Blog Archives

What Are Your Responsibilities As An Executor Of An Estate?

9/18/2020

Michael Lodge, NCPM, CRTP - Nationally Certified Professional Mediator - www.lodge-co.com - Ph: 305.824.2963

Over the last three years I have been working as the executor of my Mom's estate and I also do mediation on estates with families. If you are the executor, you have some responsibilities. Now this may vary from state to state, but is pretty standard in the United States. This is not a legal opinion or advice, it is just some of the rules that you have as an executor of an estate. If you are having issues on the division of assets within the family, call in a mediator that can help you through the process. Please consult with the family attorney on understanding the language of the will.

The executor or personal representative of a will is responsible for wrapping up the estate's affairs according to the will's instructions. After someone dies, the executor becomes responsible for the estate, and usually must report to the probate court. You can expect the executor to file the will with the court, manage the estate's assets, pay the estate's bills and distribute the remaining estate assets to the beneficiaries.

Filing the Will

The executor's first step is usually to file a copy of the will with the probate court. This action opens the probate process. Along with the will, the executor may file a petition for letters testamentary, which is an official court document that gives the executor the power to speak directly to the estate's creditors, handle the estate's bank accounts and take similar actions necessary to probate the estate, according to the American Bar Association.

Inventory the Estate
In order to fulfill his duties to pay creditors and distribute the estate, the executor is required to inventory the estate to determine the amount of assets it has, according to FindLaw. In most states, the executor is required to file a copy of the inventory with the probate court and to give copies of the inventory to the beneficiaries. The executor may hire professionals like an accountant, attorney or appraiser to help him determine the value of the estate's assets, if necessary, and may pay for the professionals' help with the estate's assets.

Pay the Estate's Debts
The executor is also responsible for paying any outstanding bills or debts the estate has. In order to do this, the executor is expected to contact any known creditors and also to notify any unknown creditors by placing an ad in the newspaper or by whichever other means the state's probate laws permit, according to FindLaw. State probate laws typically give creditors a certain time limit in which to present their bills to the estate. The executor must wait out this time limit to ensure all bills have reached the estate before proceeding to distribute the estate's assets. The executor must also settle the estate's final tax matters, and may hire an accountant at the estate's expense to do so.

Distribute the Estate's Assets
Once all the bills are paid, the executor must distribute the estate's assets according to the rules laid out in the will. Distributing assets may include giving particular items, like furniture and jewelry, to specific people named in the will. It may also involve giving certain amounts in cash to certain people or charities named in the will. In order to distribute the estate's assets according to the will's requirements, the executor may liquidate certain assets, like stock, if necessary, according to FindLaw.

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FINAL NOTE: The executor or personal representative of a will is responsible for wrapping up the estate's affairs according to the will's instructions. After someone dies, the executor becomes responsible for the estate, and usually must report to the probate court. You can expect the executor to file the will with the court, manage the estate's assets, pay the estate's bills and distribute the remaining estate assets to the beneficiaries.

How The Pandemic Has Increased Mediation

9/17/2020

Michael Lodge, NCPM, CRTP - Nationally Certified Professional Mediator - www.lodge-co.com - Ph. 350.824.2963

During the lock down of Covid, my office was really silent for about two months. Then, all of a sudden people decided to mediate and they found out they could do it virtually and got results. This article is about how the Pandemic has created more mediation cases to be heard. This is a good read on mediation and arbitration.

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The COVID-19 pandemic wiped out our workouts. It disrupted our dinners. It squashed our social life. Now, it’s likely to trim the number of trials our legal system sees. To further prevent the spread of COVID-19, Maricopa County Superior Court issued an order that steers certain litigants away from jury trials in favor of mediation and arbitration, which is a fairly big deal if you’re facing a business dispute.

“It is not so much the kind of jury trial, but rather the posture of the case that will drive the diversions to mediation and arbitration,” says Gary Smith, manager at Guidant Law Firm. “Cases will go through a triage of sorts. Mediation will be encouraged for cases more susceptible to settle. Arbitration will be encouraged for smaller-dollar, simpler-issue or lower-risk matters. No one will be forced to give up a jury trial if they prefer it and are otherwise entitled.”  According to legal experts, there is one major advantage to taking your business dispute to mediation or arbitration instead of a jury trial.“In one word, speed,” says Wendi Sorensen, shareholder at Burch & Cracchiolo. “Opting for mediation or arbitration instead of a jury trial will likely bring your matter to a close much sooner than awaiting trial.” Experts say the coronavirus has severely affected our court system, due largely to the need to socially distance, and the effect that has on the ability to appear in person and to impanel a jury.

“Although some courts have tried options involving Zoom–type trials, the results have been mixed, and parties involved in litigation are hesitating to stipulate to this option,” Sorensen says. “Once we are able to safely resume in-person appearances, criminal matters will take priority due to the constitutional right to a speedy trial. Therefore, we expect it will be at least a year before trials are able to resume.”

What’s involved in mediation and arbitration?
When it comes to a business dispute, Smith says mediation is the parties’ opportunity to write their own outcome.  “It is a negotiated settlement facilitated by a mediator,” he says. “The mediator makes no decisions or rulings, and is there strictly to help the parties communicate and help in the architecture of settlement.”

According to Smith, mediation succeeds when these stars align:
• The parties know what they need — not what they want
• Are ready to be done with the dispute
• Can accept not having all of their questions answered
• Are willing to compromise
• Logic overrules emotion

“That does not mean mediation is easy or pleasant,” Smith says. “It is a lot of work and long days.”  Arbitration, by contrast, substitutes a traditional judge with a privately hired arbitrator.  “It often replaces court rules for other rules, and offers flexibility as to time and place for the arbitration hearing,” Smith says. “In many ways, arbitration mirrors court. However, the arbitrator can be selected using criteria such as subject matter knowledge.”

Because you are buying their time, an arbitrator will have as much time for your case as you want, which is in stark contrast with Superior Court, where judges carry hundreds of cases.  “Arbitration is the antithesis of mediation,” Smith says. “It is a ‘day in court.’ It requires fastidious preparation and deep focus on discrete issues. Arbitration’s strong suits are ‘faster and final,’ as there is effectively no appeal from arbitration. Parties have to show up like it’s the Super Bowl.”

Pros and cons of mediation and arbitrationAs with all forms of dispute resolution, Christopher Zarda, director of complex litigation at MacQueen& Gottlieb, says there are definite pros and cons to mediation and arbitration.  “Mediation, a non-binding dispute resolution procedure, allows the parties to separately present their subjective case to an independent mediator,” Zarda says. “Picking the right mediator with the right experience allows for a full and frank discussion and exchange of information couriered between the parties. This also allows an experienced intermediary to provide frank commentary on the relative strengths and weaknesses of asserted claims and defenses, with the mediator advocating not for one party over the other, but rather for the successful settlement of the claims.”

The downside to mediation, according to Zarda, is its non-binding nature, meaning that no matter how strong your position may be, there is no guarantee the matter will be resolved as the parties cannot be compelled to settle.  “Arbitration can be quicker than waiting for a dispute to wind its way through the court process and the court’s burdened calendars,” says Michael R. Ross, shareholder at Gallagher & Kennedy. “Arbitration typically involves less discovery — the acquisition of information, documents, and pretrial testimony — than the court system, which generally means that the parties save money and time. Arbitration hearings are typically less formal and rigid than trial, although arbitration hearings in complex matters can often feel just like a trial without the courtroom and the judicial robes.”  The downside of arbitration is that it comes with a price.  “Private arbitrators, typically former judges or active attorneys, charge an hourly fee for their services, and there are also significant administrative fees charged by neutral services that oversee the appointment of arbitrators and the process,” Ross says.

Another frequent complaint from participants in arbitration and their counsel is that an outcome at arbitration is generally not subject to appeal.  “Parties that are not satisfied with the outcome have to live with it — there is not another bite at the proverbial apple except under vary narrow circumstances,” Ross says. “Of course, the flip side to that concern is that an arbitration provides finality and avoids what some view as a drawn-out appellate process.”

ARTICLE LINK

The Pet Mediator

9/16/2020

Michael Lodge, NCPM, CRTP - Nationally Certified Professional Mediator - www.lodge-co.com - Ph: 305-824-2963

In mediation, you never quite know what type of mediation will land on your desk and into your schedule. In the past two weeks I have had to only mediate two cases that involved a dog. And then one landed on my desk yesterday for a cat. Not a full divorce mediation, just on who is going to get the family pet. This is a very emotional subject in divorce where there are pets involved. So since so pet meditations have landed on my desk,s I have now named myself the Pet Mediator. No pet whispering in mediation.

