach that I describe as the ConstructiveDivorce, which attempts to reduce the emotional and financial costs of divorce and help my clients prepare for and get onto the next stage of their life. Helping people resolve their conflicts more constructively is also why I trained to become a certified mediator.

Any couple heading for divorce can go to mediation, even if they have already hired attorneys and started down the more adversarial path. In mediation, the wife and husband meet together with the mediator, and with his/her assistance, prepare the final settlement agreement that the Family Court requires in order to grant them a divorce.

This agreement typically deals with the division of the property, parenting plans for the children, assigning custody and visitation rights, as well as addressing child support or spousal maintenance needs. Understandably, resolving these questions can be stressful and difficult, particularly for estranged couples.

The mediator is a like a “tour director,” identifying all the stops along the way, providing knowledge and insights, while making sure each person gets what they need with a minimum of friction.

And, while no one would say getting a divorce is like taking a vacation, in the hands of a skillful mediator, the excursion can be both liberating and empowering. That’s because each party is encouraged to be totally open about what they feel, believe and expect about the end of their marriage with the mediator there to support and buffer them. The mediator’s job is not to allow the strain of these painful topics keep the parties from getting to the finish line.

I believe couples that mediate the end of their marriage “own” their divorce in ways that provide a clean break with the past and allow them to get on with their lives. They also save a boatload of money.

In most situations, no attorneys are needed until the settlement agreement is completed, and then one or both parties will usually retain a lawyer to take the agreement to the court for its approval.

Divorcing the Dictator’s Daughter

You’re an American citizen of Afghan-Uzbek extract who operated the Uzbekistan bottler for the Coca-Cola Company through your family’s company.  Uzbekistan is considered one of the most oppressive nations on earth.  You meet the daughter of the country’s dictator and get married.  Ten years later. this is what happened to Mansur Maqsudi:

After the marriage collapsed in 2001, Maqsudi says, his family in Uzbekistan was deposited on the Afghan border, while his children were spirited from New Jersey to Tashkent, the Uzbeki capital. He also claims that Uzbekistan effectively seized his share of the bottling business and transferred control to a Swiss company in which his ex-wife has a significant interest. Coca-Cola, according to Maqsudi, went along for fear of angering the Karimov clan. Both Coca-Cola and Karimova deny Maqsudi’s allegations.

So what to do?

The lawyer whom Maqsudi retained to recover his investment — Stuart Newberger of Crowell & Moring — had no obvious course of action. He could not sue Uzbekistan directly, because the nation had never signed an investment treaty with the United States. He could sue Coca-Cola for conniving in the vendetta, under the arbitration agreement signed by the members of the bottling joint venture — but it would be tough to implicate Coke without a broad U.S.-style discovery expedition. Newberger found an explosive solution in a quiet nook of federal procedure, 28 U.S.C. 1782.

You can read the rest of the article in the Europe Focus section of the American Lawyer.  (Warning: there’s a lot of procedural boredom in there.) The case is still proceeding and will likely be determined in arbitration.

New Palimony Standard in NJ

Yesterday, the NJ Supreme Court published their ruling in Devaney v. L’Esperance, A-20-07.  In this case, Helen Devaney began a relationship in 1983 with Dr. Francis L’Esperance (a pioneer in laser eye surgery) which lasted on and off for 20 years.  L’Esperance paid for Devaney’s college education (undergraduate and graduate), provided an apartment for her and claimed he would leave his wife for her (which he never did).  They also tried unsuccessfully to have a child together.

When the relationship ended, L’Esperance kicked Devaney out of the apartment.  She then sued him for palimony.  Palimony is support for a former partner, similar in concept to alimony (which is only for married or civilly unioned couples).   Palimony is not based in statutory law but common law (law developed by courts) as New Jersey eliminated common law marriages in 1939.   However, in the early 1970s, many couples began living together as married without legally doing so.  The courts recognized this shift and created palimony as equitable relief for promises made and not fulfilled.

Historically, cohabitation was a requirement for someone to be awarded palimony.  In ruling on Devaney, the court found that cohabitation was not a necessary requirement.  “It is the promise of support, expressed or implied, coupled with a marital-type relationship, that are the indispensable elements to support a valid claim of palimony,” Justice John Wallace wrote for the court.

