As a follow-up to an earlier posting about the overall costs of justice in NJ to the taxpayer, I want to look at the costs of civil lawsuits and litigation to the taxpayers of the state.  Mark Fellows of the National Arbitration Forum published an analysis of the costs of litigation to the taxpayer in several states in the December 2007 issue of The Metropolitan Corporate Counsel.  He is making an argument for the use of arbitration over litigation, which would remove cases from taxpayer funded courts into litigant funded arbitration settings.

New Jersey happens to be one state which publicly breaks out its judicial costs by part.  Fellows analyzed FY2006, where $571,570,000 was appropriated for the judiciary and $130,112,080 was allocated to the civil courts.  100,332 civil cases were resolved in NJ in 2006, leaving an average of a little under $1300.  That number, though, includes cases resulting in default judgments (where the other side doesn’t answer the complaint), dismissals for want of prosecution, settlements without judicial action and settlements through ADR.  When you exclude these cases, the estimated average cost to the taxpayer of a contested civil case is $3,112.36.

Of course, this does not even account for the costs to the litigants themselves in attorneys fees, experts fees, filing fees and more.  In a typical case, these can be in the tens of thousands which does not even guarantee a positive return on the investment (in a favorable judgment).

In a state with among the highest tax burdens in the country and no shortage of underfunded solutions for societal problems, moving cases out of the courts and into far less costly ADR forums such as arbitration and mediation can help far more than just the litigants involved.  It can help every person in the state.

If you would like to learn more about using mediation or arbitration to resolve your dispute, please feel free to contact me.

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Southern California attorney Brian Don Levy has an excellent video of himself posted on-line which describes divorce mediation and its benefits. I’ve embedded it below. He is a collaborative attorney and lends the impression that the attorneys are present during the mediation sessions, which is generally not the case in most divorce mediations.

He very nicely sums up the benefits to the family:

Divorce mediation can have a really positive affect on your family, because you’re resolving your dispute privately, fairly, and you’re taking responsibility for the resolution by coming to an agreement. So typically when people walk out of court and they’ve been forced to do something, it can have a devastating affect on the family. It can effect how you look at your whole family: how you look at your children, how you look at the other parent, your emotional makeup; the whole landscape of feelings that you go through. When you walk away from mediation, you’re usually feeling pretty good about your family because you’ve come to an agreement and nobody forced you to do it. So you’re feeling good about that.

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The State of New Jersey is currently going through the budget process for the fiscal year that begins in July 2008.  Like many states, NJ is projecting a large budget deficit due to the downturn in the economy.  As a result, all government agencies are being asked to tighten their belts.  The judicial branch of government (the courts) is being asked to reduce their budget by $27 million (total proposed budget is $636 million and the courts collect roughly $64 million in fees; the total judicial budget runs about $71 per capita).

Judge Phillip Carchman, acting Administrative Director of the Courts testified before the Senate Budget committee this week.  In his remarks, he addressed the difficulties of reducing costs in the Judiciary:

The proposed significant budget cuts present unique challenges for the judiciary. In tough fiscal times, when government necessarily looks to reduce spending, people need the courts more than ever. Court business grows rather than shrinks. The judiciary is a people-driven branch, created and functioning to resolve disputes. We cannot eliminate court sessions, particularly in difficult economic times, to absorb the substantial cuts allocated to us. To the contrary, we see record-setting increases ahead in court filings and workload.

He gave some specific numbers in regards to foreclosure actions:

Economic indicators tell us that by the end of this court year, case filings will reach historic highs. For example, foreclosure filings in New Jersey for the first quarter of 2008 exceeded 4,000 per month, a staggering 44 percent increase over the same period last year. This year we are on track to receive an anticipated 49,000 foreclosure filings. This is double the number we received in 2006, just two years ago. And our best estimate is that we may double this number yet again next year.

In the Special Civil Part (claims for under $15,000 which have expedited and relaxed rules), credit card defaults are driving the case loads to record heights, some 621,000 cases projected for this year which is 100,000 more than last year.