So Jon and Janet (names made up) have a beautiful pet bull dog that they love greatly. The wife contacted me and said in her email that they had come to an agreement on all of the finances and assets from the marriage. The only thing remaining was who would get the dog. I provide my clients with a 30 minute consultation meeting on the process of mediation. They didn't want to make the decision, they wanted me the Mediator to make the decision. So I told them to agree to mediate and submit their intake documents to me to review, and we set a date for mediation. Two days prior to the mediation in came the in-take documents with their pictures and stories as to why they should get the dog.

We when first had our 30 minute consult the husband had failed to tell anyone that the dog was a support animal to his son (from another marriage) that was going through a very big healthcare crisis. The dog was his support. The wife did not know that his son was going through this crisis and that the dog had been issues a special care document to allow the son to live independently and to fly on plains with the dog. The dog was his support through his healthcare battle. So the story now changes that there is a son very dependent on the dog to help him through this crisis.

It was time to meet with both the husband and wife in mediation. I gave each person a 15 minute time period to present their argument as to why they should have the dog. Both presenting very good cases, both who really loved this dog. I knew this from the first consult with them that both persons love this pet, it was a family member that was obtained during the marriage. I could see in their faces that this dog as creating a big stress in resolving the end of this marriage. I presented various visitation plans for the dog. But the case always came back to the need of the child for this dog. It was pointed out that the son was very upset about losing this pet and it was creating a healthcare stress on him. It was important for me to understand the complexities of this health crisis of the son and decided I would talk to his doctor to understand the issues. Both husband and wife agreed to that it would be good to talk to the doctor.

Everything worked out in the end. The wife thought about it over the evening and sent me an email in the morning explaing she thought it would be best for the husband to keep the dog and that she would move on. A MOA was written, both signed, and the mediation was complete. Pets are a part of the family, and it is hard for couples to make that decision on who will get custody of that loved pet. I feel for them since I have three dogs and they are part of my home. However, these types of disputes can be worked through, providing the couple with a thought process of each others circumstances and needs. So I am not only a dog walker in real life with my own dogs and not the Pet Mediator.

The Middle East and Israel On Working Together

9/11/2020

Michael Lodge, NCPM - Nationally Certified Professional Mediator - www.lodge-co.com - PH 305.824.2963

We have heard two very strong statements President Trump over the many years we have known him. The art of the deal and respect through strength. Two philosophies that go hand in hand. Now over the past few weeks we have had three major international relationship deals put together by a strong negotiating team. With countries who respect strength. Only Trump could have done this, by allowing the United States to withdraw from the middle east, reducing our troupes and bringing them home, and putting the responsibility of peace back in the hand of the countries who need to work together, especially since oil is their only revenue stream and that is drying up.

Now the Democrats are going to look at these deals in a negative light, they will never say anything good about these deals because for some reason they have a disdain view of Israel. How that happened I am still trying to understand as to why they have turned on Israel. Perhaps it was that people voted in very hateful people into Congress who do not like Israel from countries that hate Israel. From a former President who did not like Israel. Before, Democrats were the friend of Israel and then Democratic leadership changed and they all went to the party view that Israel was bad. I know, shock to me and a shock to Israel. But throughout the past few years this has become obvious through the leadership of the Democratic party. It is interesting that what type of leadership that changes from friendly to non-friendly.

As we look at the beginning of deals within the middle east and Israel, we also have to take into consideration that a good portion of the nations in the middle east hate Iran more then Israel. To beat Iran, Israel is needed. Let's face it the military strength in the middle east is Israel. They have been fighting a war against Iran for a long time, the know the enemy. Remember the art of war, know your enemy.

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” - Sun Tzu, The Art of War

Israel knows the enemy and everything about them. They watch Iran like hawks. They know every single move Iran makes and that source of information and tactics is respected by the middle eastern nations. Thus, the strength of one small nation can do great damage to their enemies - Iran. The other issue is that Israel is a stronger nation as it come to research and development in medicine and technology. The middle east have never developed that strength.

It will be interesting to see who will be next to create ties with Israel and the United States.

Remember 9-11 and Love Our Fellow Americans More

9/11/2020

Michael Lodge, NCPM, CRTP - Nationally Certified Professional Mediator - www.lodge-co.com - PH 305.824.2963

Every year on this date, 9-11, I always have the memories what where and what I was doing on that day. I still replay it in my mind. I can hear my conversations as it was happening.

It was just a day, time to get up, get in the car and head to work. I lived in Orange County California at the time and I had to head up the freeway to Long Beach, California. A good 45 minute drive. I had just bought this car from the Los Angeles Police Auction as a commuter car. I think I had paid about $500 for it. It had no radio in it. It had a body, and engine, a seat, and sometimes the lights worked. It was the perfect commuter car for the Los Angeles traffic.

I got in the car and headed up the 405 freeway to Long Beach. When I got to my office building, that overlooked the Queen Mary ship, I noticed that people were checking the underside of my car at the entrance of the building. That was strange, no one had done that before. I drove down, got my parking spot, headed to the elevator, and pressed 14. When I opened the door of my office I thought it was strange that no one was on my floor and in my office. I was it. I sat down and started to work. I always got to the office early, I liked to start a fresh day with no phone calls. I started to work and soon there was a knock at my door. I opened the office front door and there stood a police officer. He immediately said, you need to leave the building, the building has a bomb threat. Leave your office unlocked. So off I went, we could not use the elevators, so down the stairs and 14 floors. There were a few of us that met in front of the building, the firetrucks were there, the bomb squad was there. They began to search the building. Then I heard it as someone in the group said, "I wonder if this as anything to do with New York?" I asked, what about New Yrok. Then they told me the story. I was shocked.

Finially, the bomb squad cleared the building and we were allowed up in the building. When I got to the office the phone was ringing it. I picked it up, it was the owner of the company. He told me that they were shutting down the office for the day, have anyone that reports to the office to go to a restaurant that he named. He told me I could leave. But before I left I checked the news on the internet where I saw the pictures and videos of everything that was happening. By the way, the building had a bomb scare every day for 7 days. For 7 days I walked down those stairs, 14 floors, once a day until they finally caught the guy calling in the fake bomb scares.

I drove home as fast as I could. I turned on CNN when it use to be a news station, and I sat in front of the television all day and all night. Watching as the building fell, people jumping out of the building, glass falling to the streets, people running from the dust of the falling buildings, people wondering where their relatives were, and the police and fire departments trying to do their jobs and save lives. 9-11, a day that I will never forget. A part of history where hate for Americans was so great the two buildings fell, a plane flew into the Pentagon, and one plane crashed. Each incident killing innocent Americans. And that is when we really understood what Islamic extremism was.

We all have our stories of that day. Some of you were not even born yet. Some of you may be out on the streets today in riots against America. We have extremism in the United States wanting to do just as Osama did, ISIS did, Taliban did, and the list of terrorist organizations that hate America. So when you march in the streets chanting "Death to America" what do you think the rest of America sees in you? We see hate, we see terror, we see extremism - with the same names as Osama, ISIS, Taliban, BLM, Antifa, KKK, and all the hate group out there. That is what America sees and hears because we remember 9-11.

The best part of being an American is that we remember, we take note, but we also love fellow Americans. When people are hurting, we are there. When a hurricane or tornado destroys communities, we are there. When people are hungry, we feed them. When they are cold, we cloth them. When Americans hurt, all Americans hurt and we try and solve the problem. When something happens to our nation, no other country comes to help us. No, Americans take care of each other because we were taught to love our neighbor. That is the American spirit. That is America. Remember 9-11 and then love your fellow American greater. Don't isolate yourself, reach out, love your neighbor. That is America..

Family Mediation vs. Litigation

9/10/2020

Michael Lodge, NCPM, CRTP - Nationally Certified Professional Mediator- www.lodge-co.com - mlodge@lodge-co.com

Family mediation can cover a whole bunch of subjects, and it is a very interesting field. Let me tell you about some of the client subjects that I have heard in the last few days. Who gets the dog? Revisiting the parenting plan. Small businesses issues of a family. Grandmother wants visitation with her grandchildren. And there is a whole lot of family issues that get mediation, not just divorce issues. I was going to write a whole blog about it and then I got an email with a story already written, so I will share it with you. Great writer, great views.