However, this aspect of the ruling did not help the plaintiff in this case.  The court also found that the plaintiff did not successfully prove that she had a marital-type relationship with the defendant, nor did they hold themselves out to be a mrried couple.  “As the trial judge so aptly phrased it,” Wallace wrote, “‘the parties’ relationship was best characterized as a dating relationship.'”

Wallace further stated, “”There may be circumstances where a couple may hold themselves out to others as if they were married and yet not cohabit (i.e., couples who are separated due to employment, military, or educational opportunities who do not cohabit).  The trier of fact must consider the realities of the relationship in the quest to achieve substantial justice. [T]he trial judge should consider the entirety of the relationship and, if a marital-type relationship is otherwise proven, [the palimony claim] should not be rejected solely because cohabitation is not present.”

Wall Street Journal Article on Divorce

The Wall Street Journal recently had an article discussing divorce.  While most of the focus of the article is on collaborative divorce and the impact of divorce on children, mediation does get a couple of positive mentions.

On children:

Constance Ahrons’s 20-year look at 173 children from 98 divorced families showed that when divorced parents were able to maintain a civil and at least minimally cooperative relationship with each other, the children experienced no long-term problems associated with the divorce. But when parents remained in conflict or totally disengaged from each other, their children continued to be distressed even 20 years later.

The article also mentions that there is ample evidence that we can increase the incidence of “good” divorces. In a 12-year follow-up of couples randomly assigned to either mediation or litigated divorce, Robert Emery and his colleagues found that as little as five to six hours of mediation had powerful long-term effects. Parents who took part in mediation settled their disputes in half the time of parents who used litigation, and they were much more likely, even 12 years later, to jointly discuss children’s discipline, moral training, school performance and vacation plans. Nonresidential parents with mediated divorces maintained much more contact with their children than those who had litigated.

The average cost of a mediated divorce is less than $7,000 and of a collaborative divorce less than $20,000. This compares with nearly $27,000 for a divorce negotiated by rival lawyers and about $78,000 for a fully litigated divorce.

And it’s not just the financial toll. When a parent maximizes his or her emotional position by undermining a child’s respect for the other parent, this “victory” carries long-term costs. Researcher Paul Amato notes that children who report being put in the middle of their parents’ problems are less likely to be close to either parent as they age.

Why do Americans Love to Litigate?

New Hampshire attorney and mediator Scott Flegal writes an article in the Nashua Telegraph looking at this phenomenon.  You can read his entire article here, but I’ve copied the most salient points below (with my emphasis added):

Why do Americans love to litigate?

This is a tough question. I mean, most people aren’t crazy about lawyers. Nobody likes paying legal fees. Many people criticize the glacial pace of the judicial process. Everybody loves to rail on about crazy jury verdicts. And yet, we continue to file lawsuits, outsourcing our conflicts to lawyers and judges for resolution. Why is that?

…..

I think there are a few reasons. The first one is because of who we are. Americans believe in justice, and we rely on juries, judges and courts to provide it.

…..

Americans also seem to have a problem with negotiation….Sometimes we even view negotiation as sinister. It involves deal-making, compromise and, heaven forbid, it often goes on behind closed doors.

…..

But is [litigation] healthy? It certainly isn’t good for business, which spends billions each year on litigation. What toll is this taking on American business when we compete in a global economy with nations that don’t share our penchant for litigation?

Our fondness for filing suit is also damaging one of the cornerstones of our judicial system: the relationship between lawyer and client. For the system to work properly, that relationship must be based on mutual trust and respect. More and more it seems like it is turning into one of unhealthy codependence. The clients outsource their conflict to their lawyer and avoid the responsibility of negotiating and decision-making. The lawyer believes she is doing what the client wants, and litigation pays a lot of bills. In the end, when the result isn’t a good one, the lawyer and the system bear the blame, and everyone is miserable. But the beat goes on.

