Construction Litigation Cases Are Starting to Clog the Docket.

Is this the harbinger of more hard times to come or might it be a good sign for the economy?

I’ve been seeing a fair bit of construction and real estate related cases lately. I think it is safe to say that litigation in real estate and construction cases increases as the economy worsens. Buyers dry up, so homeowners sue to recover or retain earnest money on deals that collapse. As new homes sit empty, general contractors and builders begin to hemorrhage money. They often find it easier (or more prudent) to pay a bank than their subcontractors and vendors. This begets litigation.

And some of the litigation is quite difficult. The cases involving contractors and subcontractors are generally easy to deal with. Most have been through it before. The hard cases are the ones with the patently naive, foolish and some might say, stupid people who were seduced by the lure of easy money portrayed in ridiculous shows like “Flip This House” and countless AM radio advertisements.

Most of these people are completely out of their depth - intellectually, financially. They lack the experience, brains, skill and most importantly, finances to build Lincoln Logs, much less build and sell homes. Now they face foreclosure, eviction, bankruptcy - and litigation. Their cases end up in mediation and I sometimes find it hard not to tell these people that reaped what they sowed.

I recently had a party, who claimed to have a real estate license, act completely shocked to find out that signing a contract for a “flip house” on behalf of a “friend” who could not qualify for financing (but could somehow come up with a huge earnest money check) was committing fraud. She had never heard the term “straw man.”

I am left to wonder, however, whether the increase in litigation is a positive sign for the overall economy. As anyone who has studied economics understands, the construction and real estate markets operate in a cyclical fashion. As the economy improves or even begins a fast growing phase, construction increases as the newly wealthy (both businesses and individuals), desire newer, larger, more well appointed homes and offices. Growth continues until the economy worsens and then drops off precipitously. Litigation follows soon thereafter, until the cycle begins again, typically a few months behind the general economy.

Since litigation also has a life cycle of its own, often taking months or years to complete, are these cases actually a sign of a recovering economy? All I know is that I am gaining a lot of experience in real estate transactions and construction.

Maybe I’ll go out later to find some houses to “flip.” Maybe then I can retire early….

Share This

I’m not sure you could pay me enough

to mediate Brit and K-Fed’s custody debacle.  Whoever did is a braver soul than I.

Share This

In Further Praise of the Joint Session.

Last week, Geoff Sharp admitted to sitting on a draft post which modestly suggests that “lazy mediators don’t do joint sessions” or “lazy mediators only meet in private”. It appears that the gist of his post is that anyone can be an errand boy, but it takes a special kind of mediator to force the parties to sit across a table, look each other in the eye, and *gasp* communicate. He also commented upon an article (forwarded separately to us both by mutual friend/mediator/blogger Stephanie West Allen) entitled “Moving Mediation Back Toward its Historic Roots - Suggested Changes” by veteran mediator Joseph P. McMahon. Both Geoff and Mr. McMahon argue that the current state of mediation favors a “settlement conference” style of mediation that isolates the parties and minimizes real communication between the two.

Coincidentally, I have also been thinking a lot about the use of joint session since reading an article by New Hampshireite Scott Flegal entitled Advocating for Understanding. Mr. Flegal’s article discusses the “understanding based” model of mediation, which argues for the total elimination of caucus session. Flegal argues that the understanding based model promotes dialogue and joint decision making skills, while reducing distrust, both of the opposing party and the mediator - who is often viewed with distrust when he or she spends significant time with the other party, or is perceived as being unfair when playing devil’s advocate (reality testing).

Like Geoff, I think articles like these, which have appeared in Bar Journals, should spur interesting dialogue. Mediators should spend more time considering the dynamics of the conflict in front of them and decide whether to encourage the parties to hash it out in a joint session. Caucus is a useful tool, but only one of many at our disposal. [As an aside, I really dislike the "toolbox" metaphor almost as much as I dislike Biz school lingo like "incentivize" Why must we be made to appear to be plumbers or carpenters? It sounds as if we can reach into our "bag of tricks" and when the Phillips head screw driver doesn't work, we can use the needle nose pliers.]

I had a case this past Monday that likely would not have settled had I not brought the parties back together for one last joint session. The plaintiff had expressed frustration with the brief caucus sessions and had asked me to ask the defendant numerous questions. Even though the initial joint session was somewhat charged, I thought it best to get them back at one table. That’s when the real movement occurred.

