Will the number of cases appearing before probate judges increase dramatically in the next several years – specifically estate and trust disputes as well as fiduciary cases? The answer is “yes” according to Kenneth J. Peace, head of the litigation group at Braun Siler Kruzel, PC in Scottsdale, Arizona.
In an article titled “A Call to Mediate,” (Trusts & Estates, July 2007), Mr. Peace makes this assertion based upon the aging of baby boomers, the rising number of millionaire households, a generation of children born from 1979 to 1994 labeled as the “Entitlement Generation,” and a plethora of new litigators eager to profit from family disputes. Mr. Pease posits that the effect of this trend will be to overwhelm the court system, leading to even longer settlement times than currently seen and overburdened and possibly less attentive judges.
Litigation is often long, all-consuming, divisive, and potentially very expensive. Mr. Peace, through his article, suggests an alternative to the litigation process – mediation. Mediation offers family members an opportunity for conflict resolution without the negatives of the litigation process. It is a process in which a neutral third party acts as a facilitator to assist in dispute resolution. According to Ray D. Madoff, (“Mediating Probate Disputes: A Study of Court Sponsored Programs,” Real Property, Probate and Trust Journal, Winter 2004) “Attorneys and judges operating within jurisdictions in which mediation of probate disputes regularly occurs are quite enthusiastic about it.”
Mediation is not the same thing as arbitration. Arbitration involves submitting a dispute to one (sometimes more) impartial persons, who then render a final binding decision, often in the form of an “award” to one side or the other. In essence, the arbitrator takes on the role of the judge.
Mr. Peace states in his article that “It is important to select one or more mediator(s) with particular experience relevant to an issue that needs resolution, be it a lawyer, a certified public accountant, a financial or business planner, etc.” It is important to note that because this process occurs outside the legal arena, there is no designation that qualifies someone to participate in mediation. This allows the parties more flexibility to choose the most qualified person or firm for their specific dispute. In some states, however, courts have a mediation program for contested probate cases.
Disputes regarding estates and trusts commonly involve a business valuation element. In fact, quite often valuation is the point of disagreement. While there are professionals who serve exclusively as mediators, it might not be prudent to hire such a person if he or she has no relevant valuation knowledge or experience. Instead, a business valuation professional with a reputable firm, pertinent valuation experience, and experience in mediation is often far more qualified to bring the parties together.
Disputes well-suited for mediation are not limited to estate and trust cases. Mercer Capital recently served in a mediation capacity for a privately held firm who had proposed the repurchase of shares from certain outside shareholders. The firm hired two business appraisers to perform an analysis to ensure the fairness of a proposed transaction. Mercer Capital reviewed the two business valuation reports, and because the values were greater than a predetermined percentage apart, Mercer Capital worked with the business appraisers on both sides to reconcile value.
While no legal experience is necessary to act as a mediator, it is certainly beneficial to have some familiarity with the legal system. Mercer Capital has been providing various litigation support services to attorneys for over 20 years and has been involved in more than one hundred cases.
Mediation can be the best alternative for certain disputes. If you are involved in a dispute that is possibly headed to probate court, consider mediation as an alternative to the litigation process. Specifically, if the dispute involves valuation issues, you may want to consider contacting a business valuation expert directly to serve as a mediator. The decision to do so could save precious time, money, and valued relationships.
Mercer Capital has served as a mediator in several previous engagements and would be happy to answer any questions you may have about the mediation process or other valuation services that may be beneficial to a business owner or shareholder involved in a legal dispute. If Mercer Capital can help, give us a call at at 901.685.2120.
Reprinted from Mercer Capital’s Value Added (TM), Vol. 19, No. 3, October 2007.