Is it just business or is it personal?

After a trial is over, it is customary for opposing counsel to shake hands before leaving the courthouse. While many trial lawyers are highly combative and competitive, a trial is rarely a personal contest between lawyers. While lawyers like to win, they usually go on to fight another day. But some clients have difficulty understanding how lawyers can do battle in the courtroom for days (or sometimes weeks) and then shake hands when it is all over. Of course, a trial is not always the end of the dispute. There can be appeals, reversals and retrials. A trial might be merely one tool to gain leverage in getting the opposing party to do you what you want them to do. Ultimately, a final judicial decision will put an end to the dispute, but it does not necessarily put an end to the enmity between the parties.

Occasionally, litigation can be a “bet the farm” proposition. An attorney representing such a client should find that out before taking on the case. A mediator should also determine the parties’ financial situations as early as possible. Some litigants have nothing to lose in litigation (because they have nothing to start with). Others have everything to lose. Some are looking for vindication. In any case, everyone should keep in mind that the courts have the last word not because they are always right. Rather, they are right because the have the last word. (If anyone can find or remember who first said that, please let me know.)

In a civil society, we all must agree that if we cannot resolve our disputes by ourselves, the courts will do it for us. The alternative is the law of the jungle; survival of the fittest; might, not necessarily right. So, even if the dispute is personal, litigants would do well to learn what attorneys are trained to do:  shake hands and learn to live and fight another day.

Back to School

It is the end of August, the “back to school” time of year. Yesterday on the radio, I heard a discussion of what parents need to do to prepare their children for the new school year. The participants began talking about the usual books, pens, paper and other supplies, technology, clothing, etc. Fortunately, before I tuned out, they turned to the more important question of how you prepare children mentally. How do you put them in the right frame of mind to learn both the substance of what is being taught as well as how to interact with teachers and other students? It was good to hear a discussion that encouraged parents to get involved with their children’s education. Too many parents these days use the schools merely as babysitters, to take care of their children while the parents are at work. Education should continue at home, not just in the classroom.

The discussion soon focused on problems that arise at school that can turn children off to education, like bad teachers and bullies. What is a parent to do? How involved do they need to be? What lesson should parents give children to prepare them for obstacles at school? The answer was a pleasant surprise to me. In an age where some parents are too uninvolved and others are over-involved (so-called “helicopter parents” who hover over their children), I expected to hear something about finding the middle ground or happy medium. Instead, what I heard was elegantly simple: “Work it out!” The participants in this discussion did not urge parents to monitor every problem, call school to complain about bad teachers or bullies, or help their children out of every difficulty. Rather, they urged parents to tell their children that problems and conflicts will occur, and children must be prepared to work it out and resolve the problems themselves. Of course, this requires children to know how to stand up for themselves and be their own advocates, without resorting to violence. This is something both teachers and parents should help children do. It is a skill that will help them throughout their lives. Sometimes, they will be able to do it themselves and other times they will not. But if they try, they will at least learn when they need to seek help and who to seek it from.

This discussion should be required material in business schools. I have seen people turn their business problems over to lawyers and tell them to “handle it,” when the parties themselves could have worked it out more efficiently if they knew how to communicate and advocate for themselves effectively. Fortunately, many attorneys are skilled negotiators and advocates in and out of the courtroom. But it certainly makes the attorney’s job easier if the client is also involved in and adept at the process. That is a skill that can and should be learned in school. When parties in dispute cannot get the other side’s attention or have trouble focusing on the issues, that is when attorneys or mediators need to be called in. And then it is time for everyone to go back to school and find a way to work it out.

Caveat negotiator

An excellent article in the current issue of the Wisconsin Lawyer, titled “Negotiating in the Red Zone,” discusses the risk of legal malpractice liability for lawyers conducting settlement negotiations for clients.  The “red zone” occurs when an opposing party makes an offer within the client’s stated acceptable range but the attorney believes that they can obtain a better offer by rejecting it and negotiating further.  The risk is that the opposing party will terminate the settlement discussions and a trial will result in a worse outcome.  The author argues that lawyers are more vulnerable to professional liability when a settlement opportunity is lost in red-zone situations than in non-red-zone cases.

