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WHEN SMALL BUSINESS CO-OWNERS FIGHT

Disputes among co-owners in a closely-held business can arise over a number of issues, such as day-to-day control, compensation, or access to information. Left unresolved, these arguments can fester and eventually destroy the business.

Not only are small business co-owners like a family– they are likely to be members of an actual family. While we know that family-owned small businesses tend to weather management storms better than businesses which lack that link, family dysfunctions can seep into management of the business.

Co-owner mediations can seem more like divorce negotiations than business disputes. A mediator can calm parties’ anger, help resolve the current dispute, and create a plan to manage future disagreements so the business survives.

When you are in the middle of a co-owner dispute maelstrom, call me to discuss whether mediation can help. It’s free and completely private under California’s strict mediation confidentiality laws.

The One Thing You Can Control in Negotiation

Here’s a basic fact of life. People like to feel in control, whether it’s at their workplace, at home, or in a negotiation. But we are seldom in sole control of any of those situations, and that’s how disputes arise and continue. Though the result of a negotiation is not completely under your control, your preparation is.

Start by defining the pivotal issues. There are seldom more than five, usually just one or two. Determine the specific range of results your side needs to bring the matter to conclusion.

Imagine the circumstances from your opponent’s point of view. Be specific. What is the hot button? It’s usually not just money. The emotional or reputational costs as well as the financial drain of drawn-out proceedings may be factors. Many litigants feel they have been disrespected. Sometimes a carefully worded apology goes a long way towards bridging a negotiation gap. What does this person really need?

It Takes More Than Two
Bringing everyone together for mediation shows a serious intent to resolve the dispute. Make sure the real decision-makers are attending. That might be a corporate higher-up like a claims manager, but it might also be a family member.

Using the mediator as a buffer between parties can magnify the effectiveness of your message. Your opponent may have brushed off your arguments before, but will listen to them when they come from the mediator.

You cannot completely control a negotiation. The opposing party could surprise you in a number of ways. Your own client may surprise you. But thorough preparation will help you manage a negotiation. You are the one person you know you can control.

Was King Solomon Right?

Judgment of Solomon – Nicholas Poussin

Pretty much everyone knows the bible story about King Solomon. Two women claimed they were the mother of an infant after a different child had died. Solomon ordered the baby to be split in half and divided between them. One woman agreed; the other would rather abandon her claim. Solomon then knew that the one who put the baby’s welfare ahead of her own interests was the true mother.

Splitting the Baby
Attorneys and claim professionals complain about judges who decide cases where it appears the result does nothing more than equally divide the difference between the parties’ positions. Complaints about “baby-splitters” are loudest when the defendant or employer maintains no money should be awarded at all.

Pay Attention to the Midpoint
In mediation, the parties are in control of the outcome. As mediator, I facilitate the negotiation, gradually narrowing the negotiation gap until the parties can agree on terms to resolve their dispute.

Each demand and offer sends a message. Smart negotiators pay attention to how the midpoint changes with each round of negotiation. Cases do often resolve at the midpoint between the first reasonable settlement proposals.

Some negotiators start with an extreme position intended as an anchor. Anchoring communicates what your ballpark is. However, if the proposal is so unreasonable as to be ridiculous, no one will take it seriously, and the midpoint is not predictive.

Is There Ever A Time to Split the Baby?
When the negotiators’ positions are close, they may agree to split the difference. Often cases settle near but not exactly at the midpoint to avoid the appearance of a baby-split.

Sometimes the parties would accept a compromise at the midpoint, but are unwilling to let the opponent know this because they fear the disclosure would not resolve the dispute. When I see a likely resolution that the parties are not willing to put on the table themselves, I may make a “mediator’s proposal.” My proposal rarely suggests an even split, but like Solomon’s suggested result, it does resolve the dispute.

COVID-19 IS MESSING THIS UP, TOO

HOW CCP 599 HELPS AND HURTS

Due to the pandemic, very few cases are being tried. Reports from the legal community indicate that the absence of an imminent trial date is inducing parties to put off settlement as well.