He goes on to say how tough economic times tear families apart, increasing demands on the family part (for divorces).  It also increases demands on the criminal courts.

The courts in NJ manage their cases to ensure timely hearings.  Each case is set against a standard.  Cases that are backlogged (behind that standard) account for 12% of all cases.  This is roughly the same number as it was last year despite the caseload increasing by 8%.

Removing the backlog, increasing the speed (and lowering the cost) of “justice” is a primary motivator as to why the courts have a CDR (complementary dispute resolution) program.  Court-mandated mediation resolves roughly 1/3rd of all civil division cases directly and yet only 1.8% of all cases filed make it to trial.  This means that mediation helps set the framework for a later settlement.  Without mediation as a core part of the NJ court process, the courts would be so backlogged as to be unable to operate efficiently.

Tags: Arbitration, Commercial Mediation, Divorce Mediation and Law, Elder Mediation and Elder Law // Add Comment »

New Jersey Lawyer recently took a look at where the future of the practice of law was heading.  They surveyed several prominent NJ lawyers to do so.  Among the areas of change noted was the lessening of trials to resolve disputes (currently, only 1.8% of all cases filed in state court in NJ go to trial).  From the article (my emphasis added):

Another common theme predicted by lawyers in various practice areas is the continuing move away from trials as mechanisms for settling disputes.

Blank Rome’s Orlofsky said “more and more cases will be resolved in some form of ADR.”

That push will continue, not only due to mandatory ADR programs instituted by various courts, but also by corporations’ desire to settle commercial disputes quickly.

Corporations will continue to prefer alternative options to trial, because they are “willing to pay for a quick decision, which is sometimes better than the right decision,” Orlofsky noted.

He said more medium-sized companies are entering into highly elaborate ADR clauses in their disputes that call for confidentiality agreements and time frames for reaching resolutions.

Companies also prefer arbitration, he said, because they can choose who resolves the dispute.

The article also addressed the future of family law:

Ceconi, the family law attorney, said courts increasingly rely on hearing officers to handle a range of issues.

“In family court, the calendar has become so congested that you will have to bring in people other than judges,” she added.

Vuotto also sees increasing use of ADR mechanisms such as mediation, arbitration and collaborative law in settling divorces and custody battles.

Peter Verniero, the former Supreme Court justice and attorney general who now practices white-collar criminal law at Newark’s Sills Cummis Epstein & Gross, also foresees an increasing reliance on non-judges to relieve the court’s burdens.

The article then went to touch on the “graying” of America:

Regina M. Spielberg, a trust and estate lawyer with Morristown’s Schenck, Price, Smith & King, said the aging population will require more services in both estate planning and elder law.

“There’s awareness among baby boomers about the need for estate planning,” she said. “And an increasing number of families are recognizing disabilities and making plans to accommodate them.”

Vuotto, the Woodbridge attorney, said that as a result of longer life spans, many aspects of elder law will begin intersecting with family law.

“People are having children when they are older,” he noted, forecasting courts will be dealing with issues such as alimony and child support payments from retired parents, and the need to plan for medical expenses in divorce settlements.

You can read the full article here.

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I’ve previously written about some of the differences between a divorce and a dissolution of a civil union.  Back on December 8, 2006, I wrote about a case in Virginia whereby a couple entered into a civil union in Vermont.  They then had a child via artificial insemination.  The daughter, Isabella, now 6 years old, along with the birth mother Lisa, returned to Virginia (a state which does not recognize same sex unions).  Vermont granted a dissolution, primary custody to Lisa and visitation rights to her former partner Janet.  Lisa then went to court in Virginia and won an order granting her sole custody with no parental or visitation rights for Janet.

However, in 2006, a Virginia Court of Appeals reversed the lower court’s ruling, holding that federal law requires each state to respect the child custody and visitation rulings of another state so that chaos will not result from parents shopping for another state for a “better” ruling.

The case has now headed to the Virginia Supreme Court and a ruling is expected in June.

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From AP News via Law.com:

Lawsuit Claims U.S. Constitution Bans Woman President
The Associated Press
04-09-2008

A Reno, Nev., man has filed a state lawsuit claiming that the U.S. Constitution would have to be amended to allow Sen. Hillary Clinton to appear on the presidential ballot.

