0:13 foreign hello and welcome to trusts and Estates weekly I'm your host Kevin bemel and I'm happy to be back after a week off um an unplanned week off um and you may be wondering why I I look a little strange um my my friend bill says I should embrace the pirate um you know not not sure about that but uh yeah have a little uh little bit of a health scare um about a week ago and um um hopefully am I I'm on the road to recovery now
0:50 um but I do have to keep this eye covered at least until uh I get new glasses and uh and so um you know I I have to look a little strange you know this this this is what happens when you're no longer young so but anyway thank you for joining me today um and I guess kind of you know in in along with the theme of um you know mishaps so I had a guest plan for today those of you um who's who saw um either my my newsletter or um the the show prompts
1:28 um unfortunately he had a family emergency at the last minute and was unable to make it and so you know having having being having been in the military and knowing uh sometimes you have to shift gears quickly so I uh latched on to a topic that we can talk about today um that I think you will find worthwhile and interesting um and um the this topic applies not only to the um probate and and Estates realm
2:03 um it it does apply more broadly um in into the sort of um human behavior realm I guess we might call it and that is I want to talk about two methods of what are known as alternative dispute resolution methodologies okay adrs for I guess that's sort of what they what they go by although an ADR also is an acronym for some kind of financial instrument I think but in any event today I want to talk I'm going to talk about
2:38 mediation and arbitration Okay so as much as um we would hope that good solid estate planning will help um avoid disputes either between heirs or who knows it could be between you know a creditor and the estate it could be between um a government entity and the estate um or it could it could you know
3:14 anywhere where there's more than one party involved um there is the possibility of a dispute and in fact sometimes I guess even when there's only one party involved I we end up disputing with ourselves not knowing what to do and so um mediation and arbitration are two ways of handling disputes instead of going to court Okay so while a probate is going to require a court filing regardless that doesn't
3:51 necessarily mean that everything has to go through the court in order to gain get a resolution alternative methods can be used to resolve disputes that then are taken to the court for um approval okay and so and and they can be um we'll we'll talk about um the advantages to these Alternatives um but but the reality is is hopefully they will save time and or money right
4:29 and when you have an estate at issue right the longer it it's it goes on the longer it can the longer it will probably be for the assets to be distributed and the longer takes to settle a dispute the more the assets of the estate whether it's a probate or the state or it's an estate in a trust may get defrayed by the cost of dealing with those disputes before then the remaining assets can be distributed to to The Heirs of the beneficiaries depending
5:04 again on whether it's a a probate or a trust so we're going to look at these two and I I you know normally I would have a little um PowerPoint um but uh there just wasn't time to uh to put one together when I found out that uh my guest couldn't make it and so um I'm gonna I'm gonna talk with without the PowerPoint um I'm I'm sure you know I'm sure you can you can you know deal with it right so the two alternative dispute
5:41 resolution processes again that I'm going to talk about are mediation and arbitration okay so let's talk about mediation first mediation is a voluntary process in which a neutral third party called a mediator helps the disputing parties communicate and negotiate a resolution okay so while the parties may have lawyers helping them out typically the mediator is acting between
6:20 the parties themselves okay not their representatives okay and sometimes mediation will happen with um the the two parties in the mediator all three meeting together and sometimes the mediator will sort of shuttle between the two uh parties and and by the way this can be done either in person or online I know I was involved in a virtual mediation gosh over a year
6:55 ago now okay now here's a key point about mediation and that is the mediator does not make a decision for the parties okay the mediator looks for creative ways to help the parties find a resolution to their dispute okay the mediator has no authority to order anything okay there's no mandatory Discovery meaning
7:32 sharing of information meeting the mediator has no authority to do any of those things all the mediator can do is negotiate encourage come up with Creative Solutions okay so here's where here's here's the um I would say the key key point in a mediation okay that is to find a mediator
8:09 who will look beyond the strict letter of the law in finding a solution so if you're dealing with a mediator and many of them are lawyers many many lawyers go into mediation and all they do is talk about well the law says this and the law says that the chances that that that mediation is going to be successful are lower than if the mediator is looking for ways to solve the the whatever the problems are
8:45 between the parties in a more creative way that may deal outside the legal constraints but may still be a satisfactory way for the parties to settle their differences okay I have a very good friend who's a mediator and one of the reasons why he's so good is because he's very creative and in fact if you go on my YouTube channel and look for the um there there's there's I did two shows
