The Expert Podcast

…What is mandatory mediation And how does it affect your court case or litigation? First keep in mind that mandatory mediation in a court case doesn't mean that you have to abide by whatever third party says it's not a court It's not a judge not a jury mediation Isn't a binding requirement for you to say you have to take this opinion. There may be some clauses in some contracts for binding arbitration which would be different, but that's a pretty rare thing Mediation is just a third party that is trying to help you And the other party come together for a mutually beneficial resolution, taking the emotions taking the conflict out of that process. So just because it's called mandatory mediation doesn't mean it's mandatory for you to follow the suggestions or Requirements of the mediator. It just means that you're required to engage in mediation You have to at least try it at least have to meet with mediator and see if they can offer you something that might help resolve your case. So that's the important thing don't be afraid or don't fear the fact that your hands are tied and you have to take whatever resolution is offered by the mediator. Now for the last 20 or 30 years, there's been a a very strong increase in the number of cases that use mediation. Even though the number is increased The percentage Of its use in civil claims is still not really that high And the reason why is a lot of potential litigants defendants. Plaintiff's don't look at mediation as a possible solution because they don't know about it and they don't know that it could help keep them out of court Keep them from spending tens of thousands of legal fees. And usually the result. Is a good one for both parties. If you go to court and have a judge or jury decide your case at that point, the resolution is out of your hands You have to that point you do have to abide by whatever the court decides You don't have any negotiating power with If the court says you have to pay X amount of money you can't say well I'll offer you this. It's done the settlement or the jury verdict comes in and you have to abide by it. Mediation you can always still have your influence. Go into what the court says while the case is in mediation It's still somewhat in your hand still somewhat under your control. In fact what we've seen. With…mediated litigation…The resolution That's offered Or that suggested in mediation Is often net net better for both parties Then if they went to court and one side or the other one. Look a court case is usually winner Take all there's no middle ground. It's here's what the verdict is You win you lose. And the winner might think well I won and I get everything but not really. you have to subtract from that your legal fees which you have to pay regardless. You also subtract from that whatever you do not collect. Because winning a judgment in court just means the court dictates here's what your losses are Here's what your judgment is for. Now you have to go and you have to collect it from the defendant or from the other party…The court doesn't write you a check. The court also doesn't require that the defendant writes you a check. The court just says well, here's the bill. Go serve it upon the defendant and try to get your money Well you kind of already did that. That's why you're in court because they didn't pay their bill to begin with. Right Whatever that bill is contract losses damages You probably did it Demand letter. In advance that they didn't pay because they thought they were going to win. Now that you want in court. What are the chances they're going to voluntarily write you a check. You can file liens and you can try to do garnishments and other asset recovery But that's going to cost you even more money and more time In fact now you have a more adversary relationship with that other party. Because you went to court, you were there giving evidence. You were derogatory, claims against them were. Put in writing. They were put out there in the official record. You probably. Pulled out all the stops on negative information. And evidence about that other party. So. Now they're probably even more…Conflicted with you. They're probably even more adversarial to you. So they're going to try to do everything they can to get out of having to pay. Usually what we see in cases that have a judgment is for months or years the defendant will avoid paying the claim avoid paying the judgment. The plaintiff will file liens. Try to do garnishment maybe hire an investigator do all kinds of things. And after a few years they get tired of it. And finally the offer to settle for less than the face value of the judgment So if you get a judgment for 180,000, Finally after spending another 40,000 in fees…Somehow either the plaintiff or the defendant will say well look why don't we just settle for 80,000? Okay Give me 80,000 So now you take that 80,000 you subtract the 40 and the legal fees you put into it. Maybe you net out 30 or 40 grand…Well if you. Went to mediation and negotiated a settlement upfront Maybe you could have gotten 90 or a hundred thousand. The problem is…Parties in a case don't see the value in that settlement because they think that winner take all they're going to win. Right…In almost every case the settlement that was available. Ahead of time would have been better for both parties then having to go through that winner take all adversarial proceeding. In fact it's so important. That most courts require mediation attempts before the case can proceed in litigation That's why it's called mandatory mediation. It's mandatory that you engage in it It's not mandatory You come to an agreement, you have to at least bring to the court. That you made a good faith effort to try to, come to some kind of conclusion They may even ask what the mediation terms were. And that way they'll have an idea of where they stand In fact, it's so successful that some data from the UK. show that They surveyed over 20,000 cases that were mediated, had a 90% settlement rate that meant that, those cases were kept out of court. you didn't have to pay legal fees. The judge and the court. Process didn't have to get burdened down by those extra cases. And you might think well we pay taxes The court should do it You're right But if it does go to court I can guarantee you, the court is going to not think as highly of a case. That comes in front of them. because they figure both parties are being unreasonable That's just the nature of psychology of judges and juries. Bottom line is that when you go to court someone's going to get slammed Someone is going to be the big loser in that court case, and the Hammer's going to drop. What are the chances you believe it's not going to be you. Otherwise you wouldn't be going to court You believe you have the evidence. The the moral high ground, it's a open and shut case slam dunk right? But the other party thinks the same thing. Who's right Who's wrong. Well when you get to court you might be very surprised that your slam dunk case or what you believe was true. May not be there How many Criminal defendants do you see in court think they're going to win and their eyes are like bugging out of their head when they're found guilty. Right You only see that on TV you don't see civil cases because they're not quite as sexy They're not quite as, as appealing to show on TV, but the loser