FINRA to Propose Making All-public Arbitration Panels Permanent

Over two years ago, I wrote about a pilot program FINRA established to test all-public arbitration panels.  FINRA, the financial industry’s regulatory arm, will be submitting to the Securities and Exchange Commission a rule change proposal next month to make this option for claimants permanent.

The current pilot program involves 14 firms that agreed voluntarily to a set number of investor cases that did not involve individual brokers. The proposed rule would apply to all investor disputes against any firm and any individual broker. It would not apply to arbitration disputes involving only industry parties.

Roughly 60% of participants opted for the all-public panels.

Unattractive? Ugly? Maybe you should settle your lawsuit…

A recently published study by Cornell University indicated that “ugly” or unattractive people who are defendants in criminal trials are 22% more likely to be found guilty and are given longer sentences on average (22 months longer) than attractive people.  The scientists conducting the study tried to look at why this occurs.  Study co-author Justin Gunnell said:

Information processing can proceed through two pathways, a rational one and an experiential one. The former is characterized by an emphasis on analysis, fact and logical argument, whereas the latter is characterized by emotional and personal experience.  Our hypothesis was that if we identify the two groups, then the experiential people are more likely to focus on extralegal factors, which shouldn’t have any bearing on the legal process.  Attractiveness was the variable we used.

The study confirmed what it referred to as an “unattractive harshness effect.”  Jurors who processed information in more of an “experiential” manner were the ones who gave longer sentences and were more likely to convict.

Psychologists and sociologists have long known of the advantages which more attractive people have:  they are more likely to be hired and are generally paid more than less attractive people.  Hollywood is practically defined by attractiveness.

Most lawyers will say that the outcome of many trials hinges on how well the jurors or judge “like” the litigants, lawyers and witnesses who appear in front of them.  The trier of fact gives credibility or believes who they think is more attractive.

As I’ve indicated many times, settling a lawsuit or divorce matter is almost always in the best interests of all parties due to the unknowns of trial.  Part of the unknown results from human biases, some of which were detailed in this study.  We all like to think of a trial as “justice” but the reality sometimes is that it is a popularity or beauty contest.

If you would like to consider mediation to resolve your lawsuit or divorce, please feel free to contact me to discuss your situation further.

See a Real Mediation in Action

Most of my regular readers know I almost never have “war stories” of my mediations on this blog.  The primary reason why is confidentiality.  When my clients enter a mediation, they have an absolute expectation that what is said in the mediation room stays in the mediation room.  They do not expect their dirty laundry to be aired over the internet, even if carefully camouflaged by changing or omitting the names of the parties.  This level of confidentiality also makes it harder to market mediation.  How can I easily explain mediation by example?  There are plenty of law and court based television shows, but almost no mediation shows.

The Maryland Mediation and Conflict Resolution Office (MACRO) does an excellent job of marketing mediation.  To this end, they have produced an excellent video on different types of mediation.  The mediations feature actual disputants who have waived their confidentiality privilege and touch on different areas of mediation (commercial/business cases, divorce, family, community and peer [students in school]).  The common misconception about mediation is everything sitting around a campfire singing Kumbaya and wondering why we can’t all get along.  While most mediations are civil, the reality, as you can see in the video, is that mediations often involve difficult discussions, difficult decisions and facing the issues directly with your adversary.  The results of the process are usually a better relationship — even if it means ending it on better terms.

The video is in .wmv format and can be viewed by clicking here.

Please contact me to find out is mediation is right to resolve your divorce, family and elder issues or commercial dispute.

An Apology or Slap in the Face?

I have written before about the power and effectiveness of a sincere apology to help resolve a dispute. Now from West Virginia, a completely different way to resolve a dispute: a slap.

Stewart Altmeyer, a prosecutor in Kanawha County, was suspended without pay for one month for agreeing to drop a larceny charge in exchange for allowing the alleged victim to slap the defendant.

In a mediation, I (or most of my colleagues) do not allow violence to be the outcome of any mediation.

Still no No-fault Divorce in NY

New York is the only state that does not have a no-fault cause of action for divorce.  A cause of action is what needs to be proven for your divorce action to prevail.  Most states have an irreconcilable differences cause of action, where one side does not have to prove the other side committed some unsavory act such as adultery or cruel treatment.

