For Parties to a Dispute

Why did I get a nasty letter from an attorney accusing me of doing things I didn't do?

Generally speaking, no one contacts an attorney when they are happy or things are going well. In the litigation context, people first call an attorney because they believe they have been harmed by someone else.  Attorneys field call after call, day in and day out, from people who are upset. Attorneys are fixers. They were either born or bred to be fighters. Most attorneys are good people who want to help other people. When an attorney gets one of these calls, the desire to help and fix kicks in.

It is sometimes difficult for some attorneys to separate themselves emotionally from their client. Some attorneys confuse advocacy for a client, with fighting off someone trying to stab their own mother in the eye. Some attorneys take on the emotions and tone of their upset client. Some attorneys come out swinging from day one because they believe that is what their client wants and is paying for. Advocacy requires the taking of a strong position but some attorneys go over the line from advocacy to pummeling.

Attorneys practice law but they are also in the business of practicing law. Like other business people, attorneys must attract clients and deliver for them. When starting out, attorneys are all about the practice of law but inevitably, the business of law rears its ugly head. This may set the attorney, the client and the process up to be adversarial from the inception when it doesn’t always need to be.

How does the business of law start to smother and overcome the effective practice of law? It starts with the pressure an attorney feels from the word “go” to echo the pain, frustration and accusations of an aggrieved client in the name of advocacy. As a result, in the service of delivering on their promise to take on the business of advocating for their client, some attorneys send initial demand letters that say accusatory, inflammatory, and speculative things about an opposing party. Copies of these letters are sent to the client so they feel that their feelings are being mirrored by their attorney.

In these initial demand letters, some attorneys call people frauds, liars and immoral because that is what the client thinks. Some attorneys lob and echo all kinds of speculations (usually echoing sentiments coming from their aggrieved clients) as if they were fact. These letters are sometimes more so for the benefit of the drafting attorney’s client rather than the target of the letter. People on the other end of the letters are hurt, confused, angry, outraged and often times describe feeling betrayed.

The vast majority of sellers are not professional real estate people. They are selling their home and they must rely on someone else to explain to them how to properly complete disclosures. Sometimes they make mistakes. Sometimes they disclose issues thinly, inaccurately, or not at all. It is more often than not a mistake. Not always, but often. When the seller has made a mistake but is accused of being a fraud, a liar or immoral, they get very hurt too. Hurt, confused, angry and outraged people punch back. They hire attorneys who punch back. Now, we are in a punching match. Ouch.

If approximately 97% of cases settle before trial, why do some attorneys start the settlement process off with a gut punch initial demand letter? Attorneys do this because the business of law sometimes encourages it. Clients often demand it. Hurt people want to hurt other people. People want justice.

Some attorneys have a hard time resisting their client’s urge to hurt other people because those attorneys are under pressure to get clients and make them happy. Some attorneys do not know how to advocate without bullying because that is what has been modeled for many attorneys for decades. Am I making excuses for attorneys? No. However, it's an explanation for how this business works at times.

What does this mean for you if you received one of these gut punch letters? It means that you get angry and scared and you go find an attorney to punch back.

But before you do, breathe. And think before you act.

No, I am not a touchy feely kind of person but yes, I still encourage you to breathe. The letter you received is like the thousands of letters that get sent by attorneys every day across this country. While it feels terrible and personal, it is, unfortunately, a common practice in the business of law that has nothing to do with you as a person or what you may be accused of. And before you hire an attorney who promises you right out of the gate to punch right back, think hard about what that may mean.

Punching invites fights.

Punching takes time.

Time costs money.

Money spent on punching drains your resources.

Resolving disputes requires resources.

So, welcome to the club of hundreds of thousands of people to be on the wrong end of one of these letters. I too, personally, have been on the other end of these letters. I too, have had to attend a mediation as a party. It doesn’t feel good when the process has started with a letter that says: “Ms. Graceffa, you are a liar, a fraud, a thief and you have bad taste in shoes.” As an aside, the comment about the shoes was the most upsetting because I pride myself on my selection of shoes.