Ironically, part of the solution to this problem may involve rebuilding that very lawyer/client relationship. As lawyers, we might be able to improve it by making sure our clients understand that while the law is almost always relevant in dealing with a dispute, it is not necessarily determinative. There may be other alternatives available to the client that could do a better job of meeting the client’s most important interest than filing a lawsuit. As lawyers we must use the law to understand the relative strengths and weaknesses of the client’s position. But every bit as important is the role we play in helping the client decide whether asserting those legal rights in court is the best option.

Certainly gives something to think about.

Can You Arbitrate Custody and Visitation?

The NJ Appellate Division decided this matter in an opinion published today.  Arbitration is an alternative (or complementary) dispute resolution method.  In a nutshell, instead of a court acting as the judge in a dispute, a private neutral acts as such.  The main advantage is that the rules are more relaxed than the court’s, which should lead to an expedited process.  The main disadvantage is that the decision has very narrow grounds to appeal (basically, arbitrator misconduct).

In the case of Fawzy v. Fawzy (A-5337-06T1), the court looked at whether parties in a matrimonial action can agree to binding, non-appealable arbitration of child custody and parenting time issues. The court concluded that such an agreement violates the court’s “parens patriae” (responsibility of the government to protect individuals in need) obligation to protect the best interests of the children and is void as a matter of law.  That (parens patriae) role requires the trial court to determine the best interests of
the children regardless of any agreement as to custody and parenting time (which could also include agreements negotiated in mediation or by attorneys).

The court did go on to say that as the courts gain experience in the arbitration of child support and custody
disputes, it may become evident that a child’s best interests are as well protected by an arbitrator as by a judge.

The appellate court remanded the case back to the family part in Middlesex County for a plenary hearing.

Remember the $54 million lawsuit over a judge’s pants?

He’s baaaack.  I posted about Judge Roy Pearson and his $54 million lawsuit over a lost pair of pants.  Pearson lost his job shortly after he lost the case.  Now, he’s suing the District of Columbia for a mere $1 million, claiming wrongful dismissal over exposing alleged corruption in the Office of Administrative Hearings.

Oh, and he’s appealing the $54 million defeat.  When pants are worth more than a job…

The Dangers of Filling in the Gaps

Each Friday, I volunteer some of my time to help the Recording for the Blind and Dyslexic.  My role there is a reader; I read the books which are recorded on digital audio for blind and dyslexic people to be able to use primarily college and high school text books.  My job is to read the books verbatim (only interpreting/describing  pictures, graphs, tables and illustrations) — how hard is that to do?  Simply, read what’s in front of you.

Most of the books are fairly straightforward to read and this week’s was no different.  It was an English writing book, dealing mostly with grammar and structure.  Some of the exercises the students perform in the book deal with identifying sentences that are grammatically incorrect.  So, here I have to read sentences with grammatical errors.  Instead, I kept reading the exercise sentences not verbatim (with the errors), but as they should be corrected.  This is not very useful to a student trying to learn.  I kept having to re-record sentences and made sure I was concentrating very hard on what I was reading.

Why was this happening?  My subconscious was filling in the gaps of what my mind thought SHOULD be there, not what actually was.

Frequently, this is what also happens in a dispute.  If communication breaks down (which is often the cause of most disputes), the mind fills in the gaps with what it thinks is the truth.  This can be right or wrong.  The mind will tend to demonize the other person in the same way.  Also, the mind doesn’t like to be wrong.  It will fill in gaps to justify any wrong decision (cognitive dissonance).

The lesson here is to not make assumptions about anything.  Investigate.  Research.  And be objective.  Look at things from someone else’s shoes (this is usually why you hire an attorney — so they can be that objective advocate).

Another Study Shows How Settling Cases Early Saves Money

The National Law Journal reports that a study of court settlements in personal injury lawsuits against businesses estimated companies could save an average total of $114,000 per claim and $670,000 for severe injuries by promptly settling cases instead of battling them in court.

The study (published this month in the Columbia Business Law Review) also projected $32,000 in savings from lower legal expenses, or about $211,000 for cases involving severe injuries.

The study based the projections on how much it would cost businesses to make “early offers” to pay out-of-pocket medical expenses and wage losses of injured claimants. The quick settlements would reduce legal fees and “pain and suffering” damages.

If you’re interested in trying to resolve your lawsuit early, please contact me to see how I can help all involved.