9:22 um with um um oh gosh I almost said I'm going up on his name um Raphael my friend Raphael lappin okay Raphael Lapin is a lawyer but he he does not practice law he is a mediator that's all he does and he's mediated small matters and he's mediated huge matters and his skill comes down to he's able to find areas of mutual interest between parties that allow them to settle disputes beyond what the
9:58 strict letter of the law might dictate okay all right so that is mediation okay now once assuming parties are able to come to an agreement through mediation it is not binding in the sense that it has no legal Force okay so then in order to make it binding the parties will put together a stipulation which is basically something they've agreed to
10:33 that then gets filed with the court okay and is made binding okay so it's not that a mediated solution can never become binding it's that the mediated solution it's all by itself is is just an agreement between the parties it has no legal Force okay so after the mediation is done an agreement can be drawn up the agreement can be signed by both the parties now it's a contract okay and then violation of that contract certainly can be you
11:09 know mediated arbitrated litigated or whatever and it can be made like I said into a court stipulation which gives it it in effect the force the force of law okay um but the meaning this mediated solution itself is not a legal solution okay it's not a binding solution I'll call it okay the the other method uh the other alternative dispute resolution process that we'll talk about is called arbitration okay now arbitration is a also a process in which a neutral third party called an
11:47 arbitrator listens to evidence and then the arbitrator makes a decision about the dispute okay notice this is very different than mediation in mediation the mediator has no authority to make any kind of resolution only help the parties reach one in arbitration the arbitrator actually will make a decision about the dispute how it's going to be resolved okay now
12:24 excuse me um most of the time the parties to an arbitration will be represented by Council and in fact their lawyers will probably be the ones presenting the case the arbitrations that I've been involved in primarily as an expert witness lawyers represented the party to the arbitrator okay now you can have what's called binding arbitration and you can have non-binding arbitration okay depending
13:03 on the situation it may be one or the other now having said that I want to quickly add there are situations where if if the parties go to arbitration it will be a binding arbitration so for example maybe they have there's some kind of contractual dispute and in the contract there is a an arbitration Clause that says if there's a dispute regarding this agreement the parties agree in advance to go to binding arbitration
13:38 okay in that case you the contract specifies the arbitration will be binding now what does that mean what that means is the parties are bound by the arbitrator's decision whether they like it or not okay now in some cases this the arbitrator's decision cannot be appealed okay so once the arbitrator reaches his decision done safini as the French say okay in other cases an arbitration decision may
14:16 be appealable it's going to depend on the specifics of the of the case okay um so uh all right um now um in arbitration um generally speaking there will be so there are different arbitration uh organizations and they set up rules about things like Discovery Discovery is the process whereby each side gets to learn information about the other side's
14:51 case Okay so the so when arbitration Discovery is not as formal as it would be in a court proceeding okay um however there there typically are some rules about it okay and the arbitrator can make um decisions that are binding on the parties relative to Discovery okay as well it's not unusual as I mentioned a couple minutes ago for there to be expert Witnesses involved in an
15:27 arbitration okay whereas in a mediation you may or may not have with expert Witnesses and if you do they're probably acting on the side they're probably not you know giving any kind of testimony because mediation doesn't involve testimony okay in an arbitration the expert Witnesses probably are going they're going to come up with some kind of initially probably what's called work product which means um work that's done on behalf of the lawyer that then if it's going to be
16:03 used in the arbitration that work product will be um exchanged with the other side and then it'll be presented at the arbitration at the time that the expert or experts testify okay now in some cases the parties May stipulate to a single expert to come up with uh information that will lead hopefully to the resolution of the dispute in other cases each side may have their own expert and then the arbitrator will hear the testimony from
16:39 both and decide you know the decide the matter on the basis of that testimony and of course whatever else there is to know about the the particular case okay so um a couple of things um to sort of compare and contrast mediation and arbitration in um in in all cases um mediation is voluntary now arbitration can also be voluntary
17:14 however there is as I mentioned there are agreements where um if a dispute arises arbitration is mandated in the contract as the result as the um resolution mechanism okay and so in that case it's not really voluntary it's required and a court can also order arbitration um to try and you know um settle you know the dispute by the way the court can also order mediation and in that sense the mediation isn't