Choose your attorney and strategy wisely in response to that nasty letter. Keep yourself in check in response to one of these letters. It could be the difference between a quick and cost-effective path to sanity, or not.

What is mediation?

Mediation is a neutral process whereby as a mediator, I work with the parties to facilitate a resolution which comes in the form of a binding, written settlement agreement. This agreement is enforceable by a court if breached. I do not have the authority to render a binding decision but rather work to facilitate an agreement between the parties.

Before the day of the mediation, I review briefs provided by the attorneys. I speak with each attorney to ensure that each party is ready to attend the session. Sometimes after talking with the attorneys, I believe it may be necessary to reschedule the mediation because the parties need more time to gather important information to ensure that they have the best opportunity possible to resolve their case on the day of the mediation. This saves a party time and money and ensures that they are in the best position possible to settle their case through mediation.

In the mediation process, I am more than a “potted plant.” By that I mean that I do not engage in mindless shuttle diplomacy by simply relaying settlement numbers back and forth without mindful consideration or guidance. I work hard to understand each party’s claim and defenses and help each party evaluate the strengths and challenges of their respective cases without judgment. I do not beat the parties up, scare the parties into settlement, make moral judgments about the case at hand or act as if I have a crystal ball about what exactly will occur if the case doesn’t settle. However, I am not afraid to be direct with attorneys and parties. I am direct without bashing parties in the process.

Mediations can occur in person, over Zoom or a hybrid of the two. Generally speaking, the parties attend mediations with an attorney, but sometimes without. Whether in person or over Zoom, the parties will be in separate rooms but can have a joint session if both sides ask for one. Over the course of the day, I will meet repeatedly with the parties to deliver important information for consideration as the parties continue to refine their thinking about their case. I discuss the strengths and challenges of the facts and evidence as they develop over the course of the day. The goal of the mediation is to help the parties reach a binding, written agreement that resolves the case in its entirety and for good. Sometimes this takes one mediation session, sometimes a couple of sessions. The case is settled when the parties perform the terms of the agreement.

Why should I attend mediation?

You may have to attend mediation in some instances. If you have a dispute about the purchase of real estate, more likely than not, you will be required to attend mediation before initiating any litigation or arbitration. The California Association of Realtors (C.A.R.) residential purchase agreement contains a contractual term in them that requires in pertinent part that:

The Parties agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action. The Parties also agree to mediate any disputes or claims with Agents(s), who, in writing, agree to such mediation prior to, or within a reasonable time after, the dispute or claim is presented to the Agent. Mediation fees, if any, shall be divided equally among the Parties involved, and shall be recoverable under the prevailing party attorney fees clause. If, for any dispute or claim to which this paragraph applies, any Party (i) commences an action without first attempting to resolve the matter through mediation, or (ii) before commencement of an action, refuses to mediate after a request has been made, then that Party shall not be entitled to recover attorney fees, even if they would otherwise be available to that Party in any such action. THIS MEDIATION PROVISION APPLIES WHETHER OR NOT THE ARBITRATION PROVISION IS INITIALED.

Pursuant to the terms of the C.A.R. residential purchase agreement, if you do not mediate before initiating a lawsuit, even if you win, you could lose out on recovery of attorney fees. Some judges strongly “suggest”that parties attend a mediation during a civil action and may even order the parties to attend. Saying no is not really an option under this circumstance either.

Importantly, you may want to mediate and to do so early in the dispute. Statistics confirm that 97% of cases settle and the vast majority of those cases settle as a result of mediation. Mediation is a cost-effective, efficient and more often than not successful way to resolve claims early in the lifecycle of the dispute.

A mediator is a neutral facilitator who can assist the parties in assessing their claims and gathering information to assist them in making the best decision about how to resolve the dispute. Mediations are an opportunity for parties to have a voice in the outcome of their case. That voice is often stifled once the litigation train leaves the station. Other people have a say in the outcome of your case once litigation begins. Those other people don’t know you or the situation. They get but a snippet of your case yet get to decide its outcome.