A History of Procrastination
Lawyers have always seemed to have a reason why it’s too early to settle a case. They need to get another report, look under every rock for new information, research the heck out of every issue whether or not it is pivotal. Traditionally, discovery cut-offs and upcoming trial dates have put up a big stop sign to that process in civil cases. Without that stop sign, some workers compensation cases continue for decades.

Human nature being what it is, litigants tend to wait to the last minute to undertake the tasks necessary to close a case. The global pandemic has aggravated our proclivity to procrastinate.

When do cases settle? Legal and claims professionals have always referred to the ubiquitous last-minute settlements as happening “on the courthouse steps.” As trial dates get pushed further and further back on courts’ calendars, parties put off settlement longer.

CCP 599 Makes Procrastination Easy
When the global pandemic forced courthouses to close their doors, the California legislature recognized the obstacles to litigants’ ability to move their cases forward. The response was Code of Civil Procedure 599. This new section delays most civil litigation deadlines during the official COVID-19 state of emergency and for 180 days thereafter. If a deadline had not passed by March 19, 2020, the continuance or postponement of a trial date extended that deadline. That includes discovery cut-offs and dates for identification of expert witnesses and motions for summary judgment. Notably, the court retains the power to order litigation deadlines. Parties can also agree to self-impose deadlines which would otherwise be suspended.

At the beginning of the pandemic, no one had any idea how long this suspension would last or how we would all learn to conduct much of the court’s business remotely. Still, 599 remains in place. Some lawyers and claims professionals report that the absence of a hard deadline has resulted in fewer settlements.

Blessing or Curse?
In the last year, we have learned to manage litigation pretty well without setting foot in the courthouse. Doctors have resumed seeing patients. The suspension of many hard deadlines provided breathing room while we figured it all out. These are blessings.

On the flip side, cases are backing up. After courthouse life returns to a version of normal, it will take a long time to work through the backup. Once 599 expires, there will be a rush to undertake long-delayed tasks critical to settlement. Things could get kind of crazy, and that’s the curse.

What to Do Now
Before any more time passes, look at those files to see what can be done to set them up for settlement. Almost all mediations are now occurring remotely. Let’s settle those cases promptly, so you can better manage your caseload once the state of emergency is lifted.

A Real Life Lesson Why It’s Almost Always Better To Settle

LaQuan Tremell Taylor’s injuries were horrific. The 27-year-old veteran, was robbed, carjacked, and shot in the parking lot of a Kroger grocery store in Atlanta, Georgia. After three weeks in a coma, roughly a year in the hospital, multiple surgeries, and millions of dollars of treatment, plaintiff’s spinal cord injury left him a partial paraplegic with scars over his entire body and continuing pain. Kroger was the primary defendant in his suit for the store’s negligent failure to maintain adequate security.
Kroger’s insurance stacked thusly:
$3,000,000 self-insured retention (SIR)
$2,000,00 ACE American Insurance Company.
$25,000,000 Starr Surplus Lines Insurance Company
$25,000,000 Great American Insurance Company Of New York
Excess above Great American: XL Insurance America and Chubb Group of Insurance CompaniesPlaintiff’s pre-trial demands were within Starr’s coverage limit. But Starr refused to settle. The final judgment exceeded 61 million dollars. It appears that Starr did not attempt to mediate a settlement until after judgment was enteredNotwithstanding its ill-advised choice, Starr refused to pay more than its policy limit to satisfy the judgment. Great American settled the case and on February 11, 2021 sued Starr for reimbursement. The complaint for declaratory judgment alleges that Starr had acted in bad faith and was “stubbornly litigious.” Great American has asked for reimbursement of its settlement contribution plus attorney fees and expenses.

I see many cases that, like the Taylor case, clearly have the potential to “blow up.” Cases settle when parties are willing to spend the necessary time in good faith mediation and make reasonable settlement proposals. When parties are “stubbornly litigious”, the results can be disastrous.

And Then There’s . . .
In workers compensation cases, being “stubbornly litigious” can mean denying requested medical treatment. Often, though, alternative treatments end up being more expensive in the long run. Patients who cannot get treatment through the usual process sometimes end up in emergency rooms, incurring a much larger bill.
 

