Death and Taxes Blog

I spoke yesterday about the potential conflict of interest that arises when a third party (like a financial planner or accountant) refers a lot of business to an estate planner. A similar, but perhaps more serious, problem arises in the context of alternative dispute resolution (ADR) and referrals.

More and more companies make their employees and/or customers sign documents stating that disputes will be settled through the ADR process. That's fair on its face, but as a practical matter, I have some questions about how this works. There are only so many ADR professionals out there -- how is the person who will handle the mediation and/or arbitration chosen? If the person is chosen by the company, then we've got a problem -- if I'm referring 100 cases a year to Bob's ADR Shop, aren't I going to be monitoring closely the outcome of those cases? And aren't I going to hire someone else if I find that Bob's ADR Shop isn't favoring my company as much as I'd like?

Carried to its logical extreme, you get situations like the one detailed in this article (thanks, Tim), about the National Arbitration Forum

Collaborative divorce entered my consciousness in a big way recently. First (SPOILER), it comes up in the film Juno. (Minor quibble: In Juno, the husband says something to the effect of "I spoke with our lawyer and she said she can represent both of us in a collaborative divorce." I wouldn't recommend that.) Then there's this AP article.

The idea of collaborative divorce is that there are better ways to end a marriage than trying to destroy each other through a nasty divorce proceeding. As the article puts it, "collaborative divorce involves the use of attorneys for each party, often joined by other expert consultants. But the lawyers, instead of sparring, pledge from the outset to work together in crafting an outcome that is fair to all."

Here is a nice Q&A about collaborative divorce in Illinois from a firm in Woodstock.

Last season I blogged about the "The Office" and its take on conflict resolution (here). This week's episode (Thursday, April 5th at 7:00 CST) is in the same vein:

SALARY NEGOTIATIONS DRIVE MICHAEL TO THINK ABOUT HIS OWN PAY - Darryl (Craig Robinson) decides to meet with Michael (Golden Globe winner Steve Carell) to negotiate a pay increase. Meanwhile, Jim (John Krasinski) deals with the consequences of Pam's (Jenna Fischer) confession to Roy (David Denman) .

My sources tell me that Michael attempts what might be described as a Lysistrata-inspired maneuver with his boss and girlfriend, Jan.

Last year The Office had my vote for best comedy on TV. This year it's a toss-up between How I Met Your Mother (particularly for this), and 30 Rock. If you haven't tuned in to 30 Rock, you're missing great performances by Tracy Morgan (channeling Martin Lawrence) and Alec Baldwin, who plays Jack Donaghy, "G.E. Vice-President of East Coast Television and Microwave Programming." In last week's episode ("Up All Night," available at iTunes), Jack and his wife, Bianca (played by Isabella Rossellini), were attempting to finalize their divorce, and Jack decided to play hardball:

Bianca: I want our divorce to be final.

Jack: All right. I want back all the jewelry I ever bought you.

Bianca: Fine.

Jack: I want the art supplies that I gave you on your 40th birthday, and any subsequent art projects you made with them.

Bianca: Fine.

Jack: I want all of our love letters.

Bianca: (chuckling and waving her hand) Oh, fine.

Jack: I want all of your parents' love letters.

Bianca: Fine.

Jack: I want full stake in the Arby's franchises we bought outside of Telluride.

Bianca: Oh, damnit Johnny, you know I love my Big Beef n' Cheddar!

Bianca eventually relents and gives Jack everything, even though she has a lawyer present (and Jack doesn't). Maybe microwave programming executives really are skilled negotiators!

Being a baseball fan, a former resident of Japan, and a student of ADR, I followed the negotiations between Japanese pitcher Daisuke Matsuzaka (and his agent, Scott Boras) and the Boston Red Sox with interest. 

To review: The team with which Mr. Matsuzaka is under contract in Japan, the Seibu Lions, "posted" him.  This allowed major league baseball teams in the US to submit bids (a "posting fee") to Seibu for the right to negotiate with Mr. Matsuzaka.  The highest bidder received exclusive negotiating rights -- if the team and Mr. Matsuzaka reached an agreement, Mr. Matsuzaka would pitch for the team and Seibu would get to keep the posting fee.  If no agreement was reached, Mr. Matsuzaka would continue to pitch for Seibu, and the US team's posting fee would be returned to them.

