Heather Macklin

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Dispute resolution: litigation v. mediation

Litigation vs. Mediation

Posted by Heather Macklin on

In business, it’s common for disputes to arise. Developing cost effective strategies for dispute resolution is critical for achieving a healthy bottom line. Because employers and business owners generally seek to avoid litigation (it is time consuming, expensive and emotionally draining), mediation has become more common.  The below summary compares the differences between mediation and litigation and provides insights as to why the popularity of mediation is on the rise.

Employers and Business Owners understand

Litigation – Refers to a formal process that uses either state or federal court to resolve the dispute. To determine the court, you must examine the claim(s) asserted, the amount at issue and where the parties reside. Though you filed your claim with the court, the judge may require the parties attempt to resolve the dispute through mediation.

Mediation – Refers to an informal and confidential process that uses a neutral third-party, the mediator, to help the parties discuss their differences and consider potential solutions to those differences. If the parties cannot reach an agreement “that both parties can live with,” you still have the right to file a claim with the appropriate court to have a judge or jury determine the outcome of your case.

Where is the process held?

Litigation – Hearings are held telephonically or in the court room.

Mediation – You and the other party determine if the mediation is held at your counsel’s office, opposing counsel’s office, the courthouse, the mediator’s office, or even virtually. Depending upon the mediator’s and/or the parties’ preferences, the parties may be placed in the same room or in separate rooms. If in separate rooms, the mediator will walk between the rooms and present each party’s positions, thoughts and arguments to the other party.

Are the conversations confidential?

Litigation – Correspondence is not confidential and can be used as evidence at a hearing unless the correspondence is related to negotiations between both parties’ counsel to resolve the dispute.

Mediation – Correspondence and evidence presented during a mediation session is confidential and cannot be used by the other party as evidence at a hearing.  The mediator cannot be called to testify and will maintain the confidentiality of everything learned through the mediation.

What is the length of the process?

Litigation – The litigation process typically takes 2-3 years to reach a court judgment. The case may extend beyond 3 years if multiple motions are filed and depending on how complicated the claims are.

Mediation – The mediation process typically takes less than a year, and can sometimes be resolved within weeks. It often depends on the mediator chosen and schedules of all involved. Sometimes, you may attend multiple mediation sessions if both parties are continuing to progress towards a resolution.

Who determines the outcome?

Litigation – Judge or Jury. Besides presenting your case, the outcome is completely out of your hands and in the hands of the judge or jury.

Mediation – You. The mediator does not tell you who is right or wrong. The mediator does not render a decision. The Mediator is there to guide the conversation between you and the other party. Ultimately, you are the one presenting, crafting and responding to potential solutions. You are the one making the decision to accept or decline a solution. The outcome of the mediation is in your hands.

What is the potential outcome?

Litigation – The judge or jury determines a winner and a loser. The judge or jury determines the damages owed to the winner based on claims presented, case law and statutes.

Mediation – Both parties are winners. The parties, of their own accord, mutually decide to end the dispute and accept an outcome that both can live with at the end of the day.

What will the process cost?

Litigation – Below are conservative estimates of costs expected to reach a court judgment in Wisconsin courts. The costs will vary depending on the complexity of your claims and/or the dispute itself. For instance, if your case requires expert witnesses, you will pay more than the estimated costs. Also, the opposing party and/or counsel may cause your counsel to have to submit motions and briefs, which will increase your costs above the estimated costs. Remember, though, that you and the opposing party may settle the dispute prior to receiving a court judgment.

Court Filed in Represented by Counsel Costs
Small Claims Yes Filing Fees plus $5,000
Small Claims No Filing Fees
Large Claims Yes Filing Fees plus $25,000 – $50,000
Large Claims No Filing Fees
Federal Claims Yes Filing Fees plus $30,000 – $60,000

**Wisconsin and Federal Courts require companies be represented by counsel in Large Claims.

Mediation – Mediators usually charge between $250 – $350 per hour. If your case requires knowledge of a unique field or industry, the mediator may charge more than $350 per hour.

What about receiving my legal fees?