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by Marian Grande - September 2020 - Many people assume that the only way to resolve a family law matter is to retain counsel and commence a Court action. This is a wrong assumption. Some cases must be settled with court intervention, although many cases may be settled through alternative dispute resolution.

Litigation is time consuming, emotionally draining, expensive, and unpredictable. In litigation, a judge will make divorce-related decisions regarding child access, support, and equalization. You are never certain of your outcome until a judge makes a decision, which may not be in your favor, not even slightly.

So, what is mediation?
Mediation is an alternative to court. Mediation employs a professionally trained, unbiased and neutral third party called a mediator, who does not judge the case but helps facilitate a discussion, limit the issues, and put them in perspective to assist the parties in resolving the dispute.

Mediation is non-binding, so the parties work toward a voluntary agreement on key issues which is then drawn up into Minutes of Settlement, which is enforceable. Parties participating in mediation have an incentive to reach an agreement because they do not want to proceed to trial to be bound to the judge’s order instead.

Mediation is less expensive, more confidential, and highly effective in resolving conflicts more peacefully than expensive and stressful litigious court battles.

When you retain counsel for a court application, you will have to leave a retainer, which may range from $10,000.00 to $15,000.00 for work to even commence on your matter. Hourly rates for lawyers usually range from $350.00 to $950,00 per hour. It is not unlikely that a family law matter in litigation will cost $25,000.00 to $100,000.00 per party.

Mediation ranges from $250.00 to $300.00 per hour with both parties sharing this cost. A much smaller retainer would be required, more likely in the amount of $500.00 to $1,000.00. The total cost of mediation usually ranges from $1,000.00 to $7,000.00. The cost savings of mediation versus litigation is astronomical to say the least.

The time it takes to get to a family law trial is extensive, sometimes taking years to reach trial. Mediation can be resolved within a day to a week. Which means less stress for each party and returning to a normal life much quicker.

ORIGINAL ARTICLE www.mediate.com/articles/grande-family.cfm?MvBriefArticleId=47607

The Funny Life Of Our Password

9/9/2020

Michael Lodge, NCPM - Nationally Certified Professional Mediation - www.lodge-co.com

I found this video that made me laugh so hard because it described me perfectly throughout the years in designing a password for my computer life.

Zoom and Virtual Fatigue

9/9/2020

Michael Lodge, NCPM - Nationally Certified Professional Mediator - www-lodge-co.com

As a mediator I miss the days when clients came in to see me. It was good to have them in the office and being able to read their body and facial languages. Plus, I didn't get that tired, it was a human process that felt like you were working together to resolve an issue(s). Now we are doing it through zoom or other virtual devices. It is working but it doesn't seem the same. To me anyway. I read an article in the Wall Street journal as to how it is affecting us, this new zoom world we live in. We now have a new description and it is called Zoom Fatigue.

According to The Wall Street Journal, there are multiple causes of Zoom Fatigue:

Lack of transitions. Our brain pays attention to change, and something new, and the lack of change when looking at a computer screen causes our brain to get sleepy. Sitting at a conference table, our head is constantly turning to look at faces, whiteboard, windows, longingly at the bagel stand across the street, etc. But with Zoom, etiquette says that we must continue to look at the screen or people think we are not paying full attention.
Forced new communication style: Many of us used Zoom before the pandemic, but the number of users and the time spent on Zoom has skyrocketed (from 10 million users to 300 million since April, 2020). This means that our brain has not gotten used to the new method of communication. Just as you get a headache when you begin wearing a new prescription, our brains are adjusting to the importance of stillness in front of the camera, the microsecond delay, allowing only one person to speak at a time, and needing to modulate our voice patterns (too loud is a staticky shriek, too quiet and it won't be picked up by the mic).
Subconscious intake now requires purposeful thought: Our brains used to absorb nonverbal cues subconsciously--a fast intake of breath, a tightening of the shoulders--that gave us cues about how to proceed. We now have to be more intentional about reading facial expressions and picking up on verbal communication cues. Being more aware of the impact of our vocabulary will likely end up making us even better mediators--but it is still exhausting to learn a new method of communicating.
Less satisfying feedback: I found myself teaching a group of 40 students in the spring who typically had their audio and video turned off. Do you know how annoying it is to tell a joke to 40 quiet, black squares? Without the feedback of hearing a chuckle or seeing a smile, I found I had to draw on more of my inner energy reserves to keep the lesson interesting. In mediation, I enjoy watching the body language as parties begin to relax and hear each other. This encourages me and motivates me to keep mediating. While Zoom allows me to see more micro expressions on their faces, I miss the full sensory feedback.
Feeling invaded: Many of us rushed to get larger screens, making it easier to see faces, read documents, etc. Yet researchers found that when you are meeting with clients, their faces are so large and intrusive that it stimulates a fight-flight-freeze response in our parasympathetic brain. We have learned to squash that response, typically, but the result of ignoring our brain is not only tiring but it puts us just a bit more out of touch with our valuable instincts.
Unclear hierarchy: Our brains can relax when there is clarity. Seeing who is at the head of a conference table, allows our brains to know who to turn to for the final decision. This lack of leadership is unnerving for our brains.
Physical constraint: Have you ever seen a 3-year-old strapped into a shopping cart at Costco? Watching them try to restrict their movements while they are fairly vibrating with energy is comical (unless you are their parent. Then you are just praying that you make it out of the store before the explosion). Our bodies are designed to "move-it-or-lose-it." The more we run, the more energy we have for running. But if we force ourselves to sit motionless in front of a screen for 9-hour-stretches, then our bodies begin to decrease the amount of energy created. In other words, the long-term result of sitting makes us tired. In 2012, the Huffington Post describes this as the Tin Man effect. They stated that when inactivity becomes habit, we rust up and slow down.

Zoom has forced to act differently while on camera. Our meetings, or for me, my mediation sessions have been a learning experience that I continue to deal with. I have doing virtual meditations and business meeting for a long time, even before Covid, but not so consistently as we do it now. I look forward to the day when I can sit at the table again with clients and work through the process with actual live people in the room. However, we are now stuck in the world of virtual meetings and we will get better at it.

Who would have known we would be dealing with another type of fatigue. Zoom Fatigue, it may be curable.

Solving Family Disputes Through Mediation

9/8/2020

Michael Lodge, NCPM, CRTP - Nationally Certified Professional Mediator - Ph: 305.824.2963 - www.lodge-co.com

Families have issues. Sometimes the small issue becomes a dispute or a conflict with the family. Emotions running wild and then it can become extreme to the point that it literally shuts families down. They stop talking, they accuse each other of various deeds, and the names begin to fly. I should probably keep a list of all the names I have heard people call each other, they become very interesting. Sometimes the dispute can be between parents and children, where promises were made but not kept, sometimes by both sides. The process of mediation in family disputes should be used more often.

Family disputes can be in a family owned business. Who is going to take over the business once a family member leaves the business? Succession is a big thing if family companies and can get nasty. And then there is a separation phase of a marriage and setting rules so that responsibilities are defined until the divorce goes through. It may even be a separation while the couple goes through counseling. All of this is done through a mediator, very confidentially.

Mediation is a process and it is the best process to solve problems. Mediation has a very high percentage rate of resolving issues, in business and in families. The process is designed to have a third party - the mediator - who steps in and provides focus and rules to discuss and negotiate through the conflict or dispute. Emotions can be controlled by having private meetings with those in the family before bringing them all together. Sometimes that heat is so high in the dispute that individuals can't be brought together at the very beginning, there has to be diplomacy mediation between the two parties before they are ready to meet in person. And sometimes, when people start to talk they find out their issues are the same as the other person's issue, and that creates a starting point to agree on a way to resolve the problems.

As I do mediation I get to hear a lot of very interesting stories. Some angry, some sad, some not knowing what to do. Everyone in mediation gets to tell their story. The mediator gets to take the story and put it into discussion points to find a resolution opportunity for both parties to work on - together. If you or a client, is having a family conflict, call a mediator. The process works!