I think too many mediators fear bringing the parties back to the same table unless there is some common ground already established through caucus and so-called “shuttle diplomacy.”

Share This

George Carlin - Funniest Footnote in Supreme Court History.

One of the smartest, wittiest, funniest, and most insightful (inciteful?) comedians and, yes, philosophers of our time passed yesterday at age 71.   I guess that now that I am approaching 40, 71 seems far too young to die, especially in this day and age when they can cure such horrible, terrible, life threatening diseases such as restless legs syndrome and overactive bladders.

Carlin was a bastion of free speech, constantly pushing the envelope of what society thought “decent.”   Of course, his “Seven Dirty Words” routine resulted in a Supreme Court decision that gave the Federal Communication Commission the power to protect “the children” from “indecent” material.  It probably wasn’t the decision he would have preferred, but Carlin did say that he was “perversely kind of proud of” being a “footnote in American legal history.”

The world is a little less funny today.

Share This

Where I’ve Been….

I know some of you are wondering why I haven’t posted in a while.  It’s a combination of being busy mediating cases, trying to meet the requirements to get registered as a domestic relations mediator and simply having summeritis.   I’ve been reading - some professional articles but mostly pleasure reading- and just haven’t been inspired to write or comment on anything.  I did have some interesting things happen in  cases, but can’t seem to find a way to make the cases anonymous enough to avoid breaching confidentiality while at the same time keeping the story interesting.

So, it may be a drought of a different kind this year.

I hope all is well with you.

C

Share This

Is Court-Referred Mediation “Fair”?

As I was shuttling parties in and out of our room today during a court-referred mediation, I passed by a couple on a bench. They were either awaiting assignment to a mediator or were in mediation, but had stepped out of the room to allow caucus. (This courthouse has only 3 rooms for mediation, so we are forced to ask the parties to keep swapping to allow for caucus).

The man, who was visibly upset, turned to his companion and said, “After going through this, I have no more faith in the system.” In my mediation, I was having difficulty with a pro se plaintiff who didn’t think it was “fair” that she take less than what she was seeking despite several issues with her case - some procedural, some evidentiary.

I do not know for certain about what the man was speaking, but it made me stop for a moment and think. Are these court referred mediations just? Are they fair?

The cases I handle on most Monday mornings come from the Magistrate Court - that’s what we call our small claims courts. About 60% of the parties appear pro se. While there is a $15,000 jurisdictional maximum for any claim, the majority of these cases concern far less than $5000. There are disputes between neighbors and friends, vendors and clients, and complete strangers. I’ve seen cases about unpaid sales commissions, construction defects and souped up 60’s muscle cars.

The pro se plaintiffs who feel they are in the “right” inevitably ask me, “How can this be fair? They owe me money. They injured me (or wrecked my car). How can they get away with paying me less than what’s owed?”

The answer depends on the case. I analyze the situation. Sum up both sides’ strengths and weaknesses. Discuss the concepts of evidence and admissibility and hearsay and risk analysis. Sometimes it seems clear who is in “the right” (but I don’t tell them that). Sometimes, it is a toss-up. Other times, there are technical legal issues that will likely allow one party to prevail. While others involve cases that seem to have no legal remedy.

I believe that the agreements that are reached in these cases are just and fair because the process is just and fair. And I know the process is fair because, put simply, my settlement rate in these small claims cases is terrible. I am not forcing any party to accept terms with which they cannot live. The parties have time to express their needs, their concerns, their interests. They have time to reflect on how the court will look at their “evidence” or on the new information the other party just revealed (there is often little or no discovery in these cases).

I exert all the influence that I feel is appropriate, but in the end, it is the parties that make the final determination. And they often choose to allow the Magistrate to decide after each side gets 5 minutes to plead their case. Unfortunately, in many of cases I’ve handled, this is a terrible choice for the plaintiff. In the last four hotly contested mediations I conducted that resulted in impasse, the court eventually ruled in favor of the defendant.

Share This

Mindfulness, MediTation and Mediation

Stephanie West Allen of idealawg emailed me about an interesting blog post entitled, Mindfulness Meditation: For Lawyers? In the post, lawyer/psychologist Delaney Dean discusses a bar presentation in Kansas City called “Mindfulness in Mediation.” (I had no idea that the term “mindfulness” was part of Buddhist philosophy. According to the internets, it means “being aware of your present moment.” I like that concept.)