17:50 voluntary however the court ordered mediation it's not it's not um uh mandatory in the sense that there must be a mediated solution it's just the parties are ordered to go to mediation and and after a time if the mediation can't resolve the dispute so then it goes back to the courtroom setting okay in both cases um the um the there is a neutral third party a mediator in the mediation and an arbitrator in the arbitration okay now
18:27 here's a this is a this is a particularly um sensitive issue so if one party has a relationship with a mediator or an arbitrator okay that mediator or arbitrator is supposed to um uh disclose that that pre-existing relationship and it is by the standards of of most if not all mediation and arbitration organizations it would be improper for that individual to agree to
19:05 mediate or arbitrate that dispute okay so if you're dealing with a reputable mediator or arbitrator okay then they will not accept a case in which they cannot be a neutral third party okay I had a situation where um somebody was advocating for a particular person to be the mediator and yet this person had been friends at one time very close personal friends with this person right and so in in
19:41 discussing this I you know I said uh you know this this person does not have um the appearance of neutrality let alone probably the reality so that that party that mediator is just not going to be appropriate okay so I I would say both of those are important they need to have the reality of neutrality that rhymes um but they also need to have the appearance of neutrality as well okay when it comes to decision making that
20:16 this is a big big difference mediation the parties will come to a mutually agreeable solution if possible in an arbitration the arbitrator makes what is in many cases a binding decision okay cost to typically mediation is less expensive than arbitration which is itself usually less expensive than litigation okay and that's why people typically try mediation arbitration in
20:51 lieu of going to court that's one of the reasons why is because it costs less okay another issue is the speed at within which or the speed with which you can get to um some sort of resolution so mediation can be faster than arbitration and typically will be if it's successful okay now arbitration will usually take longer okay um but it will usually be shorter than
21:29 full-on litigation and that's because of the less formal Discovery the less formal nature of how the hearings are conducted Etc okay and by the way um most arbitration well you do you never have a jury in arbitration let me put it that way okay now you could have even in a civil matter you could in theory have a jury although that's Pro fairly uh unusual these days okay um now you in an arbitration typically
22:04 you're just going to have one arbitrator now there may be a situation very high stakes arbitration where you might have more than one arbitrator like three or something like that that would be very unusual um so you know again one of the reasons why arbitration will typically be faster than litigation is there's just one arbitrator he hears the evidence in the case and he makes the decision and you know okay the last issue I want to sort of compare
22:40 and contrast is privacy okay so a mediation is more private than an arbitration and in fact in most if not all cases what happens in a mediation is not admissible in court if for whatever let's say the mediation is not successful and so the parties end up in court in that case okay what happened in the mediation is not admissible okay now parties can
23:17 stipulate to allow something that happened in the mediation to be allowed into court that that's by agreement of the parties okay but in general what happens in mediation stays in mediation okay as as compared to Las Vegas where what happens in Las Vegas is recorded on computer servers and the security people watch the particularly funny things that people do later at night in order to amuse themselves okay there is no truth to what happens in Las Vegas stays in Las Vegas don't don't buy it at all okay
23:52 I've been rear of house in casinos I've seen the cameras I've seen the recording devices okay mediation though is a private uh um dispute resolution mechanism okay arbitration is less private okay especially depending on how the arbitration came about and what happens in an arbitration um I mean it's it's not that it's admissible or not in court it's just if if the arbitration agreement provides for
24:28 um appealing an arbitration decision in court then of course anything that happened in the arbitration will be um admissible in the court proceeding okay um but in general arbitration is more private than litigation okay what happens in open court is a matter of public record in most cases okay now there are exceptions where the judge you know for whatever reason you know doesn't allow the public in the court there maybe there may be sensitivities there may be a minor involved okay so you can't it's very difficult to make sort of very
25:03 definitive statements and all of this stuff so that's why I say mediation tends to be be more private arbitration tends to be less private both of them though are typically more private than litigation okay now if you have a dispute which alternative dispute resolution process is better and the answer is as you can probably guess it just depends okay it depends on the nature of the dispute it depends on the nature of the parties it depends on how complex the