How to Mediate a Prenuptial Agreement

9/3/2020

Michael Lodge, NCPM, CRTP - Certified Business Mediator - Business Tax Advisory Services - www.lodge-co.com - Ph/Text 818.252.5682

Mediation is used in arriving at a prenuptial agreement to a marriage. In fact, it is very important to mediate this subject. I found his article very filled with information on mediating a prenuptial agreement. Learning is the best practice always.

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by Laurie Israel

Any lawyer who has dealt with prenuptial agreements knows what a stressful and upsetting task it can be for the client. Usually, only one party wants one. The other less-moneyed party does not, and that party is extremely hurt by the fact that the other is asking for one.

Often the request for a prenup comes after a very long relationship, including cohabitation. The parties are already committed to each other and planning a life together. It often comes up after the parties have become engaged. One party’s vision of a marriage is sharing everything – including the financial. The other may be starting to have second thoughts about sharing the financial part, although he still loves her and wants her to be his life partner. Or, as is often the case, the parents of one party, self-made wealthy people, are putting great pressure on their son or daughter to have a prenup.

What happens after the idea of a prenup is broached by one of the parties? Almost invariably, everything becomes ugly. The loving relationship between the couple becomes bitter and damaged. Some relationships never recover, even after the marriage. Tears are always shed by the less financially advantaged spouse-to-be. The other spouse may be adamant, but feels brutish. Not a good way to start a marriage.

Starting with mediation one can reduce or eliminate damage to the relationship when a prenup is certain or likely to happen. The process lets the parties (not their lawyers) decide the terms for themselves. Mediators can help level the playing field and help the couple come together with a mutual solution that is acceptable to both.

Mediating prenups is an excellent way to start the prenup process, and in my opinion, often the best way.

Here’s how it works:

Mediation is the message.

The first step for couples thinking about having a prenup is to know that mediation is available. People often don’t realize that this is an option. Many mediators are now mediating prenups, with great success. Mediators with prenup experience need to write about it and post articles online for other mediators and for potential clients. They should also include mediating prenups on their websites as a service they provide.
People are searching for non-conflictual ways to negotiate prenups. About ten years ago I wrote an article entitled “Ten Things I Hate About Prenuptial Agreements,” and it’s more or less become viral. As a result of that article and others I have posted during the years, I have transitioned a substantial part of my mediation practice and my law practice to working in the area of prenuptial agreements and postnuptial agreements.

2. Start with the parties, not with a prenup draft.
Encourage the parties not to have one of their attorneys work on a first draft. That first draft, if received, is usually a very harsh and unwelcome way to start the process. It can make the negotiations turn bitter very quickly. If a party has received a draft from his or her attorney, suggest to that party that it should be put in the shredder. It’s important to start anew and fresh. If a party has received one, advise him or her not to read it and not to share it with the other party. Often the couple may see you after experiencing a very negative negotiation process led by their two attorneys. You need to open the door and create an entirely new chapter by means of the mediation.

When you are communicating with the parties before the first mediation session, try to find out as little as possible about their goals (which may be conflicting). Also, ask the clients not to share the facts of their situation (except for financial documents, see below) before the first session. Everyone should come to the first mediation session with a fresh mind and no preconceptions. Having a “Zen mind, beginners mind” will help the dynamics of the mediation, as well as help you as the mediator to stay neutral and unbiased. The surprise element of the first session nourishes the vitality of the mediation process.

The idea of mediation is for the parties to think about and mutually set the terms of their prenuptial agreement. They are getting married, so the terms should reflect love and caring. The process shouldn’t be contaminated by the thoughts of their previous lawyers or their parents who are often the “shadow parties” behind a prenup.

3. Fact finding is important.
It is helpful to have some of the parties’ financial information prior to the first meeting. They don’t necessarily have to all be provided prior to the first meeting. These are some of the documents I request:

W2s, paystubs, a detailed list of debts and liabilities, a list of assets, latest statements of any financial accounts, including retirement accounts. And any information regarding life insurance.
Personal income tax returns are also important to review. Have the parties provide the past two years of returns. You will learn a lot about the clients’ finances after reviewing these. Social security earnings statements showing historical earned income are also helpful. The mediation clients can obtain these online from the Social Security Administration site, www.ssa.gov .

At the first meeting, the mediator should become familiar with each of the parties’ factual situations. How long have they been together? What is their sense of the marriage? Is it a first marriage or is it a second one with children from the first marriage? This latter fact pattern raises other issues. Are either of their sets of parents divorced? If the clients have been divorced, what was their experience? Have they been struggling over the prenup? Have they had a bad experience with attorneys that have represented them in connection with the prenup?

If a party has an ongoing business, it is very important to clearly understand its financial aspects. This will take some time and require review of additional documents. Some questions that you should consider would be: How is the income the business generates characterized – as salary or business income? Who controls the earnings that might remain in the business? What is the fair market value of the business? If there is a recent financial statement of the business (such as in connection with a loan application) have that as part of the package to review. Look at the past 2 years of business income tax returns. A full understanding of the business by the mediator and by the parties (including the non-owning party) is crucial to formulating a sound prenup plan.

Often the idea of a prenup comes from the moneyed parents of one of the future spouses. In the case of parental wealth, a spouse may be asked to waive all rights of the other to gifted and inherited money coming from a spouse’s parent forever. That party needs to know what he or she is waiving. Accordingly, in some reasonable manner, the assets of those parents need to be revealed in order to ensure waiver by the non-moneyed future spouse.

All the information that is provided should be shared between the parties so they have full disclosure and understanding of each other’s assets and income. The understanding of each of their finances and the reasons for the prenup should be probing and precise.

The other part of fact finding is to find out what the mediation clients’ plans are. Do they expect to have children? At what point? Do they expect to have more than one? Do they expect the mother to leave the job market? If so, for how long? If it’s a second marriage, how do they plan to provide for the children of the first marriage? How do they envision providing for their own and their spouse’s needs as they age? These goals should be accommodated in a “grey” prenup.

4. Make sure the parties understand what state law says about divorce and inheritance.
Prenuptial agreements vary according to state law. That’s why it’s important that each of the parties knows what the applicable state laws of divorce and inheritance are in their state. That way they know what they are waiving. Waiver is a very important aspect of prenuptial agreements. In certain aspects, a prenup may even enlarge the rights a spouse would have under state law. There’s nothing wrong with that, especially if that person is giving up other rights.

Sometimes, after receiving this information, the parties decide that they want the state law to apply and abandon the idea of a prenup. Be open to that possibility as a mediator. If they have made that decision after an understanding of state law, it can be a reasonable choice. Never assume the mediation will end with a prenup, especially when it’s a first marriage of relatively young people.

The laws of divorce (property division, alimony, and children) should be presented in a clear way. Are premarital assets and inherited assets excluded from martial property subject to division in your state? (They are, in many states.) How are active businesses treated in a divorce? There will be case law on all these topics in your state and sometimes statutes (which will be fleshed out and interpreted by case law). This information should be shared with your mediation clients.

What about the laws of inheritance? What would happen if a mediation client inherited his parents’ estate during a marriage? What are the baseline requirements of inheritance from the estate of a spouse in an ongoing marriage? Knowing what these rules are will assist in defining differences that may be part of your clients’ mediated prenup. Too many prenups address support, but leave out provisions that would apply in the case that the marriage ends because of the death of one of the spouses.

The laws of “Community Property” states like California and Texas and many equitable division states, provide that prenuptial property and inherited property is separate property and not marital property. If you live in one of those states, and this is your concern, then you’ll want to figure out the reasons to still enter into a prenup.

Remember, mediators are allowed to provide legal information (but not legal advice). So you can and should provide this information to your mediation clients. And you should do this sooner rather than later. Prenuptial agreements should not be created in a vacuum. Understanding of the law is required. To assist in this, I hand out a state law summary of my state’s divorce and inheritance law and discuss it with the clients.

5. What are their aims and concerns?
It is important to know exactly what concerns your mediation clients have. What their sense of the marital partnership and its financial aspects are. It’s also important to find out their respective views on prenups, which might be quite divergent. Part of leveling the playing field is hearing from the person that doesn’t really want a prenup. That person often is concerned or fearful about expressing their concerns.

It’s also important to have the clients air their views on all of the substantive issues that would be in the prenup. If someone is concerned about receiving a potential inheritance, fully discuss it. It should be viewed through the filter of all the other financial information that you have obtained, and foreseeable (and unforeseeable) future financial circumstances. What if the other party will receive no inheritance? How old are the parents of the party with the expectancy? What if the marriage is long-lasting? Does it still make sense to forever isolate the inheritance as separate property?