As one might expect, Dr. Dean found that most of the lawyer-participants were skeptical of the use of mediTation and the concept of mindfulness in their practices. It should not surprise many of you to know that I am not a mystical or spiritual person. But, I share Dr. Dean’s surprise at lawyers who think of mediTation as “a sort of fuzzy, or “touchy-feely”, way to avoid reality.”

When I was in what they used to call the Gifted and Talented program in grammar school, we had a teacher who taught us relaxation and biofeedback techniques. I don’t know what the “proper” terms are, but they involve breathing techniques and visualization - you are on a cloud, a Caribbean beach, etc. I guess that as an 8 year old, I didn’t ascribe anything “touchy-feely” to it. It was simply a way to clear your mind. Focus your thoughts. “Center” yourself.

These methods have served me well over the years. I’ve never hit Nirvana (I really never thought Kurt Cobain was all that talented anyway), but these methods have helped me relax, focus and reduce stress. When I was practicing law, 15-20 minutes of reflexive breathing, maybe followed by 15 minutes of “resting my eyes” (my dad’s euphemism for his afternoon nap) was a fantastic way to decompress from a long day.

Share This

Numwhah?

I know it isn’t Friday, but this just had to be posted. One of my geeky guilty pleasures is watching the National Spelling Bee every year. It has everything: drama, bad posture, strange words. The moment of this year’s competition, and possibly ANY year’s competition came from the eventual winner, Sameer Mishra:

Enjoy a good laugh.

Share This

Mediation “Reality” TV Revisited

The concept of the mediation-themed reality TV show has reared its ugly head yet again. As noted by Geoff Sharp and Vickie Pynchon, Jerry Lazar and Richard Kilnger (who makes a guest appearance in my comment section to defend the concept but conveniently forgets to mention he has a “piece of the action”), have been shopping a show called The Peacemaker.

According to the article, “The show has not proved an instant winner with television executives. . . . Lazar said he tries to emphasize the personal drama of mediations - a combination, as he puts it, of “Jerry Springer” and “Dr. Phil” - but realizes it is difficult to explain. ”

I’m on record as thinking this is stupid idea. And it appears that Hollywood may agree (for whatever reason).

Reality TV shows garner ratings by creating conflict - whether naturally or artificially: Taking food from starving castaways; Putting incompetent chefs in with experienced ones; pitting gold-digging strippers in trumped up “contests” to win the bed of an aging hair metal star. It’s contrived and it’s meant to appeal to our baser instinct. Even a show with a laudable goal - helping morbidly obese individuals lose weight - creates conflict by dangling Snickers bars, lasagna and french fries front of the newly slimmed down contestants.

As a colleague of mine said when I described the concept, “This show will only get viewers, advertisers, and top ratings if it depicts and exploits the dark side of conflict. No one gives a shit about the feel-good resolution at the end.”

This show will not raise awareness of mediation as a legitimate dispute resolution process any more than Judge Judy has helped steer litigants towards arbitration or Dr. Phil (or Sallie Jessie or Montel or Donohue or Oprah) have helped people with disabilities or mental illness seek counseling.

Frankly, I don’t want to spend the next 10 years of my career telling people, “No, its not just like on The Peacemaker.”

Share This

Positive Attitude in Mediation

Nancy Hudgins has an excellent post for mediation advocates on her Civil Negotiation and Mediation blog entitled “Adjust Your Attitude: Go Positive!”

Nancy writes

Mediation calls upon us to use a different skill set. One that is more collegial, cooperative and collaborative. Best to leave the attack dog persona at home.

I couldn’t agree more.  In my experience, the cases that settle have parties that adopt a reasonable, objective and cooperative approach.  They realize that mediation is not adversarial and that acting like a bulldog/shark/warrior is counterproductive.

I recently entered a mediation where the plaintiff had the defendant dead to rights.  An iron clad promissory note, a clear default over a period of months and no affirmative defenses other than falling on hard times.  But the plaintiff and their lawyer realized that you can’t get blood from a stone.  They worked with the defendant to renegotiate terms that all could live with.  The plaintiff has to wait a bit longer to get his money but he felt it better than sending his lawyer to the courthouse to file post-judgment motions and seek garnishments and liens which might turn up nothing.

Share This