Douglas Wallace, 80, argues that because the constitution refers to “he” and “his” in describing presidential duties, a woman can’t hold the office.

“The use of female gendered pronouns ’she’ or ‘her’ are not present in the document, making it conclusive that the framers never intended that a woman would be president of the United States,” Wallace wrote in the suit.

Legal scholars called the suit “amusing” but without merit.

“The use of the masculine pronoun is a relic of the period,” Jonathan Turley, a professor at George Washington University Law School, told the Reno Gazette-Journal.

“The constitution has been amended to expressly incorporate women into the political system. No court would subscribe to this meritless argument,” he said.

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Man uses grinding machine to cut farm tools, machines in half for divorce

BELGRADE, Serbia - A Serb farmer used a grinding machine to cut in half his farm tools and machines to comply with a court ruling that he must share all his property with his ex-wife, local media reported on Thursday.

Branko Zivkov, 76, told Belgrade daily Kurir he had been ready to give his wife Vukadinka her equal share of everything earned during their 45-year marriage, but was furious at being asked to give away half his farming equipment.

Instead, he bought a grinder and cut in two all his tools.

The halved equipment included large items such as cattle scales, a harrow and a sowing machine.

“I still haven’t decided how to split the cow,” he told the newspaper. “She should just say what she wants — the part with the horns or the part with the tail.”

Tags: Divorce Mediation and Law, Off Beat // Add Comment »

The Institute for Legal Reform recently commisioned a survey to largely address people’s feeling towards lawsuits and arbitration.  Lost in this poll was a statistic about mediation.

The poll was conducted by respected GOP pollster Bill McInturff along with Barak Obama’s pollster Joel Benenson for the Benenson Strategy Group.  800 likely voters were polled by telephone for this survey in late December 2007.  The voters were read the following question: “I am going to read you a list of different ways to resolve disputes between companies and consumers. Please tell me, as I read each one, is your opinion of that way to resolve disputes between companies and consumers very favorable, mostly favorable, half-and-half, mostly unfavorable, or – very unfavorable. If I mention one that you are unfamiliar with just tell me and we’ll move on to the next one.”

The choices were mediation, arbitration, class action lawsuit and filing a lawsuit.  59% found mediation favorable while only 8% found mediation unfavorable (for a net of 51% positive).  For arbitration, 51% found it favorable versus 10% unfavorable (or a net 41% positive).  Class action lawsuits were nearly even between favorable (32%) and unfavorable (31%) while filing a lawsuit was seen as a net negative (29% to 33%).

While any survey can be crafted in a way to give you the answer you’re looking for (this was commissioned by a group pushing arbitration and defeat of a measure before Congress to limit arbitration clauses in consumer agreements), it is nonetheless interesting to see how favorable most people consider mediation to be as a way to resolve disputes.

If you’d like to learn more about mediation and how it may be able to help you, please feel free to contact me.

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I had previously posted about a service for divorce parties in Montreal.  Either this phenomenon has spread, or it existed in places I haven’t seen.  From CNN:

Divorce ceremonies for healing … maybe a toaster

By Elizabeth Bougerol

Charlotte Eulette donned a shiny cocktail dress for her divorce celebration to reflect her goal to “shine on.”

(LifeWire) — Charlotte Eulette of Montclair, New Jersey, ceremoniously reclaimed her maiden name and slipped a ring from her mother on her newly bare wedding ring finger.

Cathryn Michon hit the Los Angeles restaurant Mr. Chow with some friends who’d brought divorce gifts.

In Las Vegas, reality-show regular Shanna Moakler served a three-tiered gateau — complete with knife-wielding-bride cake topper (and matching dead groom) — to attendees after her (first) split from Travis Barker.

If just discussing divorce in public seemed taboo a few years ago, the growing trend of divorce celebrations is helping lessen the stigma surrounding the end of marriage.