The article suggests that attorneys fully advise clients of the risks and benefits of continuing negotiations in such situations, and that they document and not deviate from the client’s agreed-on strategy.  It also mentions that this advice should be followed even in mediation.  It does not discuss how the mediator should address or participate in the decision to accept or reject a red zone offer.  At a minimum, the mediator should be aware of the ethical considerations and risks of liability that the attorney is facing.  While the mediator probably has no obligation to advise the lawyer of the heightened risk, doing so could enhance the prospect of a final settlement.  Without a participant’s consent, a mediator cannot disclose whether an offer is a final bottom line.  But the mediator can help attorneys and their clients to intelligently consider and evaluate the risks and benefits of continuing to negotiate versus accepting an offer.  The mediator might also help to document the attorney’s advice and the client’s decision regarding red zone negotiation strategy.  Thus, a mediator may help to reduce the attorney’s risk of ethical problems or professional liability. 

In other words, the article demonstrates another reason to seek out a mediator to assist in delicate or complex negotiations to resolve litigation or civil disputes.

Happy President's Day

Today is President’s Day—a day off of work for some, a day to reflect on our 44 Commanders-in-Chief for all.  If nothing else, it helps give us some perspective when we think back on decisions that our Presidents have had to make.  Economic policy, judicial appointments, and whether or not to go to war make the problems most other people face in their daily lives pale in comparison.  So it is fitting that we set aside a day to appreciate the 44 men who have made those difficult decisions for 222 years. 

For me, the wisest President was the one who faced the most serious crisis in our nation’s history.  Abraham Lincoln had to decide how to preserve the Constitution and the union it established.  Before he was President, Lincoln was a lawyer.  Next to the Gettysburg Address, perhaps his most famous dictum was this, from his days practicing law:

Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker, the lawyer has superior opportunity of being a good man. There will still be business enough.

In Lincoln’s day, lawyers were held in high esteem. Today, we are more often the butt of derisive jokes.  If more lawyers paid heed to Honest Abe’s advice, we might regain the respect that our learned profession formerly deserved.

Failure to communicate

As if people facing foreclosure of the mortgages on their homes did not already have enough problems, a new wave of scam artists is targeting them.  According to the FTC, so-called forensic loan auditors are offering to review mortgage loan documents to determine whether the lenders complied with state and federal mortgage lending laws.  The other day, a client came to me with an ad from one such company.  The “auditors” say the borrower can use an audit report to avoid foreclosure, accelerate the loan modification process, reduce loan principal, or even cancel a loan.  Of course, they expect the borrower to pay large up front fees in advance.  This is illegal in many states.  Even if it is not illegal, it is foolish.  The FTC recommends that borrowers talk directly to their lenders to negotiate a new repayment schedule. 

Why would someone already deeply in debt, unable to pay their mortgage, fork over hundreds or thousands of dollars to someone to do what they could do themselves?  Two reasons.  First, many lenders or mortgage servicers are so swamped with delinquent mortgages that they do not have sufficient personnel to talk to every borrower who needs help.  Borrowers cannot get in touch with anyone who has authority to work out a new payment plan, so they think that someone with a fancy sounding title, like forensic mortgage loan auditor, might have better luck.  Second, borrowers may lack confidence in their own negotiation skills.  In either case, the person to see for help is a lawyer.  Most lawyers will charge less than the scam artists and will not waste time searching for unnecessary negotiating leverage.  Borrowers already have all the leverage they need.  Banks do not really want to own all of the homes securing their mortgage loans.  If the borrower’s lawyer cannot get a response from the lender, he will certainly be able to get a response from the lender’s attorney when a foreclosure action is filed. 

As they said in the movie Cool Hand Luke, “what we’ve got here is failure to communicate.”  The solution to a lack of communication, or inability to communicate, is to start talking.  If mediation is available or required, the borrower should definitely take advantage of it, using the mediator to help negotiate with the lender.  Ignoring the problem or hoping someone will find a silver bullet to make it go away is rarely the answer.  In the current economy, mortgage default and foreclosure are legal problems that no one should be embarrased to talk about.