In July 2011, Wisconsin had the 10th highest foreclosure rate in the United States, only four spots behind the State of Florida.  Several initiatives in Wisconsin have attempted to inject mediation into the foreclosure process, with varying amounts of success.  Purely voluntary processes are flailing – with lenders refusing across the board to even attend the voluntary mediations.  More suggestive processes are seeing varying amounts of success.

However, it seems that the Florida program has also been slow to gain ground.   (The Florida program requires that lenders try to reach a mediated agreement prior to seeking judicial involvement.)

A recent report from Florida shows that only 3.6% of these mediations are resulting in written agreements.  This is a far cry from the generally stated 85% national success rate for mediation in general.  Why such a vast disparity?

First, the 3.6% number is of all cases, not just the cases in which the borrowers agree to take part in the mediation process. (As stated above, the program is compulsory for the lenders – it is voluntary for the borrowers).  The settlement rate jumps to nearly 25% when the mediation is actually accepted by both parties.

Second, the nature of foreclosures has an inherent power imbalance.  Mediators are trained to be cognizant of a power imbalance and must work hard to make sure that the power imbalance does not affect a party’s ability to self-determine an outcome.  With the mountain of paperwork that they must sign between the promissory note, mortgage, rights of assignment, and other forms, borrowers may feel that there is nothing that they can do – perhaps due to a lack of knowledge of options.

Third, having worked as counsel for banks in a foreclosure, I know that the bank is often not interested in “creative” solutions.  Deed-in-lieu of foreclosure and maybe a payment plan – this was the limit of the creativity the banks would normally show in a foreclosure situation.  And why should they show more?  The law, the contracts, and the facts are all in their favor.  There is little need to negotiate.

However, is a 25% success rate that bad?  Getting 1 in 4 contested foreclosures out of the court system is a great thing.  In July 2011, there were 4,534 foreclosure filings in Wisconsin.  Even at 3.6% success rate, there would be 163 fewer foreclosures per month.

Wisconsin should look into the Florida program, as well as the programs in Ohio and New Jersey, and should find a way to add this compulsory mediation step into the foreclosure process.

Editor’s note:  Marquette University Law School has a Milwaukee Foreclosure Mediation Clinic.

Too often when litigators are choosing a mediator (or even worse when a sitting judge is ordering mediation at a scheduling conference) the conversation goes something like, “So, should we use Judge X or Judge Y?”  What does being a former judge necessarily have to do with being a mediator, let alone a good mediator?

As the late great comedian Mitch Hedberg said,

When you’re in Hollywood and you’re a comedian, everybody wants you to do things besides comedy. They say, “OK, you’re a stand-up comedian — can you act? Can you write? Write us a script?” . . .  It’s as though if I were a cook and I worked [] to become a good cook, they said, “All right, you’re a cook — can you farm?”

I am certainly not the first to recognize this disturbing trend. 

The State of Florida had such a problem with retired judges deciding that “a little extra retirement income would not be so bad” and hanging out their shingles as mediators that the State created one of the most comprehensive mediator licensing rubrics in the Nation.  Now you must show actual mediator training and a mediation practicum prior to content specific licensure, ensuring that these former judges are not merely former judges but also knowledgeable mediators.

Consider the following, albeit not perfect, analogy. Would you go in for open heart surgery – a surgery that could prolong your life for decades – with a staff of nurses who are skilled in only hospice care?  Surely not.  Judges are skilled in understanding the end product of litigation, the trial, just as hospice nurses are skilled at understanding the end of life.  Judges obviously do much more than just oversee trials – but the analogy stands in a limited fashion.

There are four possible reasons why an attorney would seek the services of a former judge mediator over other possible practitioners:

First, the attorney has failed to prepare the client properly for litigation.  The client was sold on the idea of litigating but did not actually understand the cost, the holes in his case, or has over-inflated his sense of entitlement (more on this in the second type).  This type of case preparation does little to instill confidence (as a mediator I end up spending most of my time in these cases trying to make the attorney not look bad) and probably ensures an unhappy, or non-repeat, customer.