6. Think outside of the box.
Remember that prenups don’t need to be an “all or nothing” thing. Any issue can be sliced and diced. For instance, gains from, and income derived from separate property can be always considered separate property, or not. Income from separate property can be shared as marital property, and even gains from separate property. Or the sharing can be staged in percentages. The sharing percentages don’t have to be fixed – they can start at some point after the wedding and even accelerate as the marriage grows longer and proves itself as durable.

Remember, a prenup can seek to address every financial issue, although public policy considerations make child-related provisions and spousal support subject to court jurisdiction. A prenup can also be as bare bones as one that leaves all issues to be decided by the parties, and if they cannot decide, require arbitration, and not litigation.

Often a prenup leaves spousal support to be decided by state law, or puts reasonable limits on it, drafting it so that it would likely not be overturned by a court. Clients can also consider and adopt “sunset clauses” by which the prenup self-destructs after a certain anniversary of the marriage.

Sometimes, after meeting with mediation clients and explaining the law of divorce and inheritance, the couple opts not to have a prenup. This option should be left open as a choice. Too often the prenuptial agreement takes on a force of its own aided and abetted by the mediator or the attorneys, without considering the alternative.

7. Make the prenup as generous as possible.
It is understandable that a person coming into a marriage with great wealth would want to protect him or herself from loss through divorce and from litigation. And yet, being overly protective about their money may diminish the strength of the marriage. One must ask themselves, “What’s more important, money or the marriage?” and “How much money is enough?” It’s good for the marriage if a balance is struck.

Marriage thrives on generosity. Make sure the less-moneyed spouse has a stake in the financial success of the other spouse. Make sure the marriage builds up marital assets and security for the less-moneyed spouse. Make sure that provisions about a spouse’s ongoing business are fair. Otherwise, the result could be an imbalance between the efforts of the business spouse that redound for him- or herself, and the efforts of the other spouse, which may be 100% towards supporting the marriage. This is a recipe for marital disaster.

Think about, and make plans in the prenup, for mutual inheritance terms to apply if a spouse dies when the marriage is ongoing. Many prenups totally omit this important protection that signals love and caring for a spouse.

Also remember, the more generous the prenup is, aside from having intangible benefits supporting the marriage, the more enforceable it will be. And a spouse will have little desire to litigate a generous prenup that provides reasonable security if there is a divorce. Courts tend not to overturn prenups that have reasonable terms providing adequate security for the less moneyed spouse.

8. What to do about shadow parties.
Often a prenup is initiated by the parents of one of the parties. These parents have inherited or self-made wealth, and are very protective of it. They want to be able to transfer wealth to their children by gift or inheritance without it being subject to the claims of a child’s spouse in a divorce. Not surprisingly, this can easily poison the relationship with the parents and their child’s spouse-to-be.

Third parties who are exercising control are termed “shadow parties” by lawyers and mediators. They put their child in a very bad position: you can please your parents and comply with their demands and hurt your spouse to be, or you can please your fiancé, and alienate you parents. Many times, worsening the situation, the future spouse is represented by an attorney chosen by the parents. That “family” attorney follows the marching orders of the parents, otherwise that attorney would lose their client (the parents). This is not rocket science. It happens.

If possible, the more-moneyed future spouse should retain an attorney independent of his or her parents. The mediator should let both parties air concerns about the impossibility of pleasing both the less-moneyed spouse and the other party’s parents. That party is truly between a rock and a hard place.

Work with the clients to build equity and generosity into the prenup. These can be structured in tandem with the parents’ desire to protect their wealth from a child’s divorce. A good term to think about which balances these two aims is to have income and perhaps some principal coming from the parents to their child become marital rather than separate property upon receipt.

9. Start with a term sheet.
Many prenups start with a draft document from one of the attorneys, generally the attorney for the more-moneyed future spouse. The terms of the prenup are imbedded in this draft. This sets up a negative dynamic. The first draft draws a line in the sand. It is an uphill battle to change the terms of it, even with the consent of the more-moneyed party. The memory of those very negative initial terms damages the relationship.

This is why mediation is such a good way to start the process. The parties can discuss various prenup terms and mutually decide on how they would like each issue handled. I write this up as a “term sheet” and send it to my mediation clients to review and provide further input. When the terms are set, then it’s time to write up the agreement.

10. Writing the agreement.
If the mediator is an attorney who is admitted in the state where the couple lives, it is often preferable for the first draft to be written up by the mediator. It should reflect the terms agreed to by the mediation clients clearly and accurately, but also reflect their situations and their aims. I don’t believe in having a prenuptial agreement that is in “legalese” and difficult for clients to understand, even though, to attorneys, the language might seem elegant.

I always start the prenup with a fully developed “Statement of Facts” section, which states information about the parties, their backgrounds, families, and careers. It includes information such as whether either of their parents’ marriages ended in divorce, and whether it is a first or subsequent marriage of the parties. It also includes their aims in entering into the prenup. These aims serve to project the love and caring they feel for each other. After all, they are getting married, and this is not just a financial business contract between two unrelated people.

In having their situations and aims reflected up front and center in the prenup, they will both feel more connected to the terms, which they have mutually created during the mediation process. When written this way, the agreement seems softer, more loving, and not harsh, like the impersonal template often used by attorneys.

When the draft is approved by both of the parties, then it can be sent to their respective attorneys for review and input.

If the mediator is not an attorney, it would probably be best to refer it to an attorney to write it up, based on the term sheet. (Each of the parties needs to be separately represented.) It’s probably best to have the parties agree that the attorney for the less-moneyed spouse should write up the first version. That will help level the playing field.

11. How to handle reviewing attorneys.
Feedback from attorneys can be very useful. They can make the document better, and find places where the drafting needs to be clarified. Reviewing attorneys can also find issues that were not adequately addressed or were omitted. They will provide independent advice to their client, which is very important. The clients, of course, can choose their attorneys at the outset, and consult with him or her during the mediation process.

The best way to get helpful feedback from attorneys is for the couple to choose mediation-friendly, knowledgeable lawyers. The mediator can and should provide the couple with a list of recommended review attorneys. My list includes attorneys who are very experienced in divorce law and prenuptial agreements, and who have a similar philosophy as mine in making prenups as generous as possible in order to support the marriage. My list also “screens” to make sure the reviewing attorneys are also either practicing mediators or collaborative lawyers (or both, as is often the case).

I refer couples to lawyers with a divorce law background, rather than an estate planning or business law background. Divorce lawyers tend to have more sensitivity to the role of money and marriage. Much of the prenup contract deals with the terms of a possible future divorce. Divorce attorneys have the requisite experience in divorce law and can better think about and draft these provisions.

It’s the clients’ choice as to whether they want the mediator to be copied on the drafts as they are generated by the reviewing attorneys. The mediator is sometimes in a good position to pick up on what the parties intended as the attorney drafts come through. Sometimes the reviewing attorneys need to consult with the mediator on an issue and sometimes an issue may find its way back into mediation to be resolved.

Conclusion:
Marriages can be damaged by a destructive prenup or by a harsh prenup negotiation process. Mediation can provide an excellent method for couples embarking on this difficult (and at times, treacherous) undertaking. It’s important for mediators with suitable backgrounds and skill sets to enter into this field, and to make the public aware that this type of mediation service is within reach.

https://www.mediate.com/articles/IsraelL25.cfm

What's On Your Agenda?

9/3/2020

Joke Of The Day

9/3/2020

JOKE OF THE DAY - A child asked his father, "How were people born?" So his father said, "Adam and Eve made babies, then their babies became adults and made babies, and so on." The child then went to his mother, asked her the same question and she told him, "We were monkeys then we evolved to become like we are now." The child ran back to his father and said, "You lied to me!" His father replied, "No, your mom was talking about her side of the family."

What Have You Built

9/3/2020

HAVE YOU BUILT ANYTHING? On the Island part of Palm Beach, in Florida, there are about 40 billionaires that live there. Old and new money, wise and some not so wise. Success is not about the billions of dollars they have by their names, it is about what they built that generated the professional and financial success. Success doesn't come fast, it is built.

What have you built?

What will you build? Lead by building something.