As you can probably tell from the above, the posting process is a screwy one.  Seibu wanted Mr. Matsuzaka to leave, and wanted the posting fee, but had no involvement in Mr. Matsuzaka's negotiation with the Red Sox.

Boston wound up with the highest posting fee: a little more than $51 million.  Then the real negotiation began.  What did everyone want?

Mr. Matsuzaka apparently wanted -- badly -- to pitch in the US. 

Mr. Boras wanted what his client wanted.  To maximize Mr. Matsuzaka's salary (and, as a result, his commission)?  Of course.  To get Mr. Matsuzaka into the US to play ball?  Of course.  Mr. Boras may have also wanted to try and overturn the posting system, although this is questionable; if it is the case, there's a potential conflict of interest involved.

Boston wanted to sign Mr. Matsuzaka while minimizing his salary.

Boston had the upper hand in these negotiations, for two reasons:

(1) It was widely known that Mr. Matsuzaka wanted to pitch in the US.  It may be that Mr. Matsuzaka had no "BATNA" (Best Alternative to a Negotiated Agreement), other than returning to Japan.  And I've read some commentary suggesting that, in Japan, this would be considered a shameful thing.

(2) Boston had a secondary goal: keeping Mr. Matsuzaka away from its main rival, the New York Yankees.  Boston's high posting fee pretty much guaranteed that would happen, since Boston would either sign him or Mr. Matsuzaka would return to Japan.  The only way the Yankees might have a crack at Mr. Matsuzaka would be if the Red Sox didn't reach an agreement and were found by the commissioner of MLB to have been bargaining in bad faith.  In that case, the team with the second-highest posting fee might be allowed to negotiate with Mr. Matsuzaka.  (It's unclear who this second team might be, although it was rumored to be the Mets.)

After lots of drama (which is to be expected, given that the Red Sox and Mr. Boras were involved), an agreement was reached.  One of the interesting parts of the negotiation involved the question of whether Seibu could "kick back" a portion of the posting fee to Mr. Matsuzaka and/or the Red Sox.  The answer is "no."

Finally, one ridiculous thing I read in the wake of the agreement was that Mr. Boras had somehow "lost" the negotiation.  Days before the agreement was reached, rumors circulated that Boston had offered a 6 year, $48 million contract while Mr. Boras countered at 6 years, $66 million.  Some folks have taken the final number (6 years, $52 million) as proof that Mr. Boras failed.  But given his client's wishes, I disagree.  Mr. Boras represents his client, and if his client wants to reach an agreement, Mr. Boras must help him to do so.  And that's just what he did.

According to this note at imdb, Marshall Mathers (aka "Eminem") and his on-again, off-again wife Kimberly will have their divorce handled by a mediator in Macomb County, Michigan.  This nice article (from something called Selfhelp Magazine) gives 10 reasons why mediation in divorce might be a good idea.  Number 9 ("It's confidential") is probably of utmost importance to Mr. Mathers.

When I was going through mediator training in January, one of my classmates talked about a group called Sorry Works!  The idea is that an honest apology by someone (like a doctor) who made a mistake can often prevent the filing of a lawsuit.  The apology would also include a full disclosure of what went wrong and an offer to settle the matter, which is why it's often referred to as "full disclosure/early offer."  Illinois recently set up a pilot program to see if this approach really works.  This article gives a good overview, along with some intriguing figures from the University of Michigan Health System, which started taking the "full disclosure/early offer" approach in 2002:

In August 2001, there were 262 total claims, ranging from presuit notices to active litigation; in August 2002, there were 220 total claims; 193 claims in August 2003; 155 claims in August 2004; 114 claims in August 2005; and since that time, the total number of claims has fallen to fewer than 100, Boothman said.

Within the same period, the university has cut its average claim-processing period from 20.3 months to 9.5 months, halving its average litigation costs. Also, its total reserves on medical malpractice claims dropped by more than two-thirds, he testified.

Andrew Sullivan provides this link to a legal deposition that has gone off the rails.  As Mr. Sullivan notes, the language gets a little raw.

I wonder how much more civil and efficient the legal process would become if parties and their attorneys assumed that all of their interactions would be videotaped and posted on YouTube.