“Yes, it’s sad and it’s painful, but it’s not failure,” says Christine Gallagher, the owner of Los Angeles event company The Divorce Party Planner and the author of a book by the same name. “It’s part of life, and yet it’s the only major event for which we have no ritual.

“A celebration communicates that divorce is OK — life-affirming, even.”

Michon, 38, agrees. “It’s like an Irish wake. Just because there’s been a death doesn’t mean you can’t have food and drink, acknowledge the past and hope good things for the future. It’s about closure.”

Bearing witness, wedding-style

“At a wedding, you gather friends and family around and say, ‘Support us on this journey,’” says Eulette, 49, whose 2003 post-split bash was attended by the same klatch of far-flung friends and relatives as her wedding. “A divorce ceremony is a way to gather them around and say, ‘I’m moving on. Please support me.’”

And that support, says Michon, is also practical in nature. “If you split up, someone’s getting the blender and someone’s not,” she says. “My own celebration was a way for my friends to say, ‘We love you no matter what, and by the way, here are a few appliances you’re missing.’

“Believe me, a toaster means a lot more when your heart’s broken than on your wedding day,” says Michon, a writer, who recently organized a divorce registry at Target for another friend. “Especially if you’re out thousands of dollars in legal fees.”

Divorce parties: One size doesn’t fit all

Just as no two weddings are alike, divorcees are seeking out (or creating from scratch) marriage-ending markers that resonate with them.

In Britain, the Great Northern Firework Company offers a divorce-package fireworks display. Godammo.com will melt and mold your wedding ring into a (gunpowder-free) bullet, and WeddingRingCoffin.com sells just that: a practical, dignified way to bury your dead marriage’s hardware.

“Burning is big,” says Gallagher, who’s seen everything from wedding dresses to a husband’s trophy deer head go up in flames at divorce celebrations organized by her event-planning outfit. The parties — two or three per month — serve up signature cocktails with names like the So Long and the Sucker, split-themed soundtracks (”Hit the Road, Jack” and “I Will Survive” are popular) and dartboards adorned with the ex’s face.

“A divorce party makes more sense than a bachelor party,” says Marc Tadros of Montreal V.I.P., whose luxury divorce getaways have drawn customers, about 20 percent of them female, from as far away as Ireland and Germany. “It’s a good time to blow off steam, work on your social networking skills.”

Focusing on the future

“Having six or 10 martinis may work for some people, but mine wasn’t an ex-bashing ceremony,” says Joann Lane, 50, a wedding officiant whose party took place five years after the divorce and was attended by the couple’s four sons, along with her current and former boyfriends.

“I wanted to acknowledge the good that came out of the marriage, and let go of the anguish.”

In that spirit, Eulette’s foundation (and her full-time job) Celebrants USA, which is devoted to celebrating life’s milestones, organizes 10 to 15 divorce events each year to help people craft rituals that have meaning for them. One of Eulette’s clients celebrated his divorce by gluing back together a broken glass, in a reversal of the Jewish tradition of smashing a glass at the end of the wedding ceremony.

“It’s not a hullabaloo; it’s about healing and transition,” Eulette says. “And everyone has their own story in a divorce — there’s no blueprint for moving forward like there is with marriage.”

Ottawa wellness counselor Lucy MacDonald cautions divorcées to consider their motives in hosting a celebration, and not to overlook the key to emotional recovery after divorce: forgiveness, of oneself and one’s ex.

“If you’re feeling bitter, angry or antagonistic, a divorce party may bring out the worst in you,” warns MacDonald. “But if you’ve accepted your divorce as the next step in your growth as a person, your party is a signal to everyone that you’re OK and looking to the future.”

Tags: Divorce Mediation and Law, Off Beat // 1 Comment »

Often, the BATNA (best alternative to a negotiated agreement; one of the core principles from “Getting to Yes”) in a lawsuit-based mediation is a trial in a court of law. Some trials are bench trials (where a judge makes the decision on the outcome, such as in a divorce) and others are jury trials (where in NJ, 5 of 6 jurors[your peers] have to agree on an outcome. As most attorneys will say, trials and trial outcomes are a crap shoot.