25:41 dispute is okay there could be multiple issues in dispute okay and it's of course the more issues there are into speed the harder it can be to get to some kind of resolution okay now having said that um when it what really what it really comes down to is the willingness of the parties to really engage and participate in either mediation or arbitration okay so if you know one party just does not
26:17 want to go to mediation the chances that it's going to work are probably pretty small okay um and in fact I have I had a mediation like that last year where um the the the party talked a really good game about um going to mediation but when all when when all was said and done the the party didn't have any meaningful participation at all okay the party used it purely as a forum to try and beat up the other side which I you know in this particular mediation both parties were represented by lawyers okay and I think that was the
26:55 party's lawyers uh sort of you know modus operandi is is let's you know beat the the you know the other party up in mediation right and then uh that party will give up and we'll get what we want um and and it it didn't work because it quickly became obvious that one of the parties didn't really want to mediate a solution they wanted to browbeat a solution okay so in order for mediation to work both parties have to feel it like they have a stake and a willingness in substantial participation dealing
27:32 with the complexity of the issues and really searching for some kind of creative solution if both sides are not um committed to that then you know the chances mediation will work are reduced significantly now with arbitration if if the parties decide to go to arbitration especially if it's a binding arbitration so at that point there is going to be a resolution okay um whether now again if if it's required
28:08 by a contract to go to arbitration so then um they're gonna that's what they're gonna have to do if if there's no requirement for arbitration nonetheless if the parties do agree to go to arbitration and assuming that that they've been properly briefed as to what arbitration means what it is how it works so then you know you're going to get to a binding decision because the arbitrator is going to make the decision okay all right so I think that's really uh
28:47 I think that's that's yeah that's really all I want to say and actually that turned out uh just about right about we're just about at the half hour mark here and so um so anyway um while arbit mediation and arbitration can be used in Probate and estate matters trust matters Etc okay it it can really be they can really be used in any kind of dispute okay you know this show talks about trusts and Estates and so I'm talking about it in that context um but really these alternative dispute
29:23 resolution methodologies um can be used in a wide variety of situations okay and again I invite you to go to my YouTube channel um I believe it's the second most popular um show that I've done it's one with Raphael app in it was the first show we did together where he talks about how mediation works and how it can be used uh how we became a mediator and how he's been able to um help people resolve disputes um much more quickly much less expansively uh through that alternative
29:59 means for uh settling disputes so I I invite you to take a look at uh Raphael's show um and he's he's quite the wreck on tour as well so I think you will enjoy um listening to him speak as well so think so that's that's what I have for you today thank you very much for joining me um I'll see if I can get uh Courtney Rollins uh rebooked uh uh on a later show uh uh hopefully his uh family uh situation turned out okay we we we certainly wish him well um in in in that
30:34 um just to mention before I sign off tomorrow is business lessons from the military we're um gonna be wrapping up our latest segment on Marine Corps War fighting Doctrine okay the principles of War apply to business and we're going to be talking about combat arms and he's like what do combat arms have to do with business tune in tomorrow at 11 A.M Pacific time and you will find out and then on Wednesday at 12 30 PM is my show people
31:11 making money and we're going to talk about what insurance do you really need okay um I think if you listen to advertisements you'll say I go you got to have this insurance you gotta have this insurance this one's mandated that one's man we're gonna go through all that and talk about what do you really need what you know we're going to get into the a bit of the nitty-gritty about what is Insurance really about and what do you really need when do you need it do you always have to carry every type of
31:47 insurance your entire life right it's a very expensive proposition I remember when I had my real estate business um I used to joke that like my my first month in you know of the year was devoted to paying insurance for the rest of the year because I had to have so many different types of insurance coverage um and insurance has only gotten more expensive since then so we want to be very strategic about what type of insurance coverages we have so we are taking care of mitigating the risks that
32:22 we need to take care of without paying a lot of insurance premiums that are unnecessary okay so we'll talk about that on Wednesday people making money 12 30 p.m Pacific time and then next week we will be back again on Monday at 10 A.M for the next episode of trust and Estates weekly so thanks again for watching looking forward to seeing you later this week and signing off Marie darling you are my bell all the best folks