The United States Court of Appeals for the Fifth Circuit held that a NASD arbitration panel did not exceed its authority when awarded attorney’s fees directly to counsel. In Institutional Capital Management, Inc. v. Claus, No. 08-20710 (5th Cir. Feb. 11, 2010), Leonard Claus and Institutional Capital management (ICM) entered into an agreement to buy and sell bonds. After a dispute over some bonds that Claus originally purchased to sell to Sterling Financial Investment Group, Inc. (Sterling) Claus sued ICM alleging negligence, gross negligence, negligent representation, breach of contract, violations of federal and state securities laws, and violations of federal and state statutory fraud. Claus hired Michael Fallick to represent him on a contingency fee basis. An arbitration panel at the National Association of Securities Dealers (NASD) awarded Claus $25,000 in compensatory damages and $70,000 in attorney’s fees directly to Fallick. The panel also charged Claus $22,000 in arbitration fees. Thus, the net award to Claus was for $3,000. Sterling and ICM moved to vacate the arbitration award and a magistrate judge agreed because “the arbitration panel exceeded its authority when it awarded attorney’s fees directly to Fallick in violation of Texas law.” The Fifth Circuit first highlighted the Federal Arbitration Act (FAA) grounds to vacate an award. However, the court noted that there is no need to consider whether the alleged legal error violates the FAA, because there is no reversible error in this case. The court explained that Texas law prohibits the award of fees to be paid directly to counsel unless authorized by statute. But it noted that a party that has been ordered to pay attorney’s fees has no standing to challenge to whom those fees are paid to. The court also addressed appellees’ argument that the fee award was unreasonable. It stated that “[a] disproportionate fee award is not tantamount to an excessive attorney’s fee award under Texas law.” Accordingly, the court reversed the judgment of the magistrate judge and reinstated the arbitral award. Technorati Tags: ADR, law, arbitration
Continue reading...Professor Mitchell H. Rubinstein at the Adjunct Law Prof discussed last week this mediation confidentiality case: Anthony v. Andrews, 2009 WL 4547605 (Ohio Ct. App. Dec. 4, 2009), is an interesting mediation case. Rebecca Anthony sued Dr. Annette Andrews in state court alleging medical malpractice. During a court-ordered mediation, Andrew’s counsel informed the mediator that Andrews would not give her consent to settle the matter and had never given consent to do so. The mediator included these statements in his mediation report. Upon viewing the report, the trial court concluded that Andrew’s counsel had failed to negotiate in good faith during the mediation. The trial court sanctioned Andrews in the amount of Anthony’s attorneys fees, lost income, and expenses in attending the session. Andrews appealed to the Court of Appeals of Ohio. The Court reversed. The Court held that the statements regarding Andrew’s consent were statutorily privileged from disclosure as mediation communications and failed to meet any exceptions to the privilege as permitted by statute. The Court rejected Anthony’s argument that no privilege should apply since no mediation took place because Andrew’s counsel lacked settlement authority, explaining that the statute nonetheless considers certain statements made pursuant to mediation as mediation communications. This was not a labor case which is governed by federal law. Also, most states do not have mediation privilege statutes. We would like to hear how other jurisdictions handle the issue of mediation confidentiality! Related Posts: 2009 Developments in Mediation: Mediation Confidentiality (Dec. 31, 2009) The Uniform Mediation Act and Confidentiality (Oct. 2, 2009) Mediation Confidentiality (Sept. 19, 2009) Legislating ‘Bad Faith’ in Mediation (Sept. 4, 2009) Technorati Tags: ADR, law, mediation
Continue reading...The Alternative Dispute Resolution Section of the State Bar of Texas has recently published its Winter 2010 newsletter. The newsletter contains the following articles: Judicial Survey on Alternative Dispute Resolution Processes Preliminary Analysis and Report (2009) Improving the Quality of Healthcare: Resolving Claim Disputes in Medicine Mediation of Medical Licensure Issues Before the Texas Medical Board Thankful for Unanswered Prayers? Unconscionability Equilibrium Unconscionability and Arbitration One Shot or Two Shots Arbitration Ethical Puzzler Reflections From the Edge 2009: A year of ADR Idea ADR on the Web: Making Mediation Your Day Job You may download this issue here.