Litigation – Whether you receive legal fees depends on statutes, contract language and the discretion of the judge. If statutory or contract language allows the winning party to receive legal fees, the judge will determine the reasonable legal fees that the losing party will pay. The table below shows what you will receive if the judge awards legal fees.

Court Filed in Legal Fees
Small Claims $150 if judgment in favor; $300 if represented at trial and judgment in favor
Large Claims Reasonable fees – depends on contract and/or statutory language
Federal Claims Reasonable fees – depends on contract and/or statutory language

Mediation – Whether you receive legal fees depends on the other party’s willingness to agree to pay your legal fees. Most likely, the other party will not explicitly agree to pay your legal fees.

How do I locate a mediator?

The state bar association has a list of mediators who can be contacted for an appointment. However, it is advisable to work with your attorney first to determine if mediation is right for your case.  Your attorney will spend time investigating and selecting the right mediator for your case.

Would you like to learn more about mediation? Contact us here. Epiphany Law Partner Heather Macklin is an accredited mediator with over 20 years of litigation and dispute resolution experience.

Avoiding Constructions Lawsuits

3 Tips for Avoiding Lawsuits in the Construction Industry

Posted by Heather Macklin on

The construction industry faces unique challenges. Disputes over quality, timing and non-payment are common between project owners and contractors. But, the good news is there are several strategies your company can use to avoid costly lawsuits. Review the list below to learn how you can protect your construction company.

1 – Clear Communication is Key 

If you want to avoid disputes with clients, employees and competitors, good communication is essential. You should always take time to clarify expectations and make a habit of doing the following.

  • Never over promise.
  • Keep the promises that you make. However, if you cannot keep your promise for some reason, let the person know. Offer a plan on how you will resolve the issue and make it right. Call first, then follow up with an email detailing the agreed-upon terms to resolve the issues.
  • Don’t avoid difficult situations or conversations. Avoidance is more likely to cause the problem to escalate.
  • Evaluate how your tone may be perceived. And remember that email or text messages can make it difficult to effectively convey your desired tone.
  • Don’t be afraid to swallow your pride. Doing so could help you resolve an issue before it becomes a legal matter.
  • Evaluate and enforce best practices regarding how your employees should communicate.

2 – Make Documentation a Priority – especially when it comes to change orders

To help protect yourself and your business, take time to document important communications and commitments. A few best practice tips for keeping appropriate documentation:

  • Don’t do handshake deals. All contracts should be committed to writing – even if it’s a simply one-page agreement setting forth the most basic terms, like price, scope and timing.  In particular, when dealing with change orders, it is especially important to get everyone’s approval in writing.
  • Be sure to have key customer contracts reviewed by counsel, in order to help you understand the relevant provisions. It is also best to hire legal counsel for, at a minimum, reviewing and/or drafting of custom deal contracts, settlement agreements, employee handbooks, document retention policies, sexual harassment policies, and non-compete agreements.
  • Be sure to have counsel review your company’s standard contracts every 2 to 3 years.
  • Save only what is important, such as contracts, loan documents, key documents underlying contracts and relevant negotiations, proof of payment, calendars, and tax information.

Important note – If you are anticipating business litigation, you must implement a litigation hold (also known as a preservation order or hold order).  Once you know of the existence of a dispute or even a potential dispute, save all information. The loss of relevant evidence because of failure to institute a litigation hold can result in negative sanctions against you by the Court in any related litigation.

3 – Protect Yourself: Review your insurance, business formation and employee classifications regularly. 

Insurance isn’t a popular topic of conversation, but it is an important aspect of risk mitigation especially in the construction industry. Review the following points to help ensure your business is accurately covered.

  • Make sure that all current policies are correct and appropriate for your organization.
  • Investigate your options with multiple brokers.
  • Determine if the insurance company you are working with focuses on your niche business needs. Are they industry-specific to you?
  • Understand your potential need for multiple types of policies, including general commercial liability, errors and omissions, auto, property, workers comp, product liability, and other riders/endorsements.
  • Understand the obligations you owe to your insurance company, such as notice requirements, providing documents and cooperating fully in any investigation. Don’t settle with the other side without first getting your insurance company involved if you expect your insurance company to contribute funds toward the settlement.