Also, litigation is long, frustrating, stressful and expensive. Mediation gives the parties the forum, structure and ability to resolve their case in one day or over the course of a few days. People who are directly involved in the resolution of their own disputes tend to feel better about the outcome and are more likely to follow through with the terms of the settlement agreement.

What is the difference between mediation and arbitration?

Both mediation and arbitration are considered alternative dispute resolution processes, however there are vast differences.

Arbitration is, generally speaking, a process that results in a binding decision rendered by an arbitrator. I say “generally speaking” because there are instances where parties are obligated by a contract to participate in non-binding arbitration before initiating a lawsuit. Binding arbitration is akin to a private trial using a paid arbitrator. There is no judge and there is no jury. The arbitrator is either a practicing attorney or a retired judge.

Unlike in a court trial where the parties pay for jury fees which don’t amount to much, in arbitration, the parties pay for an arbitrator by the hour. Arbitrators can cost between $500 to $1,000 per hour. Arbitrators have the authority to render a decision which then can be converted into a judgment and enforced by a court. For the most part, arbitration awards are not appealable.

Mediation on the other hand is a neutral process whereby as a mediator, I work with the parties to facilitate a resolution which comes in the form of a written settlement agreement which is enforceable by a court if breached. Unlike in binding arbitration, I do not have the authority to render a binding decision but rather facilitate the parties in reaching an agreement.

Common mediation scenario: The long saga of failure to disclose claims in the purchase and sale of real estate

  • A buyer purchases a home and learns after the close of escrow of undisclosed problems with the home.
  • The buyer often contacts their real estate agent to see if they can get more information from the seller about the issues.
  • If there is no resolution of the issues, the buyer often consults with an attorney.
  • The buyer begins to (or continues to) have professionals look at the problems with the house and obtains oral or written estimates. Sometimes if the issues are dire, the buyer will begin making repairs.
  • The buyer’s attorney sends a demand letter to the seller / real estate agent(s) regarding failure to disclose material facts / defects of the property. In the demand letter, the attorney will often demand mediation pursuant to the mediation provision in the purchase agreement along with a demand for monetary damages. If the damages are in excess of $25K, the parties more often than not will end up in a mediation to attempt to resolve the dispute. Sometimes for claims of $25K or less, the attorneys for the parties can work the matter out without the need for a mediation.
  • Real estate agents may, but cannot be forced, to attend a mediation. The real estate agents are not a party to the purchase and sale agreement which contains the requirement for the buyer and seller to attend mediation. If one or more parties alleges claims against a real estate agent, they may voluntarily agree to attend the mediation.
  • The seller will locate an attorney once they are served with a demand from the buyer’s attorney.. Real estate agent will inform their broker that an allegation has been made against them. The seller’s attorney will respond to the buyer’s attorney directly. The attorneys will meet and confer to choose a mediator to conduct a mediation. The buyer and seller will generally split the mediator fees equally. Sometimes the real estate agent agrees to split the fees as well, but not always. Sometimes a real estate agent will agree to attend the mediator as a witness, in support of their client (if that client is not making allegations of wrong-doing against their real estate agent).
  • A mediator will be selected and the buyer and seller (and the realtor if they agree to attend the mediation) will choose a mutually agreeable date to attend a mediation. Mediations occur in person, over Zoom or a hybrid of in-person or over Zoom.
  • The mediator will set a briefing schedule and pre-mediation calls with the attorneys in order to begin to work on the process of attempting to settle the case. A brief is a document that presents the law, facts, evidence of damages and defenses. Often, buyers do (and should) include invoices or estimates for repairs so that the seller and realtor understand the scope of claims and damages.
  • In some instances, a seller and their attorney will ask to visit the home with a construction professional in order to evaluate the buyer’s claims and damages. This is a voluntary site inspection and is often a good idea in cases where the damages alleged are in the six-figure range.
  • The mediator calls the attorneys in advance of the mediation to discuss the case and to ensure that the parties have enough information in order to give the buyer, seller and real estate agent so they are on notice of the claims. The parties will often exchange their mediation briefs on an agreed upon schedule of exchange.
  • On the day of the mediation, the buyer and their attorney meet with the mediator first to discuss their claims. Then the seller meets with the mediator to discuss the claims and defenses. The real estate agent is often on standby ready to meet when necessary. The parties are often in their own rooms/Zoom break out rooms. They may agree to meet in the same room to discuss the matter however are never forced to do so. Mediations often last 6-8 hours.
  • Once the mediator has met with all parties in the mediation, the parties begin to discuss how to resolve the matter.
  • If the parties are able to reach a settlement agreement, the parties enter into a written and binding settlement agreement. Generally the parties will sign the settlement agreement on the day of the mediation.
  • Sometimes, the parties attend a second or third mediation session if they are unable to settle the matter after the first session. This happens in some cases because new information comes to light in the mediation session, more work needs to be done to prepare the matter for settlement or because the parties need to attend a site inspection if they determine they need to do so. Sometimes the parties determine that additional parties may need to be brought into the claim(s).
  • The mediator may help the parties enter into informal agreements to exchange more information in between sessions. In addition, the mediator will often schedule a further session to keep the parties on track and moving towards settlement.
  • Once the parties settle and a formal settlement agreement is entered into, the parties will often have a number of days to comply with the settlement agreement terms. Once compliance occurs, the matter is concluded.
  • If the matter does not settle, litigation or arbitration (and sometimes both) may ensue. More often than not, the buyer and seller have signed the arbitration provision in the purchase agreement so are likely headed to arbitration unless they agree to file and submit to a civil lawsuit in superior court. A realtor is not required to attend arbitration because they have not signed an arbitration provision with the buyer or seller. Claims against realtors are brought in superior court.