Michael Lodge, NCPM www.lodge-co.com

IRS NOTICE

9/3/2020

IRS ISSUE - Last week, accountants received reports from members whose clients have gotten unusual notices from the IRS. These notices claim the individuals owe taxes despite having paid the taxes before July 15th. Although the checks for the taxes are reported to have cleared the bank, the IRS is sending out notices dated Monday, August 17th, that show the tax due along with penalty and interest. In response to feedback from members experiencing similar issues, the issue is a result of IRS employees being sent home as a result of the COVID-19 pandemic. Many of the employees who were sent home are responsible for opening the mail that is received by the IRS. These employees are only now returning to work. The IRS is advising that tax preparers call the IRS and use their PTIN to discuss specific accounts that have experienced this issue and request that a hold be placed on the account. The IRS has indicated that hold of up to 8 weeks may be requested. Most importantly, the IRS has stated that taxpayers should not put a stop payment on the check. You must wait for the IRS to process the check. Once a hold is placed on the accounts, the system will catch up with processing the payments automatically.

Virtual Mediation Is Here To Stay

9/3/2020

VIRTUAL MEDIATION - I have been doing mediation on-line for quite a long time, even before Covid broke out. Since I do mediation work all over the United States from my little office here in Palm Beach, Florida, I have gotten very use to using zoom and other apps to schedule and hold mediation sessions. However, I do like the ability to work with clients live in an office, especially if it is a family mediation issue. It makes it more personal and I can read the body and face expressions. This is a good article about virtual mediation and how it is here to stay, especially in the construction mediation side of it. Good read

https://lnkd.in/eJYVgQJ

Michael Lodge, NCPM - Certified Business Mediation - www.lodge-co.com

Ethics and Conflict of Interest in Divorce For Accountants

9/3/2020

Michael Lodge, NCPM - Certified Business Mediator - www.lodge-co.com

When you are in private practice you run across clients that bring in their family, first it is the son and his wife, his mom and dad, and maybe a couple more. You never know. The problem arises when they get divorced, it puts you as their tax practitioner and advisor in a serious legal situation.

I had a young couple who started to have their taxes done with my firm in Los Angeles. I did two or three years of their returns and then they decided to get a divorce. However, they failed to tell the rest of their family they had gotten a divorce. So the first conflict happened because they were all doing their taxes in my office. The mom and dad, son and daughter-in-law However, I was then contacted by the former wife and she requested all of the tax returns and documents I had prepared. The issue was that the husband always took care of the tax returns. They filed separate, he provided the documents to work off of, and she wanted to know what I had been supplied with. Which means at the point it appeared there may be a legal risk to working with these individuals. And I certainly would be asked questions from his parents who were my clients. This divorce and family issue had put me into a situation of ethics and conflict of interest. I certainly could not represent either one of them, the request of the former wife. The former wife had done work for my client mom in her business. Which I prepared the returns for. So it became a sticky wicket. I could not talk to anyone or prepare anyone's tax returns because there was too much of a conflict of interest. I had to drop all of the family as clients.

Divorce and accountants sometimes do not go together. It puts the accountant in a situation where both individuals can come after the accountant in legal action. The accountant hasn't done anything wrong but both sides are so mad that they will take it against the accountant if it gets down and dirty. I have seen this happen a lot of times with accountants, and it hopefully get meiated. The ethical thing to do is to end the professional relationship, unless they both agree it is OK for the accountant to represent each party. Ethically, you cool the relationship and let them move on to an accountant that can remain independent and there is no conflict. Best practice.

The Accounting Firm And Mediation

9/3/2020

Michael Lodge, NCPM, CRTP - Certified Business Mediator - Phone/Text: 818.252.5682 - www.lodge-co.com

As a business mediator and former owner of an accounting firm in Los Angeles, we had a mediation and arbitration clause in our retainer agreement that worked great with our clients in a dispute. Lucky for my firm we only had one that came up with a high profile client. Since I do business mediation I work with tax preparation and CPA firms on disputes or conflicts that arise, between client and accounting firm or their client and a business dispute. Even the AICPA likes mediation. The following article is from the CPA journal and is a very good read. In your next dispute that may happen, text me at 818.252.5682 or send me an email at info@lodge-co.com

_______________________________________________________

A practical guide to mediation for CPAs. (includes related article)
by Zimmerman, Philip

Abstract- The alternative dispute resolution approach known as mediation should be considered first by CPA firms before resorting to other methods such as arbitration and litigation. In mediation, relationships with clients can be maintained because there are no winners or losers. Moreover, mediation entails only minimal risk because either party can decide to end the process any time it wants. In addition, mediation costs less than either arbitration or litigation. In mediation, the accounting firm and the other party meet with a mediator, always a neutral third party, who is tasked with helping in finding an agreeable settlement of the dispute. The mediation process is usually quick and has a high success rate. Mediators should be respected by both parties, independent, experienced, trained, creative, flexible and diligent.
The author describes the mediation process from a CPA firm's point of view - who, what, and how - as well as the resulting advantages. It works for the client as well.

An emerging process for helping CPAs manage their exposure to the risk of litigation is the increasing use and availability of a form of alternative dispute resolution (ADR) known as mediation. The advantages of the process are not one sided; the other party - the user of the CPA's services - also has the potential to benefit from it.

There have been several articles (see accompanying list) explaining various ADR procedures. But these articles either emphasize arbitration or stress the advantages of mediation from a legal point of view. For the CPA firm considering mediation, there is essential information to be absorbed, including appropriate engagement letter clauses, the extent to which various insurers embrace mediation, and an understanding of the mediation process from the CPA's point of view.

Most underwriters of CPA professional liability insurance now allow mediation as an ADR method and some even subsidize it in whole or part ILLUSTRATION FOR EXHIBIT 1 OMITTED!. At least one major CPA firm is testing the use of mediation in disputes with its clients by including mediation clauses in its engagement letters for certain of its offices. Marry judges, because of court overload, require disputing parties to use mediation in the hope of avoiding lengthy court hearings. A lengthy heating usually occurs when a case includes a great deal of factual material, as in many disputes involving financial matters.

What Is Mediation?

Mediation as it relates to resolving a dispute between a CPA firm and a client or other third party is a facilitated negotiating process in which the firm and the other party to the dispute meet with a neutral third party, the mediator, whose sole function is to try to assist the parties in reaching an acceptable settlement. Mediation is generally a quick procedure that, if properly organized, can be accomplished in a few meetings, with an extremely high success rate. The process is voluntary and either party can terminate it at any time.

Who Can Assist with the Process? The parties may retain attorneys or conduct the process without them. It is unusual for the parties to come to a mediation conference with an attorney, although there generally are consultations prior to or after a particular conference. In complex cases, however, liability insurance underwriters may also suggest the presence of a CPA firm's attorney at the conference. The parties should be represented by persons from their organizations who know the facts behind the dispute and have the authority to resolve the dispute or have easy access to someone who has such authority. This ability to negotiate and settle is essential to the mediation process.

The AAA experience is that settlement is reached in 80% of the disputes submitted to it. JAMS/Endispute, Inc. has reported that 90% of the cases submitted to it during 1992 were settled. Other knowledgeable mediators state that 60% to 95% of all disputes are settled by mediation.

How Does Mediation Differ from Arbitration? Mediation is a voluntary dispute resolution process that does not become binding unless the parties reach their own settlement of the dispute. Arbitration differs in that an arbitrator makes a determination to resolve the dispute that is binding on all the parties. Mediation is also more effective in saving the relationship between a CPA firm and its client in the event of a dispute.

Mediation Is Preferable to Litigation. Even if a CPA firm is victorious in litigation, there is usually a large out-of-pocket cost for counsel, experts, depositions, copies of documents, etc. Litigation also takes its toll through the high cost in time lost from work and emotional trauma.

Satisfaction with litigation is generally low because control, by the involved parties, is lost in the process. Counsel argues the case if it goes to trial, and if the case is settled before trial, the attorneys generally have proposed it based on the hazards and costs of litigation. If the case reaches a jury, the outcome is extremely unpredictable.

Litigation results in a winner and a loser. Because of its adversarial relationship, the process tends to destroy even long-standing client relationships.

The cost of mediation is lower than either arbitration or litigation. Since mediation does not usually require a great deal of an attorney's time, and is generally successfully concluded in a few days, the out-of- pocket costs are not considerable, and the loss of valuable partner and staff time is minimized.