Second, the attorney has failed to control the client and is looking for someone else to do that for him.  This happens, even to the best attorneys.  Clients start Googling this and that, find a few web resources, and decide that theirs is the case of the century.  At this point, there may be no chance of talking the client out of his purported million dollar jury verdict, no matter how many jury reporters they are shown.  Alternatively, the attorney may have failed to explain that the initial demand was not a real valuation for the case, but merely a starting point, and when the client read the demand letter, they started believing every word.  Now, in order not to make an unhappy, or non-repeat, customer, the attorney is looking for a mediator to tell the client that their case is not as good as the “McDonald’s coffee lady.”  In these, a former judge offers the reality-check you are seeking, but once the pie-in-the-sky is gone, what’s next?

In these first two instances, almost any attorney mediator (and many non-attorney mediators) can do this – and they may have additional skills and training that make them more ideal than a former judge at doing this.

The third potential cause of this situation, and my sense of optimism hopes this is the most common, is that the attorney is having trouble communicating with the other party and is looking for a neutral evaluator to give an opinion concerning the merits and/or value of a case, from which a negotiation can begin.  In this case, the attorney is not looking for a mediator.  He is seeking an early neutral evaluation, or possibly a non-binding arbitration, followed by mediation.

Fourth, is that the attorney has never seen another way of mediating cases.  Former judges are just who is used to mediate cases in their area.

Let me start here with number four.  Even if this is the case – and there are many areas of the country where this is the case – search out other mediators.  Having trained numerous mediators, including judges, attorneys, and non-attorneys, I can tell you that I have found excellent mediators in all three of these categories.  I have also found people in all three categories that I have found to be sorely lacking in mediation skills.  Skills in one specialty do not necessarily relate to another.

The third situation is harder.  You find yourself wanting the “forty years of experience” or the “twenty years on the bench” to tell both you and the other party what the case is worth.  That is commendable.  This is a legitimate process, but is not mediation.  It is called early neutral evaluation.  Another way of looking at early neutral evaluation is that it is like an informal, non-binding arbitration.

What happens at your typical mediation when your judge-mediator gives you an unfavorable “ruling” that is contrary to everything you know and understand about the law?  Are you going to spend the rest of the day mediating or are you going to cut bait and walk away?

Consider, rather than providing your mediation statements to Ms. Former Judge Mediator (which are really your first draft of either your summary judgment motion or your trial brief), instead you send the exact same thing to Ms. Former Judge Early Neutral Evaluator, who responds to both parties with a written evaluation.  The parties then take this written evaluation to a mediator.

The mediator can utilize this evaluation as “objective criteria” against which to compare and contrast offers made by the parties, without being wed to the decision or having any stake in the outcome. This allows the mediator to remain truly neutral. (Personal anecdote – for my first mediation in private practice I used one of the “usual mediators” in the area.  Based on our premediation statements, he came in with his number valuation on the case. His view was that my client owed $50,000.  My client was not willing to go higher than $5,000 at mediation.  Because the mediator offered his own opinion early on that the case was worth 10 times what we were offering, he could not continue assisting toward a resolution without losing face – therefore he was no longer neutral.  Ultimately the case went to trial, the plaintiff’s case was tossed on a motion for a directed verdict [on eight separate dispositive grounds], and the jury awarded my client $75,000 on her counterclaim.  The mediator’s lost neutrality possibly cost the other party at least $80,000 – plus attorneys’ fees.)

Worried about the cost of pursuing early neutral evaluation separately from mediation?  Ms. Former Judge Early Neutral Evaluator will likely charge you the same amount for her review of the case as she would have to prepare for mediation, plus some for the written decision, but the mediator (who may charge much less per hour if she is not a former member of the judiciary) can move directly into forming common ground and a possible resolution at mediation.

Ultimately, if you are commonly in situations 1, 2, or 4 above, your clients may be better served by utilizing a non-former judge mediator, or more generally a mediator who employs a purely evaluative process.  If you find yourself in situation 3, consider calling the service you are really seeking by its rightful title, early neutral evaluation, and explicitly discussing that goal with your client, your opponent, and the evaluator.

If you are having open heart surgery, use cardiac nurses.  And should the situation arise, use the hospice nurses when they are appropriate.