New York currently has four fault-based grounds for divorce:

  1. Adultery (which is still a criminal offense in the Empire State and hard to prove since you cannot testify against your spouse)
  2. Cruel and inhumane treatment (so as to affect the physical or mental health of the charging party such that it is not safe to remain in the marriage)
  3. Abandonment (one spouse intentionally leaves the other or refuses sexual relations for more than one year)
  4. Incarceration of one spouse for more than 3 years

In addition to these, the parties can agree in a written separation agreement to live apart for one year.  The agreement must contain the terms of the separation and ultimately the divorce.  This is the closest NY comes to no-fault.

Davis v. Davis, a recent NY case stated that mere social abandonment was not sufficient to prove constructive abandonment.  The wife in this case did not plead sexual abandonment.   The appellate court saw the pleadings as nothing more than a way to get around NY’s lack of a no-fault ground for divorce and that the courts would not usurp the legislature’s power to determine law for the people of New York.

Is Hiring a Detective to Spy on Your Spouse Harassment? In NY, no.

The case of Anonymous vs. Anonymous (so captioned by the court to protect the identities of all involved) recently asked and answered this question.  This case involved a wife who filed for divorce in November 2008.  The husband filed a counterclaim, alleging that the wife was having an affair.  In February 2009, the court entered a protective order requiring the husband to keep 1000 feet away from the wife’s residence and place of employment (excepting visitation and church attendance). In August 2009, the husband hired a private detective to spy on his wife.  The detective followed her to a hotel where the detective recorded proof that the wife was having an affair with their priest.  The matter became a little more public when the husband told another priest during a confessional of the affair, causing the church to launch an investigation (during which the DVD was given to church officials).  While the wife did not contest the affair, she asserted she was being harassed and that her husband had violated the protective order by hiring the detective.

Family Court Judge Debra J. Kiedaisch ruled that “under the circumstances, the hiring of the private investigator, in and of itself, was not an unlawful intrusion upon the rights of the wife secured by the order of protection.”  She said that the husband had the right to “gather evidence up to the date of trial in defense of the matrimonial action and in support of his own counterclaims.”

“If the husband had the wife followed and recorded … for the purpose of gathering embarrassing material to deliver to her employer with the intention to cause her to lose her employment,” that might rise to “conduct which alarms or seriously annoys another person, and serves no legitimate purpose” — second-degree harassment under New York law — Kiedaisch wrote.

Stock Market Arbitration Filings up 43% in 2009

Filings for arbitration at the Financial Industry Regulatory Authority (FINRA), the self-regulation body of Wall Street, are up 43% in 2009 over the previous year.  Nearly all brokerage agreement specify FINRA arbitration as the only way to resolve a dispute between a client and broker or an employee and broker.  In years where the stock markets are down, arbitration filings tend to increase as investors seek redress for their losses.  The average time from filing to award decreased from 13.0 months in 2008 to 11.5 months in 2009 — a 12% decrease. Investors received a monetary or non-monetary award in 45% of the cases in 2009, up from 37% in 2008.

FINRA also has an mediation program.  Filings in their mediation program were also up (23%) and average turnaround time dropped 33% from 135 days in 2008 to 91 days in 2009.

I arbitrate cases for FINRA, among other bodies.

Are Judges and Juries like Referees and Umpires? Are Referees and Umpires Fair? Why lawsuits are crapshoots.

Analogies between a finder of fact (a judge or jury) and referees or umpires (the arbiter of a game’s rules) are often made.  It is open to debate whether the analogy firmly holds.  However, it is often interesting to discuss whether any “neutral” decider of an outcome (game rules or rules of law) have biases.

When a party enters the courthouse or arbitration room, each party expects (and hopes) that the person(s) making the decision as to who is “right” is being impartial and fair. It is certainly open to debate how to define fair, which is usually in the eye of the beholder.  Each time I went through arbitration training (to be a private judge), the class is asked to perform an exercise.  The class is broken up into groups of three people.  One person plays the arbitrator, one person the complainant and the other the respondent.  Each group is given the same exact fact pattern and the parties make their cases.  After a specified period of time, the arbitrator makes their ruling which is turned into the person running the training.  Every single time I’ve done the exercise, the distribution of rulings in the room fall out from one  end of the possible spectrum to the other with everything in between.