How Does Mediation Work?

A CPA firm and a client who are in a dispute can enter the mediation process, either under a mediation clause that was part of an engagement letter entered into prior to the dispute, or they may agree to mediate after the dispute arises if there was no prior arrangement. There is also the possibility that a court can order mediation after litigation has started.

Sample mediation clauses for engagement letters can be obtained from one of the ADR agencies or adopted from an existing model with the help of an attorney.

The Mediator. Under AAA rules, the AAA selects the mediator subject to approval by the parties. The other ADR agencies maintain lists and biographies of experienced and trained mediators. The parties involved then approve or select a mutually agreeable mediator. The process for selecting an appropriate mediator is covered in greater detail later.

The mediator's task is to help the parties resolve their dispute in whatever manner the parties decide and the mediator will act neither as counsel nor advisor to the parties. The parties should consult their own attorneys during the process and have them review the final settlement.

Preparation. It is advisable for the CPA firm to ready itself in advance for the mediation by preparing a negotiating plan that does the following:

1. Defines the issues involved.

2. Identifies the firm's interests and prioritizes them. In mediation, "interests" means the needs of the parties that relate to the dispute or the area affected by the dispute. These could include a CPA firm's economic interests (e.g., desire to retain the client), confidentiality (desire to preserve the firm's reputation), and timing (desire to resolve the case quickly to avoid loss of partner and staff time).

3. Explores possible solutions, including an initial proposal - high enough to allow for further negotiation - and a bottom-line proposal.

4. Determines the strengths and weaknesses of its case.

5. Gathers facts and documents to support its case.

6. Anticipates the other party's needs, interests, demands, positions, strengths, and weaknesses.

7. Develops a strategy and tactics, considering the interests of the other party.

To expedite the process, each pasty may prepare and supply the mediator and the other party with one or more position statements. The acceptance, depth, and contents of these statements need to be agreed on among the mediator and the parties.

The Mediation Conference. The next step is the mediation conference. The mediator first describes the ground rules to be followed. The initiating party presents its side of the dispute, what it wants, and why. The other party then responds in a similar fashion. The mediator tries to understand how each party views the dispute, their interests, and their positions. As previously noted, depending on the nature of the dispute, it may or may not be necessary for the parties to have their attorneys at the mediation conference.

When the first session reaches this point, the mediator will usually seek adjournment and caucus separately with each party. During the caucus, the mediator tries to clarify the facts and positions, while trying to loosen frozen positions and explore alternative solutions. The mediator tries to make each side deal realistically with the other's arguments. A party's position usually changes after it hears the opposing party's arguments and a settlement range may begin to emerge. The mediator then has the parties focus on the risks and costs of litigation in relation to other alternatives. At this point, there may be one or more joint sessions or caucuses, during which the mediator helps to narrow differences between the parties and obtain agreement on as many issues as possible.

Settlement. In a caucus, the mediator may suggest a final settlement, but it is the parties themselves that negotiate the final terms in a joint session. It is up to the mediator to make sure that the agreement is complete and sufficiently clear to settle the dispute.

The final step is the signing of a written settlement agreement and the exchange of releases. If a settlement is not possible, and this rarely happens, the parties may agree to arbitration, or go directly to litigation.

Selecting an Appropriate Mediator

The selection of an appropriate mediator enhances the chances for a successful mediation and an ultimate resolution of the dispute. The mediator should match the needs of the parties and the type of dispute, as well as be prepared to overcome the impediments to resolving the dispute.

The prime qualification for an appropriate mediator is that he or she is respected by both parties. The mediator should also be independent, experienced, trained, and have the time to resolve the dispute. Among the desired personal qualifies is creativity, including flexibility and adaptability; diligence, including persistence and an interest in preparation; and leadership, including patience and the ability to bring the parties together.

Independence of the mediator is necessary for a successful mediation process; it helps to reduce the hostility of the parties by facilitating a frank discussion of each side's interests, strengths, and weaknesses. An independent mediator can aid each party in assessing the reality of its position. The parties then usually narrow the issues, and excessive demands are deflated. The result is an extremely high percentage of cases ending in a voluntary settlement at a minimum of cost in time and money.

There is no reason the parties can't interview the mediator and satisfy themselves that the mediator has the necessary background, experience, approach, and personal qualities desired. It is generally preferable for the parties to jointly interview the prospective mediator to avoid any perception that one of the parties unduly tried to influence the mediator. Because the AAA rules provide for it to select the mediator, the appearance of neutrality is enhanced. The only contact with the mediator prior to the mediation and, except for caucuses during the mediation, is through an intermediary, the AAA.

The two main approaches to mediation are -

* the "evaluative" approach, which relies on expertise in a technical area, such as law or the accounting profession, and the ability of the mediator to evaluate the case for each side and make recommendations, or

* the "facilitative" approach, which relies on having the parties articulate their interests, the narrowing of these interests, and the use of other dispute-resolution techniques to help the parties themselves resolve their differences without the mediator's intervention.

A CPA firm may be better off in certain cases with the facilitative approach. It should be prepared to deal with the fact that some litigating attorneys have difficulty in accepting the facilitative approach and are comfortable only with the evaluative approach; their experience is with a process that relies on rules and precedent.

Advantages of Mediation

Putting the whole process together, the advantages of mediation are many:

1. Client relationships can be maintained.

2. There are no winners or losers.

3. Costs are usually less for the CPA firm and its client. Much less legal advice is required. Discovery is limited because the parties have all of the facts or documents and key witnesses within their control and, by mutual agreement and in the interest of reaching a settlement, will agree to supply them voluntarily.

4. The mediator selected understands the parties' businesses.

5. Even if a CPA firm wins in litigation, the costs are generally significantly higher than in mediation, and the CPA firm usually bears a meaningful amount of them. This is true even if the firm is insured because of the deductible and the loss of productive time.

6. There is little risk to mediation since either party can terminate the mediation at any time without prejudice and proceed to either arbitration, with the consent of the other parry, or litigation.

Mediation's disadvantages arise when litigation is needed to achieve certain objectives or other conditions exist such as the following:

* A nonconfidential process is needed,

* A legal precedent is desired,

* Public vindication is felt to be important,

* Maximizing recovery is important,

* More is involved than a simple dispute, or

* The rights and responsibilities of third parties are involved.

The Process of Mediation

The CPA firm planning to use mediation or have it available in the event of a dispute should do the following:

1. Consult with its liability insurance underwriter to see if mediation is acceptable and what special, if any, requirements it has.

2. Work with an attorney to develop special language to be included in new engagement letters. Also, some of the leading CPA liability insurers will provide suggested engagement letter wording requiring mediation.

3. Explain to partners why mediation is good for both clients and the firm and provide them with answers to questions clients may ask of them.

Answers to Some Myths About Mediation

A number of myths are circulating about the results of using mediation.

You give away your case. The language setting up the mediation can make what is discussed confidential, not admissible (if solely arising from the mediation) in any subsequent litigation, and prevent the mediator from appearing as a witness for either party.

Mediation doesn't prevent a non-client from suing the CPA in another action. Most clients of CPA firms are privately held and third party suits are in the distinct minority.

Mediation can go on for too long and delay the resolution of the dispute for an unreasonable time. A time limit can be put on the proceeding, unless extended by mutual consent.

Clients will not want to give up a jury trial and the right to appeal an unfavorable verdict. If the mediation is not successful, the client can still litigate. Even if an unfavorable verdict is appealed, the outcome is uncertain and the cost is high in money and in the continuation of the emotional trauma.

Insurers won't approve mediation. Most insurers now approve mediation, and some even are willing to absorb part or all of the cost.

Mediation seems to be a win-win situation. The benefits of at least making it the first line of defense are so compelling that all firms will want to give it serious consideration.

Mediate Before You Litigate

9/3/2020

Michael Lodge, NCPM, CRTP - Certified Business Mediator - Phone/Text: 818.252.5682 - www.lodge-co.com

Four years ago Christian (not his real name) and Tom (not his real name) formed a healthcare company that provided medical supplies and equipment to hospitals, skilled nursing facilities and private care. They spent a lot of time developing this business, they even went as far as getting it certified by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). I have gone through the accreditation process for my own firm and it can take a very long time to get everything ready, documented, procedures written, and then certified. My certification took about 6 months. But they got it done and they needed it in order to bid with JCAHO certified facilities.