Andrea and Natalie conclude as follows:

The opportunity to put years of writing and work in the field to use to help out the city, state, and court system was an honor and unique opportunity for the law school. Both professors and students witnessed law school teachings put to work and had a rewarding impact in their own backyard.  It also has given us, as designers, far greater insight into the local government and local community than we would have had without this collaboration. Most importantly, mediation has worked in exactly the way that we theorized. The communication between the parties is vastly improved through the program than it would be otherwise. Parties have control over the outcomes, not perfectly, but again, much more so than they would have in the alternatives. And the program provides for efficient solutions as the city continues to struggle with foreclosures. Moving forward, we have to map student availability and interest with the needs and opportunities presented by the program. But we have witnessed the putting of theory into practice in a wonderful way while recognizing that we would have all preferred that this particular need not exist.

Their paper, entitled “There’s No Place Like Home: Applying Dispute System Design Theory to Create a Foreclosure Mediation System,” will appear in the Nevada Law Journal.

This does not mean people should shut down and stop working toward their goals; it merely means that people should seek to achieve their goals away from the table.If parties’ positions are in direct conflict, it is respectful to acknowledge them as valid and worthy positions to have (rather than assume that they have less value and should change). At that point in time, transparency in process is more important: “Ok. We disagree. We are now going to do X (such as, seek guardianship over your child in order to provide treatment you are refusing). Here are available resources for you to contact in order to respond (lawyers sensitive to area, advocacy groups, etc).”

Respect goes both ways and does not equate to complete acquiescence.  Disagreement can occur without losing compassion.

Thank you, Prof. Calboli, your comment was excellent.

As followers of the blog know, one of the high points of our trip to Israel was dinner with Justice Aharon Barak and his wife Judge Elika Barak.  We were also joined by their daughter, Tamar, who is a mediator.  Interestingly from the dispute resolution perspective, Justice Barak was the judge who brought mediation to Israel through the Supreme Court, permitting cases to be referred to mediation.  In this post, student Olga Kordonskaya reflects on the evening:

The Baraks were open and willing to discuss various topics, including dispute resolution and their professions. Justice Barak spoke about criticisms made of him and discussed them in various contexts to help us understand what role he saw for himself in the judiciary. Justice Barak, who brought mediation to Israel, shared his opinions on mediation and its role in Israel and as a vehicle of dispute resolution. Judge Barak, with a different perspective as a labor judge, discussed the role of mediation in the labor courts, as well as her experience as a judge there and the challenges that the labor courts face.

Their daughter talked about the challenges of being a full-time mediator in a country where most mediators hold other jobs because there is not enough work, her approach to mediation, and the value of different approaches. In this conversation we had a chance to learn about dispute resolution and to better understand the court structure and the challenges that structure is posing, as well as potential solutions. We also considered what it means to bring a constitutional question in a country with no formal constitution. It was a pleasure being a guest in their home and having a chance to speak with people whose perspectives on dispute resolution in general and alternative dispute resolution specifically come from varied backgrounds. Additionally, it was humbling to have such access to a family that is so essential to the country’s dispute reolution development.

Cross posted at Indisputably.

Round One: Attorney in a landlord-tenant action My client was involved in eviction proceedings against an intimidating ex-hockey player who refused to pay rent.  

I prepared relevant law to argue my case against the opposing team. They were not in a facilitative frame of mind and so instead of letting the landlord and tenant figure it out, I spent most of the time debating the law with the opposing attorney. This was real-world practice as I got to put theory to action and play an attorney. I also got experience interacting and representing my client.

Round Two: Client in a divorce. This was the most trying round of the competition. I played a client who was initiating a divorce against her spouse. There was no love in this round. As the client I felt frustrated and angry; the other side refused to even try to come to an agreement. The mediators assigned to the round did a poor job of moderating the outbursts and at the end, I was left with several options for asset division and the other side had tossed them on the floor. I have to say my partner Jesse played the role of attorney superbly and managed to calm me down several times. Even though this was a made-up scenario, I became emotionally involved in the client and was able to experience some of the emotions a client would feel in a similar situation. Jesse demonstrated that he could both calm me down and advocate my interests in a positive and cooperative way. At the end of the round, I felt much more comfortable with having Jesse as my attorney than if I had the opposing team’s attorney. This is because Jesse was attuned to my needs as a client, but he was able to be cooperative and civil to the other side. The opposing attorney on the other hand . . . well, I will just say it was an example of how not to act in the future.

