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.

An ounce of prevention . . .

Maybe it’s the economy. Or maybe it’s the latest negotiation tactic. Lately, I have conducted several mediations in which one party claims that it will file for bankruptcy if it does not prevail in the pending litigation. Collectibility is frequently an issue in mediation, but the spectre of bankruptcy raises it to a higher level. If a settlement is reached and the party who pays money then files for bankruptcy protection, will the recipient have to pay it back to the trustee to be distributed equitably to all creditors? In one case, the plaintiff alleged its business losses were due to conversion by a business partner — an intentional tort that could not be discharged in bankruptcy.

Of course, many business disputes, especially between partners, can be avoided with carefully worded contracts, partnership agreements or corporate documents. Unfortunately, in the recent cases I have mediated, the contracts and other documents were not carefully worded. In some instances, they were non-existent or, at best, inartfully drafted. Maybe the parties did not feel the need for written agreements, or maybe they were too cheap to pay attorneys to draft them. But I suspect that well-drafted legal documents would have come in handy when it came time to end the relationships or resolve disputes. In the absence of such documentation, the litigation became a he said/she said affair. And the mediation boiled down to “give me what I want” or “accept what I am offering” or else I’ll file for bankruptcy.

A transactional or business attorney’s best marketing tool is to tell a client to “pay me now or pay the litigators later.” In the cases I have seen, parties who scrimped on business planning and documentation have gotten what they paid for. Trouble.

Uncertain certainty

In my last post, I noted that predictability was not a hallmark of trial by jury. Long ago, I gave up predicting what a jury would do. Perhaps this is what utilitarian philosopher Jeremy Bentham was thinking when he said “The power of the lawyer is in the uncertainty of the law.” Negotiators for NFL players and owners may also have recognized the risks in predicting the future when they recently settled their contract disputes.

Meanwhile, our nation’s capital seems to be filled with those who are certain that they know what the future holds and what is best for the country. The problem is that at least two groups are so certain, and their proposed policies are mutually exclusive. One side believes we can reduce our deficit (if not balance the budget) strictly by making cuts in expenditures. The other believes that both expenditure cuts and revenue increases are necessary. No one believes that Congress and the President will risk ruining the nation’s credit rating by defaulting on the national debt, but they are playing a dangerous game of chicken. Someone has to blink.

In litigation, many cases settle on the courthouse steps, with a jury in the box, ready to decide the case. These last minute settlements frequently occur because one side finally realizes a flaw in its case or a mistake in assessing the risk of an adverse decision. Settlements made under such circumstances are rarely favorable to the panicked party. Such outcomes are bad enough when they involve private parties involved in civil litigation. They can be catastrophic when the nation’s finances and economy are at stake.

Unfortunately, no independent, impartial mediator appears to be ready and able to save our elected leaders from themselves. The President cannot be mediator-in-chief because he, too, is a politician with a dog in the fight. We can only hope that the impending debt ceiling deadline provides the necessary reality check that brings the warring factions to their senses and produces a solution we can all live with.

Popping the "information cocoon"

Sometimes, reading a New York Times book review can be better than reading the book. This past weekend, a review of the book The Filter Bubble: What the Internet is Hiding From You prompted me to think about how people can be trapped inside their own “information cocoons.” Google and other internet search engines, as well as Facebook, LinkedIn and other social media, apparently spoon feed us information they think we would like to see, based upon our past searches and selections. Their algorithms personalize search results and rankings according to the searcher’s previous internet history. The book details how and why this is done, as well as exploring the political and social implications of search engine personalization. The book review raises the question of whether governmental regulation to achieve more “serendipitous discovery” is desirable.

This topic is important in understanding how people make decisions and why disputes and conflict arise. Perhaps this is one of the reasons many people perceive an increase polarization and hostility in recent public discourse. When the information you receive on the internet is tailored to complement your previous disposition, you are less able and likely to see the other side’s point of view.

In dispute and conflict resolution, it is sometimes necessary to pop a person’s “information cocoon” to help him or her understand the other side’s position and the risks of continuing the conflict. Mediators often must test a participant’s underlying presumptions by engaging in “reality checks.” Another way to think about this process is to pop the information cocoon. Where are the parties to the dispute getting their information? Are they familiar with the other side’s sources? If not, it may be worth their time to take a look. 

Good litigators must know the other side’s case as well as their own. Good negotiators must be similarly prepared. If internet search engines and social media are making that more difficult, we must be aware of it and be prepared to deal with it. Removing the filters from our search engines would be a good start toward diversifying our information sources. Mediators should be prepared to point out this problem to parties in dispute in order to help pop their information cocoons.

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.