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How we resolve our disputes

Entries in arbitration (22)

Monday
Apr242017

Home Sweet Home (sometimes)

I am a baby-boomer. That means that many of my friends and relatives are at that point in life where they are in the process of, or considering, selling the single family home in which they raised their children and moving to a condominium or other type of property where landscaping and common elements are taken care of collectively, together with other owners. Often, a homeowners’ association performs those tasks and manages the community. Sounds idyllic. But the legal consequences are too often the opposite. People who haven’t shared residential property ownership with anyone other than their spouse and children since college — 40 to 50 years ago — suddenly have to relearn what sharing means. And, of course, there is no such thing as a free lunch, so they have to pay for the privilege of sharing. Monthly condo or homeowners’ association fees have to be factored into their budgets, along with special assessments and reserve accounts. When things don’t get done, or get done poorly or late, finger pointing begins. Sometimes, the fingers are pointed at the association’s management, board members or other owners. So much for the idyllic scenario. 

When disputes arise between condo or collective homeowners and their association or contractors, litigation frequently ensues.  The resulting litigation can be lengthy, acrimonious and costly. Unfortunately, it seems to be rare in Wisconsin for a condo or homeowners’ association to have an alternate dispute resolution provision in their declaration, by-laws or rules. In Florida, a state statute requires pre-filing mediation and arbitration of certain homeowner/association disputes. 

Recently, I represented several clients buying and selling condos or homes that are part of an owners’ association. Both parties always want to be sure there are no pending special assessments or delinquent monthly dues. Some lenders (including FHA loans) also want to know if there are any unresolved disputes between other owners in the association, or between the association and any of the owners or outside contractors. The pendency of disputes can make it difficult to sell or finance the purchase of a condo or home unit. So it is in everyone’s best interest to resolve such disputes expeditiously. Therefore, I would not be surprised to see more homeowners’ associations and developers include mediation or arbitration clauses in their governing documents. Even existing developments can change their rules to include such clauses, with the owners’ consent. The sooner and more frequently that occurs, the more likely that our Golden Years will not be tarnished. 

Wednesday
Feb032016

Electronic discovery and mediation

Recently, I attended a seminar sponsored by the American Bar Association and FINRA titled Utilizing Mediation to Navigate the Perils of Electronic Discovery in Arbitration. I have previously written about effect that the effort and cost of obtaining discovery from adverse parties has on litigation and prospects for settlement. Today, with increasing amounts of information being stored in electronic formats, the cost and effort of obtaining that information has soared. Frequently, the parties need to retain an IT specialist to search, find and interpret the records and data. In complex commercial and financial cases, especially when allegations of fraud are involved, the level of distrust between the parties makes settlement and discovery even more difficult. Judges and arbitrators do not like to wade through the reams of pleadings and documents that are often necessary to resolve disputes concerning electronically stored information (ESI). 

Enter the mediator. By focusing the parties’ attention on the specific issues, rather than on allegations of spoliation of evidence and threats of sanctions for discovery abuse, the mediator can help the parties devise a plan to allocate the costs and schedule the timing and manner of production of evidence, thereby maintaining confidentiality and credibility with the court or arbitration panel. A mediator familiar with the concepts of proportionality, privilege and data mapping can help the parties minimize the time, effort and expense they put into discovery. Thus, they can concentrate on prepartion of the case for trial or arbitration. After they obtain the information they feel they need, the parties might then return to mediation to fully evaluate their settlement options. 

It takes more time, effort and money to fully and properly prepare a case for trial or arbitration today than it did before the advent of ESI. The federal courts and FINRA (which supervises arbitration panels in many securities cases) have done much work lately to help the parties and the tribunals minimize the costs and time involved in resolving modern discovery disputes. Attorneys would serve their clients well by becoming adept at using mediation to relieve the parties and tribunals of most of these burdens. 

Monday
Apr132015

All that glitters . . . 

This past weekend, I went to see the movie Woman in Gold. It is based on the true story of a holocaust survivor, Maria Altmann, who convinced a young attorney to help her recover some paintings that belonged to her aunt and uncle before WWII, but were taken by the Nazis in Austria. She tried to get the Austrian government to voluntarily return them to her, but they refused. So she sued the Republic of Austria in the United States. Of course, Austria claimed sovereign immunity. The U.S. District Court rejected Austria’s motion to dismiss, and the Court of Appeals affirmed. The U.S. Supreme Court agreed to review it, and again ruled against Austria. That meant the case would return to the District Court for a trial on the merits. At that point, Mrs. Altmann offered to submit to mediation, suggesting that she might agree to allow one or more of the paintings to remain in Austria on public display, in exchange for a certain sum of money. The Austrians refused to negotiate or submit to mediation. However, they did agree to submit to binding arbitration in Austria. Surprisingly, they lost again, even on their home turf. Finally, if the movie got it right, the Austrians suggested a negotiated settlement. Too late. Mrs. Altmann took the paintings back to the United States, where there are now on display in New York City.

As a mediator, I was pleased to see litigation, mediation and arbitration depicted so accurately. I frequently encounter people who do not know the difference. Litigation and arbitration are win-lose propositions. Mediation can lead to a win-win solution. The Austrians could have kept at least some of the paintings in Austria and saved face, as well as creating some good public relations. Instead, they chose litigation and then arbitration, and lost everything, including some good will and (for them) a bad precedent.

It is not unusual for me to hear people say “why should I mediate when I know I’m going to win in court?” They think agreeing to mediation is a sign of weakness and shows that they have some fear they might lose. My job is to convince people that there is nothing to fear in trying mediation. Normally, nothing that is said or done in mediation is admissable evidence if the case does not settle and goes to trial. Many times, the parties find they have interests that cannot be satisfied by a court, even if they win. Outcomes in mediation are not limited to what a court could do. It can be a very creative process, limited only by the parties’ willingness to search for a win-win solution and to look beyond the immediate legal battle. The things I enjoy most about being a mediator are helping people to put their legal battles behind them expeditiously and finding solutions that both (or all) parties can live with. Saving time and money can often be a pleasant by-product.  

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
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.