Business Formation – Occasionally, business owners are surprised to learn their business structure is not aligned with their type of work. To help minimize liability, you should engage counsel to help determine the appropriate corporate entity for your business. You will also want to keep corporate records, annual reports and minutes if your business formation requires it. Make sure to follow all the formalities of your business structure in order to ensure protection from personal liability. And don’t commingle funds or use the company bank accounts as your personal piggy bank!

Employee classifications and wage issues – The Fair Labor Standards Act and the US Department of Labor (DOL) have established strict criteria for determining how your employees must be paid. On January 1, 2020 the DOL announced an updated overtime and salary level threshold. It’s important your company stays up-to-date and adheres to all labor laws.  Unfortunately, many employers (especially in the construction industry) haven’t correctly classified their independent contractors and employees or are engaging in “banking” of hours that directly violates the overtime laws. Often employees are thought to be exempt from receiving overtime pay when they actually should have non-exempt status and be paid 1.5 times for any overtime hours earned each week. Payroll errors can lead to potential lawsuits (including class actions) from either past or present employees.

To learn more about business litigation and how you can proactively protect your construction business, you can contact us here or call us at 920-996-000.

SCAM ALERT: Payment Fraud Warning

Posted by Heather Macklin on

It is no secret that schemes and scams designed to fraudulently separate you from your money abound.  Every day it seems we learn of new and creative ways criminals have devised to defraud innocent people. Sometimes the schemes are brand new, sometimes they are recycled.  Whether new or old, however, they can hurt the people who fall prey to them.

Recently, we have learned that banking institutions have seen increased activity surrounding a fraud scheme that has been around for a while.  You may be aware of this particular scheme, but we believe it can’t hurt to remind you to be vigilant and use best practices to protect yourself from fraud.

Here’s how the scam plays out.

You receive a fraudulent email or letter disguised as one of your current suppliers.  In the communication, the “supplier” informs you that they have recently changed their payment processes or their banking relationship and provides new wiring, ACH or other payment information to be used on all future orders.  The communication seems entirely legitimate, so you direct your accounting department to input the changes and your next payment is made accordingly.  Unfortunately, the criminals now have your money and it will be withdrawn from the account before you catch on and can get it back.

How you can protect yourself.

ALWAYS double-check directly with your suppliers BEFORE you change any information in your company’s payment system.  Make a phone call directly to a trusted contact at your supplier to confirm whether the communication and new payment instructions are legitimate or not.  A phone call to a direct contact is better than email.  Email can be hacked and/or redirected.  A phone call will take only minutes but will provide you with significant protection against scams.  It will also signal to your suppliers that you are vigilant and care about your relationship with them.

Long story short: Do NOT make any changes to how you pay your suppliers or vendors until you first confirm with them that the change of payment instruction is legitimate.

Fraudsters often target businesses, trying to steal money or personal information. Make sure your business is taking proper steps to avoid scams. Employee education and cyber security are paramount  for defending your business from fraud.

 

About the Author

Heather Macklin

Heather J. Macklin is an experienced corporate litigator. She has spent her legal career helping businesses and business owners find practical and economic resolutions to legal disputes. You can learn more about Heather here.

Epiphany Law Business Litigation

5 Tips to Avoid Business Litigation

Posted by Heather Macklin on

In business, lawsuits aren’t uncommon. Many successful executives and business owners will face a lawsuit at some point in their careers.  While you may not always be able to avoid litigation, there are steps you can (and should) take to best protect your interests when disputes arise.

1 – Improving Communication is Key to Avoiding Business Litigation 

If you want to avoid disputes with clients, employees and competitors, good communication is essential. You should always take time to clarify expectations and make a habit of doing the following.

  • Never over promise.
  • Keep the promises that you make. However, if you cannot keep your promise for some reason, let the person know. Offer a plan on how you will resolve the issue and make it right. Call first and then be sure to follow up with an email detailing whatever agreement was reached.
  • Be proactive. Don’t avoid difficult situations or conversations. Avoidance is more likely to cause the problem to escalate.
  • Evaluate how your tone may be perceived. And remember that email can make it difficult to effectively convey your desired tone.
  • Don’t be afraid to swallow your pride. Doing so could help you resolve an issue before it becomes a legal matter.
  • Evaluate and enforce best practices regarding how your employees should communicate.