in a civil case is just that surprise when they lose as the guy who gets sentenced to life in prison. Right. And granted a civil judgment is not the same as life in prison but it could be just as financially devastating to you as a loser. And if you're the winner, don't be doing a big happy dance quite yet, because you gotta remember what did you write a check for for all your legal fees? What did you, put out there in terms of your time? A litigated case can be months and months of your time taking attention away from your business. having to go to court Have it go to depositions, having to worry about the loss, and then when you win, you're going to be very surprised that your court judgment. Even if you get a judgment for let's say $180,000, you can't just walk down to the bank and deposit that in your bank That's not cash. That's just a piece of paper. It's not cash until the defendant writes you a check. What are the chances they're going to voluntarily whip their checkbook out of their pocket at court and say please can I give you money? They're going to be more angry with you then than they were at the beginning of the case because now they lost. And now you said all kinds of bad things about them in court. So they're going to try to even do more to evade it hide assets and maybe appeal. The case…Even if you find a way to try to get…garnishment of assets they're going to move the assets around How do we know that Well our investigative division that we run. Does asset searches And we see we had one today that the report from the investigator about their bank accounts said. Defendant appears to have cleaned out their bank accounts word for word That's what it said. Well, what are you going to do then Do you have to start over run another asset search asset searches costs a couple thousand dollars a piece. Every time you do it. And if there's more than one potential defendant their company, their. LLC. Maybe third parties are hiding assets in their cousin's name I keep running assets at $2,000 a piece five or six times. Now you're gonna have five figures in investigator fees, just to try to find the assets. Alright. And. A lot of times the loser the defendant wants to dig in there. and say on principle I'm not giving you any money. Right They're even more principled now than they were before. At the beginning of the case, there may be an opportunity for negotiation settlement or mediation, and that mediation version gives you an opportunity to have a third party That's not your attorney not their attorney get involved because sometimes attorneys. Have…You know kind of negative conflict. associated with them. You might be suspicious of your own attorney. You're certainly suspicious of the other party's attorney. So don't let…An opportunity for resolution…Be squandered…Also don't fear of giving in. It might seem a hard like a bitter pill to swallow to have to admit. And lose a little bit rather than going to court Look if you want to just go have your day in court on principle that's fine. But just be aware that you might pay for that in terms of legal fees, days off your life and the potential. of loss. We had a case. A couple of years ago where…it was over a $10,000 contract. And the company sued the client for not paying their $10,000 contract. Well the client said look you didn't deliver the service that we were supposed to pay for. So I'm not giving you the $10,000 contract. Right. And. It went to court. And both parties were offered settlements In fact, The client said look you didn't deliver the service You're supposed to. And. The contract was for 10,000. Look I'll give you the 10,000. Just to avoid going to court while at this point, the defendant…I'm sorry the plaintiff has said well, now I've already spent another 20,000 in legal fees So unless you pay me that I'm still not going to let you off the hook. They said fine. You know the defendant said look I, you know, I'm not going to pay your legal fees. You made the choice to try to collect for something you didn't do So we'll go to court. A year year and a half two years later with depositions and legal fees and everything else, both parties had over a hundred thousand dollars each into this case. And went to court…The judge said, no you didn't deliver this service You don't get…This $10,000 from this other company you don't get to keep, you don't get to get money for something you didn't do favor of the defendant. Well you might think, well…The plaintiff lost 10,000 They didn't lose 10,000. They lost 10,000 They didn't get, they lost all the legal fees that they paid to their attorney which were a hundred thousand dollars. But there was another problem to their contract that they had said that if there's any legal dispute, loser pays. They lost a lawsuit. So now they have to write a check and pay The Defendant for the legal fees that they had expended over that two years which was 120 something thousand dollars. Had they settled in advance or mediate in advance Nobody would have been out that money or the two years of their life…Well you might think well then the defendant made out Okay They didn't because when they sent over all their legal bills for 120,000, The plaintiff said well you can't count this because this really wasn't for the case Well you can't count this because it's double billing or you can't count this because whatever. Well, it added up to be about $14,000 in legal fees that were excluded from reimbursement. So. The plaintiff lost 106,000 They have to write a check for the defendant was still out 14,000 in legal fees that they paid that they didn't get back. Plus it was like a free loan because that money was out of their pocket. They have to wait to get it back two years later. Everybody lost on that deal. Granted that's an extreme version but it's one that we were directly involved with seeing how this all played out. And. The settlement would have solved it. Neither party engaged with mediation at that time, neither party went forward with mediation. The court didn't require it. Neither attorney suggested it. And the parties weren't aware of it Now you might think well of course an attorney's not going to suggest it because then they don't get the legal fees I tell you right now, attorneys don't want this type of legal fee. They don't want to get tens of thousands from litigation by going to court They'd rather work on. Cases they can work from their office…Right filings. Trust probate ask any attorney do you want to go to court and make your money by billing hours in court No attorney wants to do that They want to do things that are more collaborative cooperative. Attorneys don't want to duke it out in court, ask them even after the case, both of those attorneys. You know we're just exhausted and neither one of them really relished that process. So mediation whether it's mandatory or voluntary is a good thing. More courts are making it. Mandatory that you at least try. And if you're a party to a case that's not mandatory, at least suggest it can't hurt might cost a few hundred bucks to try, but at least it keeps you from…Having the risk of the court taking the case out of your hands Plus if you go to mediation you can go to the court and say look. I tried to mediate this case, but it didn't work out So the court may think more favorably on cases that had mediation at least attempted.