There are two reasons as to why this is largely the case. First, trials are performances. The lawyers, clients and witnesses are all putting on performances in court. They are all humans. They all have good days and bad days. Perception is everything in court as to credibility of those giving testimony and attorneys. Second, every human being has prejudices and built in biases. We all see the world through the filters that have been taught to us by our parents and peers growing up and our cumulative experiences. Judges and jurors are humans with these biases. A jury is somewhat randomly selected…as one of my colleagues likes to point out, they are the 6 people standing in line behind you at Wal-mart or Target. It’s a crap shoot as to who you get and voir dire (the process of selecting a jury and questioning jurors about their backgrounds and biases) can only peel back some of the layers of bias of a potential juror, not all of them.

If trials and the legal process were cut and dried, there would be no need for appeals, appellate division and the Supreme Courts. But we have them because errors are made and court decisions are often overturned (which consumes a lot of time and money to do so).

Here’s an interesting thing to ponder. Why does the same case — which has the same facts — when tried more than once (either through a mistrial/hung jury, or on remand from an appeal) often have differing outcomes?

In today’s Rocky Mountain News, an article enumerates on some recent high profile criminal trials which went more than once and their various outcomes. Here’s an excerpt:

Dennis Kozlowski, former CEO of Tyco International Ltd.; Mark Swartz, former Tyco chief financial officer

* Accusations: Kozlowski and Swartz were charged in September 2002 with stealing $170 million from Tyco by abusing corporate loan programs and taking unauthorized bonuses and by taking $430 million more by selling stock at prices artificially inflated by misstatements about company finances.

* First trial: Ended in mistrial in April 2004 after several news organizations published a juror’s name during deliberations, and the juror told the judge she received a threatening letter and phone call.

* Second trial: Prosecutors tightened their case and spent far less time on Kozlowski’s extravagant lifestyle.

* Results: Both men were convicted June 17, 2005, of grand larceny, conspiracy, securities fraud and falsifying records.

Richard Scrushy, former CEO of HealthSouth

* Accusation: Prosecutors accused Scrushy of masterminding a $2.7 billion accounting fraud at HealthSouth Corp. to inflate the company’s stock price.

* First trial: Acquitted by a Birmingham, Ala., jury in June 2005, despite the 15 guilty pleas from other former HealthSouth executives who implicated Scrushy.

* Second trial: Six Alabama charges of bribery, mail fraud and conspiracy. Defense lawyers denounced the case as a sour-grapes effort to win a conviction.

* Results: In June 2006, Scrushy was convicted of paying $500,000 of bribes to former Alabama Gov. Don Siegelman.

Frank Quattrone, former investment banker at Credit Suisse in New York

* Accusation: Prosecutors said Quattrone hindered the government’s investigation of Zurich-based Credit Suisse, Switzerland’s second-largest bank, by endorsing a subordinate’s e-mail that advised employees to “clean up” their files. The government said he sent the message, suggesting that subordinates destroy records, after learning that a grand jury was probing how Credit Suisse doled out IPO shares.

* First trial: Hung jury in October 2003.

* Second trial: Conviction for obstruction of justice and witness tampering in May 2004.

* Results: Conviction reversed on appeal. Prosecutors decided not to re-try him and dropped the case in August 2007.

While criminal trials have a far greater burden of proof than civil trials do, the point of risk at trial is analogous.  In a later posting, I will give an example of a civil case which was tried 3 times with 3 different outcomes.

The BATNA in a civil case is a negotiated agreement.  Your risk goes to zero since you agree to the parameters of the settlement.  Your costs also go down as trials are costly; lawyers, trial preparation and experts all cost money.  And they cost the same amount of money if you win or lose.  Plus, litigants also often forget about the other costs, namely your time and emotions/aggravation factor.  These are all legitimate.  There are large costs to “prove” you’re right.

This is why mediation has gone mainstream and is accepted as a way to resolve disputes, whether they be commercial or family in nature. If you want to avoid the risk of a trial and going to court, feel free to contact me to see how mediation can help.

Tags: Commercial Mediation, Divorce Mediation and Law // Add Comment »