Diane Levin just sent me an e-mail letting me know that her excellent directory of alternative dispute resolution (ADR) blogs has a new url -- it's now at www.adrblogs.com.  I highly recommend it -- and not just because this blog is listed there as an "ADR-Friendly Blog"!

I've blogged about the Rosa Parks guardianship and probate litigation on a number of occasions, most recently here.    According to this story, the parties have agreed to mediation of the dispute -- that's good news.  Unfortunately, the mediator is retired Judge Adam Shakoor, who is one of Mrs. Parks' executors and is accused of acting inappropriately with respect to Mrs. Parks' affairs during her life.  One of the attorneys for Mrs. Parks' heirs says that he believes Judge Shakoor "will be fair" -- if that's the case, then why does this dispute even exist in the first place?

As I noted here, last week's episode of The Office focused on conflict resolution.  Here's a partial transcript of a scene that should be near and dear to any ADR professional.  The participants are Michael (the office manager) and two employees in the accounting department, Angela and Oscar, who are fighting over whether Angela should be able to display her poster of babies -- in diapers, hats and sunglasses -- playing saxophones.  (I wish I could find a picture of the poster, but I can't seem to locate one online).

Michael holds a 3-ring binder with the title "A Mediators Toolchest."

Michael: "A Mediators Toolchest." OK.  Well, before we get started, you should know that there are five different styles of conflict.  [In kung fu-ish voice] My Shaolin Temple Style defeats your Monkey Style.

Angela: Can we go? I have a lot of work to do.

Michael: No. This is important.  OK.  The first style is lose-lose.

Oscar: What's the next one?

Michael: Just hold... on... please.  OK.  If we do lose-lose, neither of you gets what you want.  Do you understand? You would both... lose.  Now I need to ask you -- do you want to pursue a lose-lose negotiation?

Angela: Can we just skip to whatever number five is?  Win-win or whatever?

Michael: Win-win is number four, and number five is win-win-win.  The important difference here is, with win-win-win, we ALL win.  Me too.  I win for having successfully mediated a conflict at work.

Michael, Angela, Oscar, and Pam (the office receptionist) then go to look at the offending poster.

Michael: Let's see if we can't just brainstorm and find some creative alternatives that are win-win.

Pam: win.

Michael: Yes.  Thank you, Pam.  How about Angela makes the poster into a t-shirt which Oscar wears.  That way he can never see it and whenever she looks at Oscar, she CAN see it.  Win-win-win.

Oscar: No.

Angela: That's -- no.

Michael: OK. Well, brainstorm.  Own the solution.

Angela: How about I leave it up?

Oscar: How about she takes it down?

Pam: How about Angela can keep it up on Tuesdays and Thursdays?

Michael: OK, that is called a compromise and it is style three.  And it is not ideal.  To sum up --

win-win: make the poster into a t-shirt
win-lose: take the poster down
compromise: Tuesdays and Thursdays

and the answer is [holding his head like he is deep in thought] ... make the poster into a t-shirt.  Win-win.

Pam: win.

Oscar: Fine.

Angela: But...

Michael: It is done.

This is a pretty funny scene (maybe funnier on TV than on paper), but it also contains a lesson for mediators about what NOT to do.  Michael as mediator injects himself into the mediation twice, first by insisting on win-win-win negotiation (where he also gains something), and then by switching his role from mediator to arbitrator, and announcing his solution to the conflict. 

In this viewer's opinion, "The Office" has grown from modest beginnings to become the funniest show on television.  This week's episode sounds like a good one -- here's the writeup from tv.com:

When Michael takes over conflict resolution duties from HR, chaos ensues at Dunder Mifflin.               

Somehow I think Michael Scott (Steve Carell's character) is going to provide lots of tips on what NOT to do in resolving conflicts.

Yesterday I received an invitation to an interesting luncheon being sponsored by the Chicago Bar Association.  The concept, "Take Your Adversary To Lunch," is based on a line in Shakespeare's The Taming of the Shrew ("and do as adversaries do in law, strive mightily, but eat and drink as friends").  The luncheon's focus is to "encourage lawyers to share a meal with an adversary - someone who they have opposed in the past or are currently opposing in a legal matter."

This idea makes sense from a couple of perspectives.  To begin with, I think attorneys (and the public) need to move beyond the often ridiculous notion that representing your client well means you have to act with incivility toward the other side.  You don't, and in some (many?) cases clients are ill-served when their attorneys behave badly.  To me, that's one of the points of alternative dispute resolution.