Why?  Everyone had the same exact case to argue.  Shouldn’t “justice” be consistent?  In reality, several things happen.  First, not every party presents the case the same exact way.  Some people are more effective than others, just as some lawyers are better skilled than others. In a real case, anyone who speaks (lawyers, witnesses) can have good and bad days.  Trials are performances.  Second, every single human being has biases.  We grow up with things we like or don’t like.  We have all had good and bad experiences with things, people and scenarios.  These create the filters through which we see the world.  There is also a theory many attorneys ascribe to which states that whomever the jury or arbitrators likes better in terms of attorneys and litigants will win the case. Likability trumps “rightness”.

Getting back to the sports (referee) analogy, there have been some recent studies showing bias in referees.  And I am not referring to the Tim Donaghys of the world who seek personal gain from their on-the-court rulings.  In the Netherlands, two professors discovered that soccer (the other football) referees are more likely to call ambiguous fouls on taller players.  A study out of England showed that referees favored home teams in their calls, especially in disciplinary sanctions (yellow and red cards).  From the world of Tae Kwon Do, referees tend to award more points to competitors wearing red uniforms.

In the U.S., college basketball referees tend to also favor the home team by calling fewer fouls.  The college refs also try to level the playing field for the teams by issuing “make up” calls, calling more fouls on the team in the lead, and trying to even up the number of fouls between the teams regardless of the aggressiveness of the level of play of each team.  A 2007 study also found that white NBA referees tend to call more fouls on black players than white players.

Even just looking at the games you watch, do you agree with each decision the referee or umpire makes regarding your team?  How about instant replay, the analogy of an appeal in court?  Does the referee get it right even when they have a TV with 20 angles and slow motion to look at each play?  Sometimes not.

So what does all of this tell you?  Try to resolve the case without having someone else decide it for you.  That’s what mediation helps the parties accomplish.  The outcome is on your terms and is unaffected by the biases of others.

Please contact me if you would like to further discuss how mediation can help facilitate a resolution to your lawsuit, divorce or family dispute.

Want Palimony in NJ?? Get it in Writing.

On January 18, 2010 departing NJ Governor Jon Corzine signed into law bill S2091, which mandates that any palimony agreement must be in writing and with the advice of independent counsel for both parties.  Palimony is the common term for a promise of support by one person to another in a relationship where the parties are not married to each other. This law aims to overturn several court cases which established even implied oral support promises could be enforceable.

Previously, the NJ Supreme Court had established the concept of palimony.  In Devaney v. L’Esperance, 195 N.J. 247 (2008) and in re Estate of Roccamonte, 174 N.J. 381 (2002), the New Jersey Supreme Court upheld the concept of palimony agreements between two unmarried cohabitants.  In Devaney, the court held that “cohabitation is not an essential requirement for a cause of action for palimony, but a marital-type relationship is required.”  In Roccamonte, the court held that an implied promise of support for life is enforceable against the promisor’s (cohabitant’s) estate.  Those decisions are consistent with the court’s prior decision in Kozlowski v. Kozlowski, 80 N.J. 378 (1979), which said a promise of lifetime support by one cohabitant to another in a marital-like relationship would be enforced, if one of the partners was induced to cohabit by the promise.  The court stated the right to such support is found in contract principles and that the contract may be either express or implied.

The takeaway:  if you want palimony in NJ, get it in writing and have it reviewed by your attorney.

Tips on Making Foreclosure Mediation Productive

I have written previously about how homeowners and lenders can use the court’s foreclosure mediation program to help resolve a foreclosure matter.  Here are a few tips on how homeowners can use the mediation process more effectively:

  • Get into the process as early as possible.  Waiting until the morning of the sheriff’s sale is probably too late.  Since the bank will not accept payments while the loan is in arrears, the amount in arrears can drastically increase.  If the homeowner is not saving this money, they will be unable to address the arrears, making a modification impossible.
  • Be prepared.  Have all of the documents which have been requested by the bank.  You are trying to prove you are eligible for a loan modification of some sort.  Not having the proper documentation will not help your case.
  • Show the lender you can be responsible in trial payments.  Banks will often set up a trial payment plan so that the homeowner can prove financial responsibility to the bank.  Make sure you can make the payments as agreed to.  If you don’t, you will be unlikely to ever be given another chance.  Send any payments by a service which can be tracked (i.e. certified mail, priority mail, Fedex, etc.).
  • Be aware that not all homeowners will be able to save their homes.  There are other alternatives for those homeowners rather than going through foreclosure.  The lender may allow you to stay in the home through the end of the school year.  They may be willing to offer cash for the keys.

Remember, the mediation is your one chance to get the bank to discuss solutions for you.  Take advantage of that moment.