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Los Angeles Probate, Estate & Tax Blog

Recent developments in Probate, Estate and Tax Law.

Remote Handling of Cases 
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  • Henry J. Moravec III

Frequently Asked Questions About Probate Mediation. How to Use Mediation as a Important Tool in Prob

Probate Mediation.

Many clients understand the concept of going to court or "suing" someone, and that a lawsuit can result in a trial before a judge or jury. However, not as many know that (i) in probate courts, which hear all estate and trust disputes, there is no jury, and (ii) there is a strong preference among the probate court judges that the parties attempt to mediate a matter before a trial will be scheduled.

What is mediation?

Well, in a non-legal sense, any negotiation between two people can be called a mediation. But in the context of a formal court proceeding mediation has a specific meaning, which is a commitment by the opposing sides to schedule a day (or series of days) to meet with a mediator and try to resolve the case in a confidential, non-binding process.

Mediation is a flexible and less formal process that may reduce the time, legal fees and costs often associated with preparing for and going through a formal trial. In our practice, we work on making our clients' positions as strong as possible before the mediation process so that there is more leverage during negotiations.

A trained mediator (often a retired probate judge or experienced probate attorney) acts as a neutral person who facilitates communication and assists parties in reaching a mutually acceptable resolution of all or part of their dispute. The mediator is not the decision-maker and does not resolve the dispute -- the parties do with the mediator's assistance. A written settlement agreement is drafted and signed at the end of the day so there is an enforceable agreement.

A mediator is often able to more fully explore the parties' underlying interests, needs, and priorities. It is often conducted like shuttle diplomacy and the parties can tell the mediator "confidential' information not to be shared with the other side. Mediation may be particularly effective when family members have a dispute or when emotions are getting in the way of resolution.

The attorneys participating are also key to the process. For example, I am also a tax attorney and many probates have tax issues in the background. There can be income tax, step up (or down) in income tax basis, or estate tax issues. Sometimes with structuring on the tax side during mediations, taxes can be reduced and used to bridge any settlement gap. The certainty on the tax side can be an important benefit. Creative problem-solving by the attorneys is key. Most of the time it is the well-prepared, knowledgeable, strategic, and credible attorney who helps the mediator settle the case.

Types of Mediation: Court or Private

The Los Angeles County Superior Court has a free, court-sponsored half-day mediation program that parties to a case can use. The free program is staffed by experienced volunteer attorneys seeking mediation business where they donate four hours which often is not enough time to settle a complex case. For complex or significant value cases, we prefer to select a private mediator that both sides agree upon. Often, the mediators at the private companies are retired probate judges which given them credibility to the parties.

For example, we resolved a dispute over the validity of a Trust amendment in one full day of mediation. The parties were approximately a million dollars apart at the beginning of the day but came to an agreement in the end and it saved our client significant legal fees and gave them certainty in the result.

As for the private mediators, they are expensive, typically around $4,000 to $5,000 for a full day. However, considering the amount of legal fees that could be spent if a case drags on for months, payment of several thousand dollars to bring the case to resolution is often viewed as well worth the cost.

Mediation Procedure

Clients are often surprised to learn (usually pleasantly surprised) that when they attend a mediation they do not actually spend much time with the opposing party or their attorneys. Instead, the parties are in separate conference rooms, and the mediator goes between the rooms, discussing the case and proposing solutions.

This is where the skill of the mediator, and the experience the mediator has with the type of case being mediated comes into play. The success of a mediation does, of course, depend on the willingness of both sides to compromise, but if both sides are willing to compromise and be creative then the burden shifts to the mediator to find a solution agreeable to both sides.

This can be difficult. The reason for the frequent use of retired judges is that judges are used to telling parties, basically, that their case is not quite as good as they think it is. Also, the mediator has the job of not only evaluating the case but also getting to know the parties and figuring out what each party can offer the other that would really settle the matter. In a case where the only issue is money, the mediator will go back and forth throughout the day, seeking to narrow the gap and explain to each side why settling the case could be in their interest.

For example, at the start of the day, one party may feel they are owed $100,000, and the other side believes they are only owed $10,000. The person who wants the $100,000 probably sees that as the maximum value and the person who wants to pay $10,000 sees that figure as the minimum value. Over the course of the day, the parties will make offers. Perhaps the "$100,000 party" will offer $87,000. Then, perhaps the person who only wanted to pay $10,000 will be convinced to offer at least $40,000. At this point, the $90,000 gap has been narrowed to $47,000.

The mediator will go back and forth, discussing and arguing points, and trying to narrow the gap further. You might meet with the mediator for a half hour from 10:00 to 10:30 in the morning, and then not see the mediator again until he or she comes back after meeting with the other side for an hour. Successful mediations share one characteristic: at some point during the day the gap between the parties gets narrow enough that it is clear that a settlement will save money as compared to continuing the case, and once that point is reached both sides will be incentivized to see if they can find an acceptable number.

Mediations do fail, however, because settlement is not like a judgment of the court, it is voluntary. It is frustrating to spend a whole day and quite a bit of money and not achieve a settlement, but sometimes parties who attempt mediation in, say, April, can return in August and come to an agreement. At a minimum, the parties each learn what a neutral, experienced third party thinks of their case, and that alone has value. The parties can also then proceed to trial knowing that they have given it their best effort.

Other advantages is that the settlement agreement will generally be confidential and not public and it is also faster. It can take at least a year to get to trial and a court date will not be set until mediation has been attempted.

Mediation Is Not A Sign of Weakness

While we prepare for trial, in essence, we are also preparing for mediation. It is never done out of weakness but as part of an assessment of a case and recognizing the costs of litigation. The settlement only occurs when it is in our client's best interest and the client is fully informed. We draft confidential mediation briefs for the mediator that sets forth the advantages we have in the case so the mediator can use them when needed.

We also see attorneys not experienced in probate putting on a "show" and grandstanding for their clients or antagonizing the other side. There is a way to fight aggressively for your client that does not destroy the possibility of resolving the matter in his or her best interest. We also see clients afraid that entering mediation or engaging in settlement negotiations will be seen as a sign of weakness. It is not.

The reality is that over 90 percent of probate cases settle before trial. To avoid that realistic fact does not benefit anyone in the long run. Mediation is a useful tool in the probate litigation toolbox and it can be a win for the client in getting them a certain and predictable result while keeping legal fees and costs down and structuring taxes and other financial matters. Needless to say, mediation and settlement can also save significant time and emotional energy.

We will work on settlement negotiations with the other side as early as feasible. Often, it takes some time whether due to grief or hard feelings between the parties to be able to enter into settlement negotiations. How many times have I heard that a client would rather pay my legal fees than to pay the other side any money? We work with clients to help them preserve their assets and make good business and family decisions even though as probate trial lawyers, we make more money taking cases to trial.

It is always rewarding to get a telephone call a week or month later thanking me for helping my client get the best possible result and settle a matter even when it was not an easy decision. One thing that makes the process easier is when the client knows that the attorneys are prepared and willing to go to trial if necessary. Do not fear mediation. The attorneys who can resolve complex cases for clients find it a very rewarding part of their practice.

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