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Alternative Dispute Resolution
Asher N. Tilchin (Co-Chair) During 2005, the Real Property Law Section established the Alternative Dispute Resolution Committee as a new special committee of the Section. The purpose of this Committee is to promote the use of mediation and other forms of alternative dispute resolution within the real estate bar. As its first Co-chair, I have had the rare opportunity to influence the long-term mission of a new Committee. We have established several initial goals:
A question that often arises is why does the Real Property Section need its own ADR Committee? After all the State Bar already has its own ADR Section. The answer is two-fold: First, the ADR Section of the State Bar encourages the formation of specialized ADR committees within its various substantive law practice sections. Such committees, in addition to promoting the publication of relevant articles, also provide Section members access to other Section members having expertise within both their areas of legal practice and alternative dispute resolution. Second, and more importantly, the unique nature of real estate allows for more creative dispute resolution potential than other kinds of disputes. Many practitioners regard ADR primarily as a means of settling litigation. Most transactional lawyers are at least vaguely aware that sometime after a lawsuit is commenced and before a trial is scheduled, trial judges often require that a third party neutral first to try to “mediate” a settlement between the parties. While this is an accurate understanding, ADR has much broader application and potential in real estate transactions. ADR is a cost-effective viable option to avoid litigation. Transaction attorneys understand that commercial litigation is always expensive and time-consuming, so much so that even the winning side typically still loses economically. However, they often fail to incorporate ADR requirements into transactional documents which require the parties submit any disputes to facilitative mediation as a precondition to commencing litigation. Significantly, real estate disputes are much more amenable to win-win settlements than other types of disputes. If you and I are fighting about the value of a pound of nails, it is probably objectively true that one of us will win and the other of us will lose. Real estate disputes, on the other hand, often can be resolved in creative ways that promote win-win settlements. For example, a fight among competing parties over who owns or controls property might be effectively resolved by directing a sale of the property by a qualified third party with the proceeds distributed according to a formula conceived during the mediation process. Conditions governing the manner that property may be sold can be mediated to overcome a dispute among partners about whether to sell. Even land use disputes can be resolved by the mediation of site plan requirements and conditions. These are just a few examples of potential mediated real estate dispute outcomes. The kinds of disputes and the kinds of win-win remedies that may be achieved are limited only by the imagination and creativity of the mediators and the willingness of disputants and their attorneys to utilize the process. Even if the mediation“fails” when it does not fully resolve all of the issues in a dispute, mediation can maximize the use of factual stipulations and result in agreements narrowing the need for discovery in the ensuing litigation, with obvious cost saving advantages to both parties. In the coming year, the Committee is presenting a program to real estate boards to promote greater use of pre-litigation mediation requirements in listing agreements and purchase agreements. Plans are underway for future programs, for both Section members and other real estate groups and the creation of an online ADR library. We hope that you will utilize the services of our Committee and consider joining our growing ranks. |
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