Where does mediation fit in the scheme of litigation?

The parties to a dispute can choose to attend mediation at any stage in the dispute. In some instances, mediation is required by contract or by statute before litigation or arbitration can be initiated. In other instances, mediation can occur at any stage of the litigation process, including even once a trial is underway. Some parties choose to mediate after a trial has occurred but when an appeal has been filed. It is never too late to mediate a dispute. Since 97% of disputes resolve short of trial or arbitration, mediation should be part of the dispute resolution plan at the outset of analyzing a case.

Why is my attorney now suggesting I settle in mediation when they told me I have a good case?

Even for “good” cases, the legal system is not the best way to resolve disputes. Courts are overburdened. Juries make stupid decisions. Justice is elusive. Biases create unfairness and inequity. Litigation is expensive. A defendant can file bankruptcy minutes before your closing argument after a long trial (yes, this happened to me). The entire process is risky, nasty, long, costly and for the average human being walking this earth, unpleasant at best. Even if you have an amazingly good case, good cases can lose and terrible cases can win. The justice system in the United States is death by a thousand cuts.

Attorneys are advocates and part of being a good advocate is helping a client resolve a matter in a cost effective and efficient manner. Your attorney is not selling you out by suggesting that you settle a good case. Most attorneys know from experience that in addition to the inherent risks in bringing a case to trial, that the longer a case goes on, the greater the chance that a client will feel badly at the end, even with a good result. As cases go on, good attorneys continue to not only analyze the viability of the case but also stay attuned to the effect the process is having on their client and those around them.

Many times I have run into people out in public who I mediated and settled a case for short of a trial. We exchange pleasantries and I ask them, do you remember the amount you settled for in your mediation? Around 85% of the time, people fumble around, trying to remember. And most if not all of the people I ask this question to tell me that they are so happy that the case is over with and done. This is true even for defendants who may have had to pay a lot of money to settle a case.

And that is why attorneys suggest you settle your case in mediation even when you have a good case.

What is a mediator’s proposal?

A mediator’s proposal is made by a mediator to both sides if they are stuck at the end of negotiations. It is “double-blind”, meaning that neither side knows if the other accepted the proposal unless both sides accept it. This feature is important because it allows a party to accept the proposal without compromising its negotiating position in the event the other side rejects the proposal.