As a lot of small startup businesses they needed capital to get everything done, buy the equipment they needed to provide to medical facilities. They went out and found nine investors to help them. An LLC was formed and became operational once the investor funds were available. However, there is always a however to every story. The nine investors saw that it was going to be a good business, everything had been formed and certified, so they started meeting to find a way to take over the business from the two founders. They came to me and asked for mediation.

As a mediator you have to find out if the remainder of the parties involved want to mediate. I got on the phone and got them all to agree to mediate. The focus of the mediation was not to keep the LLC together with the investors, it was to remove the investors and dissolve their relationship with the LLC. Now, I had never had nine people in one mediation, so this was a learning experience for me also as a mediator. My board room table thank goodness had enough seats for everyone.

As all good mediators do I opened up the mediation with an opening statement, the rules, and then allowed the two original partners present their concerns and their needs to take back the ownership interest of each partner. They did a very good job, they knew what they wanted to say and had gone over their presentation. It was very professionally done. The Mediator asked the followup questions. I then let the other nine, whoever wanted to present their side. They were all over the place, some wanted to continue, others wanted to leave. The most greedy ones wanted to leave and wanted their investment funds back. Finally, all nine agreed to leave the LLC and all funds were returned to the investors. Now, remember all these investors did was put money into the LLC with no participation whatsoever, but they smelled the money and in the end they all went out and started their own healthcare supply company, but it failed in the end.

This could have gone to court, but with mediation everyone sat down, acted like adults, and an agreement was done in one meeting with a mediator. I shutter to think what would have happened if it did become a litigation and nine attorneys got involved. Mediation was done in less then four hours at less the cost of court fees and attorney retainers. Mediate and resolve disputes in business.

A Case To Use Mediation

9/3/2020

Michael Lodge, NCPM, CRTP - Certified Business Mediator - Phone/Text: 818.252.5682 - www.lodge-co.com

I always encourage businesses to mediate their disputes through mediation. A private mediator should get involved before it becomes a part of the legal world. Try to resolve the disputes in a professional way with a third party that can bring both sides together. Legal disputes become very costly and may take a long period of time. However, in mediation you can bring a Mediator in and work with both parties to get to an agreement. Here is a good article that provides a better argument for mediation.

Mediation is a process whereby an independent third party assists two or more consenting parties to resolve a conflict by helping them to come to a mutually acceptable solution or compromise. The mediation is considered a confidential process and the mediator may not subsequently be called into court or otherwise obliged to disclose the information received during the mediation. The mediator assists the parties to identify issues, vent, if necessary, discuss causes of the conflict and explore options for an outcome satisfactory to all, some of which may not be available in the litigation process.

The mediator does not sit in judgment of the parties, and although a party who is or appears to be biased ought not to participate in the mediation, it is important for the parties to understand that they are the ones who will decide as to the final outcome; however, it is desirable to have an impartial mediator. It is thought to be empowering for the parties to be the ones to make a decision on their own terms as opposed to having a decision imposed on them at the end of a long and no doubt expensive litigation.

Often matters that are litigated in the courts turn on a relatively narrow issue, but because of hurt feelings and for a variety of other causes each party is determined to fight to the bitter end, when the mediation process is shorter and thereby much cheaper, and allows the parties to “save face” in making concessions on their own terms.

Some of the tools used during the mediation are the mediator's opening statement, each party being allowed a similar amount of time to present their case as they see it and the mediator's summary of each party's positions. It may be necessary to hold a caucus with each party as a means of reducing tension and putting a little distance between the parties, or just if there seems to be no movement in the discussion. The mediator is entitled to ask questions in order to clarify issues and may use other tools in order to narrow the issues.

Hopefully a mediation ends with an agreement, but at times parties are unable to resolve their issues at the time, but the mediation may assist in reducing hostility; and mediations may sometimes give rise to settlements after the mediation but as a direct result of the mediation.

FULL ARTICLE:

Tips To Settle Business Disputes

9/3/2020

Michael Lodge, NCPM, CRTP - Certified Business Mediator - www.lodge-co.com

In my practice I do mostly business mediation because that has been my focus of life since leaving school. I love business. But in business there are conflicts, internally and outside that happen, and they have to be resolved. So, the following article talks about how to settle business disputes, and mediation is your best bet in using a third party to help guide both sides.
________________________

For practitioners of the law, mediation is a well-known concept that became part of their lives. To business people, however, the idea of mediation is foreign. When they enter a dispute, they expect to win the case with their arguments. Instead of thinking about cooperation towards a final resolution, they look at business disputes as sources of conflicts.

A neutral third party has a lot of work to help them sort out the situation. Their goal is to help the two businesses find a solution that helps them maintain the ongoing relationship.

10 Mediation Tips: How to Settle Business Disputes
1.Get All the Needed Documents
When arranging a mediation meeting, you should have all needed documents with you. Tell all parties to bring the documentation that they plan to show during the process.

2. Decision-Makers from Both Sides Must Be Involved
If the decision-makers send representatives who cannot make decisions without consultation, the mediation process will be prolonged and ineffective. Businesspeople are busy, so they like sending their lawyers to mediating meetings. However, a lawyer doesn’t have any power to make decisions in their place.

When decision-makers from both sides take active price during the process, the mediator will gain an understanding of their concerns and opinions. The mediator should do their best to bring the two parties together. If that’s not physically possible, an online video conference might be an option.

3. Listen, So You’ll Learn
Listening is the point where all mediation techniques start. Every negotiation process starts by listening. When you listen to the parties of a business dispute, you should be prepared to hear sound arguments on both sides.

If you don’t understand something, ask questions. If you’re not sure if you understood correctly, repeat what you heard so you’ll make sure you’re getting everyone’s perspective.

4. Nobody Should Feel Like They Lost
Microsoft took Motorola to court in 2012 because they couldn’t solve the dispute through mediation outside court. Both sides came well-prepared. Analyze that case. What would you suggest as a mediator? Instead of deciding who’s right and wrong, your goal is to bring both parties to a meeting point.

5. Tackle All Issues
No matter what mediation techniques you implement, one rule is always valid: you shouldn’t leave any issues unsolved. If you bring the parties to a solution on the main point but you leave something unsettled, the remaining issues will arise again.

It’s best for mediators to use to do list apps during the preparation process. They will note down all underlying issues, so they will discuss them in detail.

6. Include Both Parties in the Brainstorming Process
Brainstorming is one of the basic mediation techniques that lets you think of potential solutions. Mediators usually cover that stage alone, and then suggest the solutions one by one to the parties in the process. Why not try a different approach? The decision-makers can take part during the brainstorming stage, so you’ll see what solutions they are willing to accept.

Joint brainstorming may be the source of deeper conflict. Explain to them that this is just the first stage, during which you’ll present ideas. Nothing is mandatory and you’re trying to reach a solution. Everyone is allowed to suggest anything.

7. Identify Clear Goals
The brainstorming process helps you identify the goals that both parties would like to reach. In the ideal case, they would continue their business collaboration after you solve the issues. That’s the main objective, but it may not be possible to achieve it. An effective mediator should bring both parties towards a goal that’s realistically achievable and acceptable for them.

8. Familiarize Your Clients with the Process
Both parties should understand what mediation means. Explain how long you expect the process to take, what goal you’d ideally achieve, and what it will mean for your clients to settle the issue in the calmest way possible.

9. Be Creative
You won’t find too much creativity when you look at notable mediation cases. Everything seems to be done by the book. In business mediation, however, you might need to offer creative solutions. Maybe none of the tried and proven approaches will work. In that case, you can try something different. You can invite your clients to communicate directly with each other, include a neutral expert to provide their opinion, or create PowerPoint presentations that showcase the outcomes of each point from the narrowed-down list of solutions.

10. Make It Less Stressful
When conflict arises between powerful businesspeople, each party wants to question the authority of the other and prove their own influence in the industry. You’re going to spend hours or days in discussion, and the tension won’t help anyone. Mediators have to do their best to make the process less stressful. Even humor is a good idea when used tastefully.

It’s a Challenging Process
The business mediation tips listed above give you foundational understanding of the process. When you start practicing it, you’ll realize that each case brings a new challenge. Mediators learn through practice, but it’s important for them to understand the theory behind mediation, too.

FULL ARTICLE: Written by James Dorian https://www.mediate.com/articles/dorian-mediation-tips.cfm

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