Round Three: Mediator in a product liability case. This round got tricky. Instead of being the client or attorney, I was to co-mediate the proceedings with a fellow competitor. I had to be cooperative and fair while at the same time trying to look better and get the win at the end of the round. Derrick (my co-mediator) was a competitor with whom I had to work out distribution of time and allocation of responsibilities. We had two very strong and aggressive personalities plopped in a competition setting and were asked to work together to solve a dispute. Amazingly, we worked very well with one another. As I worked with Derrick, I was exposed to differences in approaches in problem solving and was able to improve my skills as a mediator.

The competition was a success. We did not make the final round, but the competition gave me valuable experience as a mediator and attorney.  I would highly recommend participating in either a mediation or negotiation event sponsored by Client Skills Board at Marquette University. March 26 is the yearly negotiation intramural in which any student can participate. If you would like more information about Client Skills Board or wish to participate in an upcoming event, please email President Olga Kordonskaya at Olgakordonskaya@gmail.com or Vice President of Competitions Andi Thompson at Andi.l.tompson@gmail.com.

The New York Times article he cites is interesting in a number of ways. First, as Paul notes, it confuses the process of mediation with the underlying applicable law. Mediation—voluntary as in our program or mandatory as in Nevada—occurs in the shadow of HAMP and other regulations and financial realities governing the ability of the parties to make loan modifications.

Second, the article highlights some of the issues with mandatory mediation where, it appears, there are a whole bunch of lenders showing up with little interest, or even ability, to modify the mortgages.  

And, it appears that this poor behavior on the part of lenders leads mediators to want to suggest sanctions which, apparently, has led to confusion in the Nevada program and raises policy issues regarding the role of a mediator as a neutral. This is an ongoing issue in terms of how we get the right people to the table, with the right documents including all of the necessary financial information, with the right incentives to mediate.

I am not sure that we have the balance right either but I do think that our program has several differences with Nevada that might be worth contemplating over time. We have a voluntary program in which the lenders can choose to decline mediation. At the beginning of our program, we did have quite a few declines, but in the last 9 months, the rate of declines is rather low. We actually think that as the legal culture as adapted to the program in Milwaukee, both the lender community and their attorneys plan for mediation when requested by the homeowner. (Requests for mediation have been at around 18 percent of all cases filed—actually higher than in Nevada last time we checked—and with our lower rate of declines, it may be that our voluntary program is mediating a higher percentage of foreclosure cases than their mandatory program but I don’t have their latest numbers.) Of course, the foreclosure picture in Wisconsin is radically different from the picture in Nevada from a sheer numbers standpoint, and as a judicial foreclosure state with an extremely long redemption period, our challenges are different from Nevada’s. This is one of the reasons our program believes there is no “one size fits all” solution and local law, DR culture and custom all need to be considered in a systems design context.

Another difference between our program and Nevada is that the borrowers, with the help of a mandatory meeting with a housing counselor, are in charge of getting their financials together and we (as the program administrators) are in charge of circulating all information in advance of a mediation. No mediations occur, in our program, without the lender having all the information it needs in advance.

As for two general concerns the New York Times raise, they are both good points. First, we too do not yet know whether trial modifications turn into permanent modifications. We are moving to study these, and definitely to track what happens, but most foreclosure mediation programs around the country do not have plans in the works to find out what happens past the mediation session. I expect to be blogging about this more as soon as we have data.

Second, the article notes that some lawyers in Nevada are concerned that banks have more power than borrowers in the mediation. And, yes, that is absolutely true. Mediation cannot fix the fact that, unless the borrower has some sort of legal defense like the bank was engaged in predatory lending, the borrower clearly has less power. Mediation is not a panacea nor can it change the facts on the ground. Most foreclosures, at least the ones we are seeing, have little to do with banks’ bad behavior and are caused by unemployment, illness, divorce, or any combination of those. What mediation does provide—and where I think our program and other programs probably excel—is ensuring that the lender will sit down with the borrower, that full information will be shared, that the borrower will understand the financial opportunities and risks of any loan modification, and that the borrower will feel heard and will have a say in the outcome of the mediation. At this point, I think that is the best we can do.

Cross posted at Indisputably.

The ABA Young Lawyer Division’s latest newsletter perpetuates that myth in an article entitled “Top Ten Mistakes Litigators Make in Arbitration.” Certainly, the article gives good advice in telling us what to avoid — serving excessive document requests, using delay tactics, not cooperating, not being prepared, introducing redundant testimony, and filing untimely submissions. However, that advice is equally applicable to litigation as it is to arbitration.