I do not like giving a proposal in all honesty. I want parties to resolve the matter themselves. For a host of reasons, proposals may encourage parties to be less than honest in the negotiations so I avoid them if possible. However, if the parties appear to have negotiated openly and in good faith and are at a true impasse and are in agreement to hear one, I will provide it as a tool to attempt to resolve the dispute.

What happens if we settle the case in mediation?

Cases that settle in mediation result in a written settlement agreement that is binding on the parties. Settlement agreements contain many terms and conditions, the most common ones of which are the agreement to pay money for damages by a date-certain. Other terms require parties to perform certain conditions or abstain from acting in a particular way. Once these terms have been performed, the matter is done, usually forever, as there are terms in the agreement that prohibit future claims other than claims for the breach of the settlement agreement. If the terms of the agreement are not performed, then settlement agreements can be enforced by a court.

What also happens if you settle your dispute in mediation are the following:

You stop driving your significant other crazy discussing the matter.
You sleep through the night.
You stop plotting revenge.
You stop feeling like a schmuck.
You find something else to worry about.
You stop spending money on an attorney and spend it on something more enjoyable.
You stop obsessing.
You stop worrying.
You find something else to worry about.
You pay attention to your child/dog/garden again.
You stop Google-stalking the opposing party.
You start contributing to your kid’s college fund again.
You stop short of drinking the entire bottle of wine.
You get your life back.

Am I admitting liability if I choose to settle?

No one is admitting liability by agreeing to settle or to pay money to settle a dispute. In fact, the settlement agreement itself contains explicit language that states that by settling the dispute, the parties are expressly not agreeing to fault but rather are settling to avoid further expenses associated with protracted litigation.

Can I sue the same party later if I find more problems / claims (A.K.A.: What is a 1542 waiver and why do I care?)

The point to settling a dispute is so that it can be over and done, once and forever. One way to accomplish this is to include what is known as a “1542 waiver” in the settlement agreement which operates to bind the parties to waive all knowns, known and unknown, past, present and future regarding the dispute at hand.

A 1542 waiver is great for the party accused of wrongdoing because it cuts off further claims.

A 1542 waiver can be great for the complaining party because it ends the dispute once and forever. Ending the dispute may result in settlement funds for the complaint party that they can use to remedy the damage complained of. However, a complaining party must be reasonably certain that they will have no future claims.

This issue arises often in cases where a buyer of a home is bringing a failure to disclose claim against the seller of the home. Buyers may be in a rush to pursue a seller but they should breathe for a minute and ensure that they are comfortable with the condition of the home before signing a 1542 waiver because that waiver will operate to preclude future claims regarding the home.

Ways to get comfortable with the condition of the house are to get an independent and thorough home inspection and to check city and county records regarding the property. In addition, a buyer should spend time actually owning the property to get comfortable with its condition.

The Top 15 Reasons People Settle

  1. So they can stop driving their significant other crazy discussing the matter.
  2. So they can sleep through the night.
  3. So they can stop plotting revenge.
  4. So they can stop feeling like a schmuck.
  5. Because they have a job/family/life that they want to attend to.
  6. So they can stop spending money on an attorney and spend it on something more enjoyable.
  7. So they can stop obsessing.
  8. So they can stop worrying.
  9. Because they have other things to worry about.
  10. Because they do not want to spend any of their retirement years in agony.
  11. So their spouse will stop Google-stalking the opposing party at 3am.
  12. So they can start contributing to their kid’s college fund again.
  13. So they can stop short of drinking the entire bottle of wine at dinner each night while the legal problem persists.
  14. Because they realize that people are people.
  15. So they can and will get their life back.

Will the settlement be public / searchable?

The settlement agreement and its terms are generally confidential. There are exceptions to confidentiality built in for a party’s tax professionals or a court of law (in the event that there is an issue with compliance with the agreement). If you settle before a lawsuit is initiated, there will be no public record that you settled a dispute. If a lawsuit is filed and you thereafter settle, then the court docket will show that a matter was dismissed which may be an indication of settlement.

Should I post about my settlement on Yelp and other social media? Should I leave a nasty review for a professional on Yelp after I settle with them?

No and no. Enough said.