Continue reading...By Holly Hayes Our health care conflict resolution series began with Part I, applying the “principled negotiation” method to health care (post available here) and followed with Part II, examining a case study of “Separating the People from the Problem” (post available here). In this post, let’s take an example of a physician and a hospital group negotiating to buy the physician’s practice to see how “positional bargaining” results in failure to find a solution. Physician: I need you to buy my practice for $X and I will not take weekend call. If you don’t want to buy my practice, my partners and I can take it down the road to hospital Y. Hospital Representative: We are willing to offer you $Z for your practice and we must have a weekend call rotation as part of the deal. Physician: You don’t care about me or my practice, this discussion is over. Wise solutions acknowledge interests, not positions. The basic problem with the physician and the hospital representative is not that one is buying and one is selling, the conflict is between their interests or their concerns, fears, needs and desires related to the negotiation. What are some tools to help reconcile interests rather than merely seeking to compromise positions? In Getting to Yes, Roger Fisher and William Ury describe techniques for identifying interests so that options can be developed that meet both party’s interests. Ask “Why?” – put yourself in their shoes. Ask “Why Not?” — why doesn’t the other side agree with us? Realize each side has multiple interests – the physician wants a secure income for his family, he wants time with his family so he does not want to always be on call. Realize the most powerful interests are basic human needs – security, economic well-being, control over one’s life, a sense of belonging, recognition. Talk about interests – make your interests come alive for the other side. The hospital representative can talk about ways to include the physician in decision-making at the hospital and about what the hospital needs in terms of income to make a profit to reinvest in its people and physical plant. Using these techniques, let’s see how the conversation between the physician and the hospital representative is more productive: Physician: I need you to buy my practice for $X and I will not take weekend call. If you don’t want to buy my practice, my partners and I can take it down the road to hospital Y. Hospital Representative: I understand you have spent your time and your own income to build such a successful practice. You have been a great partner for us for five years. Can you help me understand how you arrived at the $X figure and talk a little about the call issue? Physician: We recently bought an MRI and quite a bit of other costly equipment that would be included in the purchase price. I have spoken with some other physician practices and this price seems fair. I just want to be fairly compensated for the value my partners and I have brought to this practice over the past five years. In terms of call, I want time with my family on the weekends. I am afraid that if one of my partners leaves, I will have to take both my call and their call and who knows when a new physician could be recruited. I want control over my life. Hospital Rep: Would it be alright with you if we had both your accountant and my CFO take a look at the practice financials? There are also some industry standards we could apply to the purchase price. As for call, you make a very good point about how much call would be needed. Of course, my problem is that I need to provide certain coverage or the hospital cannot provide certain services and those patients will go down the road. This is a problem across the country and I know many hospitals have begun to pay very high prices to provide call for certain specialties. I wonder if you would consider being part of our medical staff executive committee as part of a purchase package? This would not guarantee you no call, but it would give you a chance to help make policy about how we move forward. If we can reach agreement on purchasing your practice, it will take both of us to make the best decisions for a successful partnership. Physician: Yes, I can agree to those next steps. I am starting to feel a level of comfort that I will be treated fairly. As the two parties talked about their interests by asking questions and realizing that the most powerful interests are basic human needs, they both came closer to the purpose of negotiating — serving their interests and finding an acceptable solution. Part IV in our series will explore more on this topic – “how to invent options for mutual gain”. We welcome any comments you have about conflict you have experienced in health care and lessons you have learned. Technorati Tags: Healthcare, ADR Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at: holly@karlbayer.com.
Continue reading...Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.
Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.