In my experience, the differences between litigation and arbitration are cosmetic. 

Although arbitration proceedings are often described as being less formal than traditional litigation, this lack of formality does not mean that the preparation is any less. Substantively, each type of proceeding has the same objective — to resolve a dispute. To that end, the tasks that must be taken to ensure that the dispute is resolved in your client’s favor are the same — strategies need to be developed, facts need to be gathered, documents need to be collected, and witnesses need to be questioned. And, I also suspect that it is just as stressful for a witness being cross-examined in an arbitration proceeding as it is in a court proceeding.

Likewise, I view mediation as part of the litigation process rather than a separate “alternative” because courts often order the parties to attend mediation. Mediation is a useful part of the litigation process as it forces both the attorneys and their clients to focus on the strengths and weaknesses of their positions and also the financial impact of taking the case to trial. This exercise in analysis should be engaged in early and often throughout litigation, but sometimes a scheduled mediation is a necessary catalyst to get the parties to focus on the “bottom line” and truly assess the strength of their positions.

To those of you who are still in law school, I urge you to consider ADR classes not as a separate practice area, but as another weapon in your litigation arsenal. Learning how to use ADR methods in litigation will serve you well as you help your clients to reach satisfactory resolutions of their disputes.

“Emily” came home from school one day and told her mom how she helped two girls make up with each other after a bad fight.  Emily knew the girls had been best friends, but they had gotten into a fight about a week before and were not speaking to each other.  Emily saw that both girls were miserable.  She knew that both of them wanted to make up, but they did not know where to begin and both were too proud to be the first to make amends.   Now, if you do not know, let me just say that a week in tween years is an eternity in real years, so Emily knew this was a serious situation and decided she needed to help these girls out. 

Emily asked each of them to come to her during the lunch hour.  When the girls saw each other they clammed up immediately, but Emily did not hesitate.  She asked each of them to sit down and they obeyed.  Emily then sat between them so that they could not see each other.  She asked one girl to sit quietly and listen while the other girl said everything she needed to say – no interruptions.  Both girls were able to speak openly with Emily physically between them.  By the end of the “session” the girls were on their way to becoming best friends again and Emily felt good about helping.  Her mom was amazed that Emily had just accomplished her first mediation without any classes, training, or books to guide her.  Granted her parents probably laid the ground work for her to be the kind of girl who would help people in need, but Emily wisely knew exactly what these broken-hearted best friends needed – someone to help them listen.

Cross posted at Indisputably.

The concept of a constitutional right to counsel in certain civil cases is often referred to as “Civil Gideon,” after the Supreme Court decision that established the right to counsel in criminal cases, Gideon v. Wainwright. Critics charge that recognizing a civil version of the right established in Gideon will cause “waste” by increasing litigation. A recent Wall Street Journal law blog post quoted Ted Frank, for instance: “What is clear is that you will never have a simple eviction because every single one of them will be litigated. . . . The rest of the poor will be worse off because of that.”

I guess “waste” is in the eye of the beholder. As a student noted on another blog,

While I understand the drawback of added litigation, I’ve never found it to be particularly persuasive enough to override a law aimed at a greater level of fairness and justice. In most custody cases, an agreement is more likely reached when the party who can afford an attorney bullies the other party into signing something. As for eviction cases, I believe that at the end of a notice period, a landlord must file an eviction case with the court anyway to have the eviction legally recognized. Moreover, the American judicial system can be overwhelming, confusing and inevitably adversarial. While many civil parties successfully file suits pro se, I think it is fair to say that they often lack the knowledge and skills to successfully plead a case.

Indeed, it seems beyond dispute that pro se litigants are, on average, overwhelmingly disadvantaged by lack of representation.

For instance, the final report of the Access to Justice Committee of the Wisconsin State Bar in 2007 cited research establishing that unrepresented litigants were dramatically less successful in Equal Rights Division hearings on probable cause:

[T]he Equal Rights Division of the state Department of Workforce Development tracks outcomes in probable cause hearings and found that complainants with counsel are successful more than 42% of the time while complainants without are successful only 17% of the time. In a probable cause hearing, the ERD determines whether there is enough believable evidence of job discrimination to let the case move forward to a hearing on the merits. Judges in Rock County reported a similar disparity in outcomes in cases involving domestic abuse injunctions. Large numbers of abuse victims who are unrepresented give up before the case comes to a final hearing. Abuse victims who are represented regularly appear and most often prevail. Judge James Daley observed, “I doubt that this circumstance is the result of [a] chang[e of ] mind[] or that the abuse complained of in the petition stops.”