I've also been reading a lot about the increasing number of attorneys who become depressed about their line of work.  My pet theory is that acting -- or feeling required to act -- in an uncivil manner can take a real toll on your psyche.

A blurb about the event, with information on how to register, can be found on this page (it's about half-way down the page, under "Special Events").

I'm compiling a survey of estate planning and probate-related mediation resources (mostly of the on-line variety), and will be posting the results here in the near future.  Here's my plan for this survey:

Part 1 (here): Articles about estate planning and probate-related mediation (if an article is available on-line, you can click on the word "link" following the article citation to access it)

Part 2 (here): Links to court probate mediation programs

Part 3 (today): Links to websites that relate to probate mediation

I view all of these parts as works in progress -- I'll be supplementing the lists as new items come to my attention.  If you think I'm missing a link, please let me know!

The Center for Resolution of Disputes - probate page (Cincinnati, Ohio)

The Law, Mediation and Arbitration Offices of Gerald F. Gerstenfeld (Encino, California attorney and mediator with a focus on estate planning, trusts and probate)

Gromala Mediation Service (Eureka, California mediator with a focus on estate planning and probate disputes)

Valerie J. Merritt, Attorney at Law (Pasadena, California attorney offering probate mediation services)

National Conflict Resolution Center - probate mediation page (San Diego, California)

Semmelman & Semmelman (Lake Forest, Illinois law firm offering probate mediation services)

I'm compiling a survey of estate planning and probate-related mediation resources (mostly of the on-line variety), and will be posting the results here in the near future.  Other postings will probably be fairly sparse for the next two weeks, as I'm on jury duty in the United States District Court for the Northern District of Illinois (!) from today through March 7 (!!).   Here's my plan for this survey:

Part 1 (today): Articles about estate planning and probate-related mediation (if an article is available on-line, you can click on the word "link" following the article citation to access it)

Part 2: Links to court probate mediation programs

Part 3: Links to websites that relate to probate mediation

I view all of these parts as works in progress -- I'll be supplementing the lists as new items come to my attention.  If you think I'm missing a link, please let me know!

Laura Bachle, "Estate Planning and Family Business Mediation." link

J. Behrens, "The History of Mediation of Probate Disputes," 68 Arbitration: the Journal of the Chartered Institute of Arbitrators 138 (May 2002). link

Roselyn L. Friedman and Erica E. Lord, "Using Facilitative Mediation in a Changing Estate Planning Practice," Estate Planning, Dec. 2005. link

Roselyn L. Friedman and Erica E. Lord, “Using Mediation to Stem the Tide of Litigation in the Ocean of Family Wealth Transfers,” 59 Disp. Res. J. 36 (Nov. 2004/Jan. 2005). link

Roselyn L. Friedman and Sally Larson Sargent, “Applying Mediation Strategies to Trusts and Estates,” 139 Tr. & Est. 56 (Feb. 2000).

David Gage et al., “Holistic Estate Planning and Integrating Mediation into the Estate Planning Process,” 39 Real Prop. Prob. & Tr. J. 509 (2004). link

David Gage and John A. Gromala, "Mediation in Estate Planning: A Strategy for Everyone's Benefit." link

Susan N. Gary, "Mediating Probate Disputes," Probate & Property, July/Aug. 1999, at 10. link

Susan N. Gary, “Mediation and the Elderly:  Using Mediation to Resolve Probate Disputes over Guardianship and Inheritance,” 32 Wake Forest L. Rev. 397 (1997).

Samuel R. Graham and Paula Pierce, "Mediating Probate and Estate Matters." link

John A. Gromala and David F. Gage, "Trustee - Beneficiary Mediation." link

John A. Gromala, "The Use of Mediation in Estate Planning: A Preemptive Strike Against Potential Litigation." link

Rikk Larsen, "Mediating a Key Estate Settlement Issue - Dividing Personal Property." link

Rikk Larsen, "Mediation in Today's Estate Settlement World." link

Rikk Larsen, "Tipping Points - Reasons Why Mediation Works in Complex Family Disputes." link

Bridget A. Logstrom, “Arbitration in Estate and Trust Disputes:  Friend or Foe?,” 30 ACTEC J. 266 (2005).