Authorizing a quick, “expensive” treatment can lead to early claim closure and a less costly claim overall. Sometimes the injured worker ends up undergoing the procedure which was originally requested anyway. And don’t forget the administrative expenses of utilization and bill review.Patients aren’t doctors. Patients are not writing the Requests for Authorization. Almost every patient will prefer conservative treatment to life-threatening surgery. Sure, there are malingerers and patients who exaggerate their pain in the hope of scoring heavy-duty medication or just gaining attention. And, yes, some doctors overtreat to increase their fees. Independent doctors, claims personnel, and defense attorneys have heightened their awareness of those patterns.

Don’t lose sight of the forest for the trees. Like Starr Surplus Insurance, a “stubbornly litigious” stance can end up costing you more in the end.

Are You Serious?

The #1 predictor of mediation success is whether the participants have come with a seriousness of purpose. They understand that mediation is their best chance to avoid delay and expense, not to mention a bad result. They have readied themselves to settle the case.

Why Are You Here?
Sure, the court may have ordered the parties to mediation. Look at this as a blessing. You might have struggled to get your opponent to the negotiating table. Now the court has done this for you. Moreover, instead of having to deal with insincere posturing, the mediator can filter communications to get to the crux of the dispute.The participant who only comes to mediation because “opposing counsel wanted to do this” is throwing away an opportunity and dishonoring the client.Have You Prepared?
Mediation helps parties resolve disputes efficiently. Yet, both attorneys and their clients often show up for mediation completely unprepared. Being prepared doesn’t just mean knowing the facts and law of your case, though some mediation participants even disdain this basic step.

Before coming to mediation, double-check whether you have followed the mediator’s pre-mediation instructions and requirements. This is doubly important in an era of remote video mediation.

Evaluation is Key
Take the time to thoroughly evaluate your case. Don’t think you can come in with an extreme number and wing it. Be prepared to explain your proposal, including why it is reasonable. What calculations were involved? Have you researched similar issues online so you can show how those precedents apply or are different?

The next step is to educate the client about that evaluation and plan your negotiation. Make sure you know who can grant settlement authority and line it up in advance of the mediation. The ultimate checkwriter should attend the mediation.

Come to mediation ready to settle, and chances are high you will.

Remote Mediation with Non-English Speakers

You’re ready for your remote video mediation. Everyone has the latest version of the technology and knows how to join. You rehearsed with your client; maybe you did a practice session with the mediator. You submitted the mediation confidentiality form and contact form. Now you can concentrate on the facts and the law.

Wait–What about the Interpreter?
At the beginning of every remote mediation, I confirm that everyone present has signed off on the confidentiality agreement. Yet, sometimes, against all the rules, someone else is there. Often, it’s a family member who is “just there to interpret.”

It’s inconvenient, but perhaps not a major issue. Just as would happen with an in-person mediation, someone who does have a role in the mediation can execute the confidentiality acknowledgement at the last minute. But some family members refuse documented participation in any court proceeding. Sometimes the party lacks the technology to return a signed document immediately.

Usually, the attorney can interpret for the client. Of course, the attorney is bound by confidentiality rules, but this arrangement often omits a few steps.

Get the Client What the Client Needs
An English language confidentiality agreement executed by a party who clearly needs an interpreter raises questions. Did the client sign a document without understanding it? If the attorney or a family member interpreted, that should be documented within the agreement. The person who interpreted should be a signatory, e.g.,

I translated this document and read it to Plaintiff in Spanish:___________________________________

The Settlement Agreement
Attorneys on both sides of the conflict should be concerned about the validity of an English-language settlement agreement when one or more signatories are not fluent in English. Nobody wants to be in in court after the fact because someone is contesting the agreement. The document should be read to the non-English speaker, and the interpreter needs to disclose and sign off on the settlement document. Ideally, lawyers will also provide a written translation of the document. Google Translate can create it quickly, but not necessarily with 100% accuracy.

The ultimate protection is to bring in a certified court interpreter by video or telephone and at the time of signing the settlement document.

