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Law Rules

How we resolve our disputes

Monday
Dec032012

It's All Negotiable

I recently advised a client concerning a real estate purchase. My client had signed an offer to purchase many months ago, but the seller was under water with his lender and was trying to negotiate a short sale. The seller’s real estate broker wanted my client to sign a new offer to purchase, giving the seller another 60 days to complete the short sale negotiations. But my client did not want to delay for another 60 days. So I told the broker that my client would not sign another offer to purchase unless we saw some concrete progress toward completing the short sale. The broker and seller did not want us interfering in their negotiations with the lender, and did not want to show us the seller’s financial documents. But when I told the broker of my client’s concern with the length of time for completion specified in the offer for completion of the short sale approval, they came back with a revised proposal for 20 days. That was acceptable to my client. Now, if the seller or lender is still dilatory, my client can get out of the deal in a relatively short period of time. And the seller gets his new offer, which he says will help pave the way for approval. That may or may not be, but at least both sides now have a written offer they can live with. Sometimes, it is the seemingly small things that make a big difference.

I have said it before and I’ll say it again. When it comes to contracts, it is all negotiable. Even when one party presents a printed form, it is not written in stone. With computers, forms can be redrafted and reprinted much more easily and quickly today than when I began practicing law. That’s a good thing. People need to consider what they really want or need when making big purchases or commitments of time and money. They should not be deterred by the prospect of having to redraft some written document. Even the terms of written contracts to resolve disputes (e.g., Agreements to Mediate or Arbitrate) are negotiable—until you sign on the dotted line. So be sure you read and understand what you are signing. If you don’t, get an attorney to look it over and explain the potential pitfalls and consequences before you sign. If a dispute arises concerning the meaning or effect of the terms of the contract after you sign it, the parties to the contract can get attorneys and litigate in court, or they can agree to resolve it through arbitration or mediation, out of court.

In any event, it is wise to remember that courts are not in the business of creating or negotiating contracts for you. That is your job, with or without the help of an attorney or mediator. Courts either enforce agreements or decide that they are not enforceable. The time to negotiate is before the hammer falls. When a large amount of time, money, valuable property or assets are at stake, it is best to seek out an experienced attorney or mediator to help you.

Monday
Nov192012

Extraordinary circumstances

In Wisconsin, absent excusable neglect, newly-discovered evidence, fraud, illegality or subsequent change in circumstances, a court can vacate a judgment or settlement agreement only if it finds “extraordinary circumstances” justifying relief from the judgment or agreement in the interests of justice.  In a recent unpublished decision, the Wisconsin Court of Appeals decided that a woman’s subsequent “discovery” of earlier releases she executed with a former business partner prior to entering into a mediated settlement agreement did not constitute such extraordinary circumstances.  The woman admitted that she had effective legal counsel in the mediation and she did not assert that she did not voluntarily choose to participate in the mediation and enter the settlement agreement, rather than to litigate the business dispute.  The mediation was conducted at an early stage of the litigation and the woman asserted that she did not remember or appreciate the legal significance of the earlier releases.  Nonetheless, both the trial court and the appellate court found nothing extraordinary enough to justify vacating the mediated settlement agreement.

I question whether this woman’s legal counsel was truly effective.  Preparation is as important prior to entering into settlement negotiations as it is prior to trial.  If these litigants truly had released their claims in prior documents, this should have been discovered and discussed before or during the mediation.  However, the courts’ decisions in this case, upholding the mediated settlement agreement, are not unusual.  Courts do not exist to extricate people from their own neglect, mistakes or lack of preparation.  This is why it is often just as necessary to have an attorney represent parties in mediation as it is in litigation.  Even so, mediation will usually result in a faster and more economical resolution of the dispute.  Satisfaction with the result depends on the partipants’ and the mediator’s preparation.  There is nothing extraordinary about that. 

Monday
Oct292012

Making law

Every few months, I talk to a local business networking group about the law. I get my topic by asking members to submit a question to me in advance. I call it “Ask the Attorney.” This month, the topic concerned an arbitration that involved a real estate agent’s client. I explained that the arbitration must have arisen out of an agreement to arbitrate. Members of the group seemed surprised to learn that no law compelled them to enter into an agreement to mediate or arbitrate a dispute. My presentation showed how law was frequently made by one of our 3 branches of government (legislative, executive or judicial). But even more “law” was made by mutual agreement between individuals or business entities. We call these agreements contracts. In effect, a contract makes law between the parties to the agreement. That law is enforceable in court just as any statute passed by the legislature or any rule properly made by an administrative agency. But it can be enforced only by or against the parties to contract, or by designated beneficiaries of the agreement. Therefore, the procedure and outcome of the real estate arbitration in question depended on the terms of the agreement to arbitrate.