Likewise, statistics show that immigrants who are represented by counsel stand a greater chance of avoiding deportation, on average. Specifically, according to a report from Minnesota Advocates for Human Rights (reporting to the United Nations, on the United States’ compliance with its international obligations to protect civil and political rights), the Executive Office of Immigration Review’s own statistics for the years 2002 through 2006 demonstrate that

in cases involving represented, non-detained immigrants, 34 percent secured relief; but only 23 percent of unrepresented, non-detained immigrants received relief. Similarly, in cases involving represented detained immigrants, 24 percent secured relief as compared with only 15 percent of their unrepresented counterparts. More pronounced disparities appear in political asylum cases: 39 percent of represented, non-detained asylum seekers received political asylum compared with 14 percent of unrepresented, non-detained asylum seekers; 18 percent of represented, detained asylum seekers were granted asylum, compared to three percent of unrepresented detained asylum seekers. [footnotes and citations omitted, and emphasis added]

In other words, not only do represented immigrants have a better chance of avoiding deportation, that advantage is greatest in some of the most critical cases: aliens in detention and aliens seeking refuge from persecution.

Similar examples abound. The Brennan Center’s Civil Right to Justice web pages document, for instance, the “crisis in legal representation” arising out of the current foreclosure crisis. Wisconsin courts have seem a sharp uptick in foreclosure filings: last year was a record-setter for Wisconsin foreclosure actions, with more than 25,000 actions started, and this year (according to the Law School’s foreclosure mediation program web page) is on pace to pass that record.

Imagining our courts swamped with foreclosure actions suggests another potential benefit of civil Gideon: maybe access to counsel would improve not only fairness but also efficiency? Rather than promoting wasteful litigation, lawyers might help people present their claims more clearly and effectively. They might even convince some who lack a genuine defense to give up the legal fight. (In a similar vein, the National Coalition for a Civil Right to Counsel links to a number of different studies and reports tending to show economic and social benefits resulting from the provision of civil legal aid for the critical legal needs of those who can’t afford attorneys.)

Well, as so often seems to be the case, I have no tidy ending for this post. I just wanted to draw together in one spot various news items and blog posts that had recently caught my attention, at a moment when the question of fairness in critical legal proceedings seems to be on many minds. As always, I welcome your comments and criticisms.

Debra Tuttle, chief mediator for the program, said during a panel discussion at a conference Friday on foreclosure issues in Wisconsin that from July 22, when the program began, through November 4, there were 278 requests for mediation, more than double the number that was anticipated.

Twenty cases have gone through the mediation process, with all but one resulting in the owner keeping the house, she said. More than twenty others have ended with agreement between the owner and lender without the mediation process. And 136 are awaiting mediation. 

Natalie C. Fleury, program coordinator for dispute resolution at the Law School, said a key to making mediation work was having everyone involved understand that that it is in their interest to work together to reach agreement. Lenders don’t actually want to take possession of homes and owners don’t want to give them up. “There are common interests here that mediation can help,” she said.

Cases are brought to the mediators through court referrals, and the mediators act as neutral parties. Marquette Law School is playing a central role in launching and staffing the mediation process.

The panel discussion was moderated by Daniel Idzikowski, the Law School’s Assistant Dean for Public Service. It was part of a conference at the Clarion Hotel & Conference Center, titled “Foreclosures in Wisconsin:  Responses and Resources for Living Beyond the Bubble.” The sponsors included the Law School, the Federal Reserve Bank of Chicago, the City of Milwaukee, the Wisconsin Housing and Economic Development Authority, the University of Wisconsin Extension, and the  U.S. Department of Housing and Urban Development.

I don’t expect that all of these cases will magically work out (and some are absolutely ripe for litigation).  At the same time, I am optimistic that this program can help people save their homes.  We will start mediating cases soon and will be tracking not only our immediate settlement rate, but whether people are in their homes six months, twelve months, and twenty-four months down the road.