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“Make this go away”: Corporate America’s New Take On Litigation

August 17, 2009 | This was first posted By Patrick J. Lamb | His blog is at

“Make this go away”: Corporate America’s New Take On Litigation

The online version of National Law Journal contains an interesting analysis of the impact the recession is having on how corporate America looks at litigation. In For Litigators, A Different Kind Of Recession,author Karen Sloan analyzes various data and surveys and reaches some interesting conclusions. Here is the critical part for me:

A survey of general counsel by Altman Weil, which is owned by The National Law Journal’s parent company, in late 2008 found that 75% of general counsel had their budgets cut in 2009. The average decrease was 11.5%. “It’s not down 2 or 3%. It’s double digits,” said Susan Hackett, senior vice president and general counsel for the Association of Corporate Counsel. “They can’t afford litigation. There’s a real sense of, ‘Make this go away quickly and quietly.’ ”

Hackett has observed a greater reluctance by companies to initiate litigation or defend themselves in court. Instead, they are “looking to apply the least expensive Band-Aid” to their legal problems. “I’m seeing a greater focus on saying, ‘We will try to make you whole somehow. What can we do? What do you want?’ Sometimes money isn’t the ultimate goal,” Hackett said.

Hackett’s point was echoed by Peter Sloane, a litigation partner at Cahill Gordon & Reindel in New York: “I see clients who are much more focused on the cost-benefit analysis before starting litigation. There’s a much greater emphasis on thinking outside the box in approaching legal disputes.”

About time. I am left to wonder what the hell people were thinking about before. Did they think litigation was like Madden NFL 2010, some computer game to play to satisfy some competitive urge?

Litigation should always be the very last resort. You are taking a business problem and asking someone else to solve it for you. “Hey you, dude on the street, solve this problem for me.” We call that dude a judge. And sometime we don’t trust the one dude, so we go even further and look for 12 (or 6) perfectly average strangers with no special skill or expertise to decide how to solve a problem. We call those strangers jurors. This form of problem-solving is very costly, and places a tremendous load on the gladiators who stand in front of the dude or strangers.

I am a lawyer whose favorite part of being a lawyer is trying cases. But having stood in the well so many times and looked into the eyes of so many dudes and strangers (by the way, dude is not gender specific), I have come to know that trials represent, in many but not every case, a fundamental failure of imagination. It’s good to know that the economy appears to have stimulated imaginations so that businesses are finding ways to solve problems in different ways.

Mentally disabled seniors suffer in group home prison camp

SAN BERNARDINO, Calif. (KABC) — Authorities in San Bernardino uncovered what are described as prison camp conditions at a group home. Investigators say seniors, some mentally disabled, were abused, crammed into chicken coops and forced to go to the bathroom in buckets.

Authorities say the facility was an illegal adult group home that was not licensed by the city or the state.

The home owner, 61-year-old Pensri Sophar Dalton, was arrested Friday. She’s accused of forcing mentally ill adults to live in prison camp-like conditions; housing them in converted chicken coops with razor wire fences surrounding the facility and padlocked gates.

City Attorney James Penman says 22 people were living in three dilapidated buildings – none of them with indoor plumbing. He says residents used buckets as toilets.

“The house has been converted. We believe there may be some illegal conversions in the bedrooms. People were living in rooms as small as 6 to 15 feet, two beds and a mattress to the room,” said Penman.

He says the conditions were amongst the worst he’s ever seen.

Dalton was charged with 16 counts of causing harm to elderly adults. She was booked at the West Valley Detention Center, where she remains in custody.

“I was wondering if that’s illegal or not ‘cuz that comes over on our property too and it’s razor wire like they use in prisons,” said Kevin Milner, a neighbor.
The facility has been shut down. A city attorney investigator says most of the 22 residents were picked up by family members or taken to licensed care facilities.

Watch the video here:

How can we make sure this doesn’t happen to us or our parents?

(1) Make sure an estate plan is in place, and that the plan names who will take care us or our loved ones if incapacity strikes.

(2) Make sure the person given the authority to determine where you or your loved one lives is the correct person to do the job. Making sure the right person is: (a) paying your bills; and (b) determining where you live is the most important decision you will make regarding your estate plan. Don’t pick a child just because they are your child, and don’t pick a neighbor just because they are your neighbor. Watch closely how a person conducts their own affairs and how they treat other people. If the person you want to pick doesn’t treat others with respect, odds are they won’t treat you well, especially if you are incapacitated.

(3) Finally, consult a competent attorney to review your selections with you. An attorney who specializes in this area will be able to give you their experience and wisdom on picking the right person so that you don’t end up living in a chicken coop when you can’t speak for yourself.