Translating to Everyday English

You may think all the mediation participants are speaking English, but you have failed to realize that at least some of you are speaking a foreign language. The most common foreign language used in mediation is Lawyer, and Adjuster is also common. In some mediations, everyone except the claimant is speaking Insurance, but no one has thought to provide a translation.

While the professionals in the room are speaking one of these languages, the clients are often mystified, simply trusting that their counsel is looking out for them. Sometimes, though, a client’s inability to understand becomes apparent near the end of the day.

I have heard of mediations where, when it was all over, the client asked, “What just happened?” In one of my mediations, as the attorneys were finalizing the details of the settlement, the claimant asked me how a particular issue was being resolved—an issue that hadn’t been addressed at all. I had to make sure the attorneys addressed this concern with the claimant and each other.

Professionals who use jargon regularly can easily forget that people outside their closed community don’t understand what the professionals are talking about. Just as you would provide an interpreter to translate an international language, make sure everyone understands what is being said in the languages of Lawyer, Adjuster or Insurance.

Happy Mediation Holidays

A MEDIATION CAROL
Sung to the tune of Jingle Bells
Mediate, Mediate
Mediate all day
Oh, what fun it is to see
The disputes go away
HeyMediate, Mediate
Make nice, it’s Christmas time
Or Hanukkah or Kwanzaa time
Remember this smart rhyme
Hey

Mediate, Mediate,
A way to bring folks peace
Your settlement agreement
Will be a masterpiece

HAPPY HOLIDAYS!

The Smartest Thing to Do in Mediation

W-A-I-T: these four letters remind you to ask yourself Why Am I Talking? Silence is often your most effective negotiation technique.
 

Silence has two big benefits
The first benefit of silence is to be better able to respond. Too many people come to mediation with their attitudes so entrenched that they don’t listen. You cannot successfully respond if you have not listened—really listened—to the opposing party.

Do not multi-task. During a remote mediation on your laptop, no one may be able to see you scrolling on your phone. But you are cheating yourself of the opportunity to collect information to help you conclude the case. You can miss something important if you’re not paying attention.

Lose the condescension. If you come to mediation with the attitude that your side is righteous and the other side’s views are valueless so you don’t have to pay attention to them, the initial obstacle to reaching settlement is yourself.

The second benefit is that if you just stay quiet, the other party may rattle off information to fill the silence void that damages their own case.

Listen First

Lawyers in particular are prone to thinking about what to say next instead of taking heed of what’s happening in the moment. It’s why they can miss asking the follow-up question a deponent’s answer should have prompted. And it’s why they ignore signals that would help them settle their case.

As your mediator, my job is to recognize those missed signals and follow up with the participants to facilitate settlement.

Remote Mediation Ethics

The COVID-19 pandemic has made many things about our jobs more difficult. And yet, there is a silver lining when it comes to case resolution.
 

The inability to safely congregate has compelled lawyers and claims professionals to turn to video mediation. Some were surprised to learn the benefits. Among these are that people are more relaxed in familiar environments; they feel more in control. Less stress results in better negotiation.

Pre-pandemic, the real decision makers often did not actively participate, instructing the attorneys, “Call me if something important happens.” These people missed getting the full picture. Now, there is no barrier (or excuse!) for parties who may be hundreds of miles away to actively participate. Again, the result is a better negotiation.

Lawyers must not shun mediating via remote technologies like Zoom. On the contrary, they have an ethical duty to master the technology. California Rule of Professional Conduct 1.1 imposes a duty of competence, which includes the learning and skill reasonably necessary to provide legal services. The rule specifies that if you don’t already have that learning and skill, go out and get it or hand the case off to someone who does. State Bar of California’s Formal Opinion 2015-193 addressed the question of technology competence in a case involving e-discovery. The opinion states: “An attorney’s obligations under the ethical duty of competence evolve as new technologies develop and become integrated with the practice of law.”

Of course, you will want to choose a mediator who is comfortable with remote mediation technology. One way for you to get comfortable with it is to ask that mediator for a free practice session.