Ray D. Madoff, “Mediating Probate Disputes:  A Study of Court Sponsored Programs,” 38 Real Prop. Prob. & Tr. J. 697 (2004). link

Mary F. Radford, “An Introduction to the Uses of Mediation and Other Forms of Dispute Resolution in Probate, Trust and Guardianship Matters,” 34 Real Prop. Prob. & Tr. J. 601 (2000). link

Mary F. Radford, “Tax Considerations and Other Issues Unique to the Mediation of Estate and Trust Cases,” 39 U. Miami Heckerling Inst. on Est. Plan.  IV-A-5 (2005).

Two interesting mediation stories are in the news these days -- one national and one local:

Story #1. As reported here, Major League Baseball and the District of Columbia are engaged in mediation over plans to build a new baseball stadium.  The very well-respected Dennis Archer, former mayor of Detroit and former guardian of Rosa Parks, is acting as mediator.

DC and Major League Baseball have a contract regarding the stadium, and DC failed to fulfill certain contractual requirements.  Under the contract, the parties must attempt mediation (i.e. negotiation using a neutral third party who tries to help the parties reach agreement).  If mediation fails to result in a settlement, the parties will move to arbitration (where a neutral third party essentially acts as a judge in deciding which party is in the wrong, damages, etc.).

Why would the parties prefer mediation or arbitration over going to court?  A few reasons:

1. Privacy

2. Lower costs

3. Speed of resolution

4. Desire to preserve an ongoing business relationship.  It may be that DC is entirely in the wrong here, but what would such a finding accomplish for Major League Baseball?  Not much, perhaps.  Maybe they have decided that DC is "the best game in town," and that no other location can provide the same benefits as our nation's capital.  Most attorneys and mediators will advise negotiating parties to consider their BATNA ("Best Alternative To a Negotiated Agreement").  If Major League Baseball's BATNA is going to court, or finding another location for a team to play (Oregon? Las Vegas?), then perhaps they are willing to spend more time working with the other party to reach a solution, even if the other party is in the wrong. 

It's harder to talk with private disputants (such as parties in probate litigation) about BATNA -- they are much more likely to become emotional, and to talk in terms of "principle" and wanting to prove that they are right (and the other party is wrong).

Story #2. For some time, day laborers have been congregating at the Home Depot store in Cicero, looking for work.  This has led to conflict involving:

-the day laborers;

-the store (which has intermittently tried to have the day laborers arrested for trespassing);

-the town of Cicero (including the police, who don't want to devote a lot of resources to this matter); and

-the Chicago Minuteman Project (which picketed because many of the day laborers are illegal immigrants).

This morning's Chicago Tribune reports (in an article I can't find online) that Home Depot has now hired mediator Trudy Nichols to attempt to work out an agreement between the store, town officials, and the Latino Union (described in the article as "an advocacy group representing the day laborers").

Mediation strikes me as a great way to resolve this dispute.  There are lots of different interests at play here, and a good mediator can probably be pretty creative in helping the parties to craft a solution.  My only concern is whether all of the necessary parties will be involved in the negotiations.  Does the Latino Union truly represent all of the day laborers?  Does it make sense to involve the Chicago Minuteman Project?

John Hodgman, a contributor to NPR's "This American Life," has written a book entitled The Areas of My Expertise.  Mr. Hodgman claims the book is the successor to works like Poor Richard's Almanack, but the big differences are that (1) nothing in the book appears to be true and (2) Mr. Hodgman's areas of expertise include werewolves, hoboes (including a list of 700 potential hobo names), and "History's Worst Men's Haircuts."  One of my favorite sections of the book includes Mr. Hodgman's "Five Secrets of Successful Negotiation" -- number 4 is a keeper:

A bestselling author on the subject of "negotiation" reminds: "Negotiation requires compromise.  Each party must gain something, and each must give something up.  Before you begin your negotiation, privately consider what you are willing to give away.  Now gather all of that material together and put it in a sack.  Hide the sack in a secure location, such as a cave that is laced with explosives that you can detonate by remote control.  Take the remote control in with you to the negotiation.  As any experience negotiator knows, in order to succeed, you must be willing to walk away from the deal at any moment, and then blow up the cave.  Note: The sack should be made of velvet."