I’m not dead yet! Why do I need Estate Planning? Part 2

You may be under the assumption that a durable power of attorney will prevent the court’s involvement at incapacity- A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so. However, many financial institutions will not honor one unless it is on their form – even though such a requirement is against the law. And, if accepted, it may work too well — giving someone a “blank check” to do whatever he/she wants with your assets. Court action could be needed to stop someone from abusing their authority. A power of attorney can be very effective when used with a living trust, but risky when used alone. Under either scenario, your agent could end up going to court to get the necessary authority to handle your affairs.

More information on “Power of Attorney”- A power of attorney is a document that allows you to appoint a person or organization to handle your affairs while you’re unavailable or unable to do so. The person or organization you appoint is referred to as an “Attorney-in-Fact” or “Agent.” A “Durable” Power of Attorney – makes it so that the general, special and health care powers of attorney can all be made “durable” by adding certain text to the document. This means that the document will remain in effect or take effect if you become mentally incompetent.

Another important part of your estate planning should include an “advance health care directive”- which lets your physician, family and friends know your health care preferences, including the types of special treatment you want or don’t want at the end of life, your desire for diagnostic testing, surgical procedures, cardiopulmonary resuscitation and organ donation. By considering your options early, you can ensure the quality of life that is important to you and avoid having your family “guess” your wishes or having to make critical medical care decisions for you under stress or in emotional turmoil.

In considering this it is important to understand the HIPAA Privacy Rules-
HIPAA provides federal protections for personal health information held by medical entities and gives patients an array of powerful privacy rights with respect to that information. HIPAA’s privacy protections are so powerful that they interfere with estate planning. As a result, you need to give your loved ones a written HIPAA authorization that gives them access to your medical records.

I’m not dead yet! Why do I need Estate Planning? – Part 1

Although Estate Planning is generally thought of in the context of what happens after your death, there are several instances when comprehensive Estate Planning can be crucial while you are still alive.

If you can’t conduct business due to mental or physical incapacity (Alzheimer’s, stroke, heart attack, etc.), and you do not have a comprehensive estate plan, only a court appointee can make decisions for you – even if you have a will. (Remember, a will only goes into effect after you die.) In California, this is known as a conservatorship. Once the court gets involved, it usually stays involved for the rest of your life and the court, not your family, will ultimately control how your assets are used to care for you. This public court process can be expensive, time consuming and is very difficult to end. It does not replace probate at death, so your family may still have to go through the court system twice! Once for a conservatorship, and the second time to probate your estate.

A comprehensive Estate Plan in California has four documents that assist you while you are alive but incapacitated. A Trust, a Durable Power of Attorney, an Advanced Health Care Directive, and a HIPAA authorization are all very important documents that you need in order to keep your affairs out of court while you are alive.

A Trust can be a very important part of your incapacity plan. All too often, we focus on who will be the trustee of my trust after I am gone – who will pay my bills and distribute my assets? However, the vast majority of us will become incapacitated before we die. Your successor trustee (think of your successor trustee as a manager) will manage your assets that are named in your trust when you cannot manage them yourself. Financial institutions and title companies are much more comfortable working with a successor trustee than they are with an agent under a power of attorney.

Reverse Mortgage Fraud Schemes on the rise

In the wake of the mortgage meltdown, regulators and law-enforcement officials are sounding alarms about the potential for yet another type of mortgage fraud—this time, in the small but fast-growing reverse-mortgage market. Such fraud, though still rare, “is occurring in every region of the United States and reverse-mortgage schemes have the potential to increase substantially,” according to a recent publication issued by the Federal Bureau of Investigation and the Office of Inspector General at the U.S. Department of Housing and Urban Development, which oversees the federally insured loans that account for some 99% of the reverse-mortgage market.

Available to people 62 and older, reverse mortgages allow homeowners to convert their home equity into cash. Instead of writing a check to the bank each month, the bank pays the homeowner, who can elect to receive a lump sum, a line of credit or monthly payments. The loan is repaid, with interest, when the borrower dies, moves, sells the house, or fails to pay property taxes or homeowner’s insurance.

Reverse-mortgage fraud, typically committed by homeowners’ relatives, caretakers or financial advisers, has also been cropping up recently in schemes to unload distressed real estate. Regulators cite cases in which real-estate speculators bought properties on the cheap and then sold them, using inflated appraisals, to senior citizens willing to take out reverse mortgages. Lenders and administrators of the HUD program say reverse mortgages, for the most part, are still working well. “There are little scams around the edges,” says Meg Burns, director of Single Family Program Development for the Federal Housing Administration, the HUD division that administers the reverse-mortgage program. Recent data—and HUD’s own inspectors—indicate reverse-mortgage scams are on the rise.

So far this fiscal year, which ends Sept. 30, HUD has referred 29 cases of suspected fraud to its Office of Inspector General for investigation, up from two the year before. Jacqueline Felton, who heads the FBI’s mortgage-fraud team, says her agency is also seeing an increase. Indeed, HUD’s data on suspected fraud likely understates the extent of the problem. Anthony Medici, who in June testified before Congress as a special agent in the OIG’s Criminal Investigation division, said current cases “involve hundreds of properties.”

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