Near the end of my presentation, one of the group members asked whether I recommended that all of their business agreements contain an aribtration or mediation clause. Again, I think my answer surprised them. I told them that I did not recommend inserting an arbitration or mediation clause into every business contract without considering the costs of those proceedings, the nature and goals of their business, and the types of disputes likely to arise. I also explained that such clauses do not have to be agreed to before any dispute arises. Arbitration and mediation agreements can be, and frequently are, entered into after a dispute arises. Of course, even if you do have a mediation or arbitration agreement in your contract, you can waive the right to enforce it by mutual consent or conduct inconsistent with enforcement.

The beauty of any agreement to arbitrate or mediate is that you are being proactive in addressing your dispute. Too many people leave dispute resolution to their attorneys or the courts, leaving the details to lawyers. Mediation and arbitration are much more hands on for the real parties. By tailoring the procedure to your dispute, you increase your chances of an acceptable, timely and economical resolution. There may be times when you want to set a public precedent or change existing law, which requires litigation in court and maybe an appeal. In other situations, you may be more concerned about confidentiality or putting the dispute behind you as soon as possible. Whatever your goal may be, it is always better to have options and to think about them before making a choice.

It is important to remember that, when entering into any kind of contract, you are making law. That is an awesome responsibility. Exercise it wisely.

Sunday
Apr222012

Negotiating with terrorists

I went to hear Moty Cristal speak tonight.  Mr. Cristal is an Israeli professor of negotiation dynamics and a negotiating strategies consultant.  His company, Nest Consulting, provides complex negotiations and crisis management training, consulting and operational support to senior executives in the public and private sector in the US, Europe, Asia and the Middle East.  He was instrumental in negotiating the release of Israeli soldier Gilad Shalit last year.  Many people have been critical of the deal, which exchanged more than 1,000 Palestinian prisoners for a single Israeli soldier.  However, Mr. Cristal is an expert in low-trust negotiations.  It is difficult to second guess decisions made in such situations. 

Everyone says you should never negotiate with terrorists.  But everyone does it when there is no other feasible or reasonable alternative.  The argument against such negotiation is that it will only encourage more terrorism.  But history does not support this theory.  No more Israeli soldiers have been captured, nor has there been any attempt to do so since Shalit’s release.  The more time that goes by, the harder it will be to blame any such incident on this negotiation.  The fact is that when terrorists negotiate, they may still be terrorists, but they are not engaging in terrorism while they do so. 

In a civil society, we never negotiate or mediate with parties whose members or representatives have killed members of the opposing party’s group.  And usually there is a deadline for the parties to negotiate a settlement or else a resolution will be imposed on them by some outside entity, like a court.  In the Middle East today, there is no such Sword of Damocles, so there is no motive for either side to negotiate or change positions.  Nonetheless, negotiations do go on.  Small issues constantly need to be resolved, regarding water, electricity, transportation and tourism.  Name-calling (terrorists, occupiers) never achieves anything.  Who knows.  One day, maybe the small negotiations will turn toward larger issues?

Friday
Apr062012

Opening day

I admit it. I’m a homer. I like my hometown professional baseball team, the Milwaukee Brewers. Today is the opening game of the 2012 season. After a first place finish in our division last year, hopes are high for another exciting and successful season. But even if they don’t win it all (and the Brewers never have), it is still good clean entertainment, usually outdoors.

What does this have to do with dispute resolution? I have written about conflict in sports before, (at least twice). It can be a good model for how we should handle conflict in the workplace and society in general. During the off season, we saw the controversy about Ryan Braun’s positive blood test for steroids. It was finally resolved through arbitration. Agree with the decision or not, it has the benefits of finality and closure. And it showed the importance of having some kind of relatively quick decision making procedure to resolve the dispute.

Conflict can be constructive. Even if we don’t get everything we want or hope for, engaging in a civilized discussion or game with your opponent ultimately puts the dispute behind you and lets you get on with your life. If we don’t win today’s game, there are 161 more to go. And then there is next season. In the meantime, enjoy the game and the opportunity for growth that civilized conflict provides. Baseball is one of the most civilized sports. No slap shots, slam dunks, sacks or kicks. Just some base hits and the opportunity to make it “home.” So enjoy the game and play ball!