2 – Make Documentation a Priority

To help protect yourself and your business, take time to document important communications and commitments. The following suggestions are some best practice tips for keeping up with appropriate documentation.

  • Keep all your emails organized in a good filing system.
  • Don’t do handshake deals this includes both business and personal agreements.
  • Avoid using templates you find via Google search to create your agreements/contracts. Each state has different legal aspects and you don’t know if the templates are accurate or current.
  • Be sure to have key contracts, including vendor agreements, reviewed by counsel, in order to help you understand the relevant provisions. It is also best to hire legal counsel for, at a minimum, reviewing and/or drafting of custom deal contracts, settlement agreements, employee handbooks, document retention policies, sexual harassment policies, and non-compete agreements.
  • Save what is important, such as contracts, loan documents, key documents underlying contracts and relevant negotiations, proof of payment, calendars, and tax information.

Important note – If you are anticipating business litigation, you must implement a litigation hold (also known as a preservation order or hold order).  Once you know of the existence of a dispute or even a potential dispute, hold onto all information so that nothing gets deleted. The loss of relevant evidence because of failure to institute a litigation hold can result in negative sanctions against you by the Court in any related litigation.

3 – Review Your Insurance Policies

Insurance isn’t a popular topic of conversation, but it is an important aspect of risk mitigation. Review the following points to help ensure your business is accurately covered.

  • Make sure that all current policies are correct and appropriate for your organization.
  • Investigate your options with multiple brokers.
  • Determine if the insurance company you are working with focuses on your niche business needs. Are they industry-specific to you?
  • Understand your potential need for multiple types of policies, including general commercial liability, errors and omissions, auto, property, workers comp, product liability, and other riders/endorsements.
  • Understand the obligations you owe to your insurance company, such as notice requirements, providing documents and cooperating fully in any investigation. Be sure not to settle with the other side without first getting your insurance company involved.

4 – Review Your Business Formation

Occasionally, business owners are surprised to learn their business structure is not appropriate to their type of work. To help minimize liability, you will want to engage counsel to help determine the appropriate corporate entity for your business. You will also want to keep corporate records, annual reports, and minutes if your business formation requires it. Make sure to follow all the formalities in order to ensure protection from personal liability. This step is key in avoiding business litigation.

5 – Work with the Right People

This is easily the most important tip on the entire list. The best way to protect yourself and your business is to make sure you are surrounding yourself with the right people. As the great Albert Einstein once said, “A clever person solves a problem. A wise person avoids it.”

To learn more about business litigation and how you can proactively protect your business, visit https://epiphanylaw.com/practice-areas/litigation/ or call us at 920-996-000.

 

About the Author

Heather J Macklin, Business Litigation Attorney

Heather J. Macklin

For nearly 20 years, Heather has focused her practice on complex commercial litigation. She has represented clients from a broad spectrum of industries, including financial institutions, luxury good retailers, real estate developers and small, closely held corporations. Contact Heather here. 

ALERT: Payment Fraud Warning

Posted by Heather Macklin on

fraud alert

It is no secret that schemes and scams designed to fraudulently separate you from your money abound.  Every day it seems we learn of new and creative ways criminals have devised to defraud innocent people. Sometimes the schemes are brand new, sometimes they are recycled.  Whether new or old, however, they can hurt the people who fall prey to them.

Recently, we have learned that banking institutions have seen increased activity surrounding a fraud scheme that has been around for a while.  You may be aware of this particular scheme, but we believe it can’t hurt to remind you to be vigilant and use best practices to protect yourself from fraud.

Here’s how the scheme plays out: You receive an email or regular mail from someone disguised as one of your current suppliers.  In the communication, the “supplier” informs you that they have recently changed their payment processes or their banking relationship and provides new wiring, ACH or other payment information to be used on all future orders.  The communication seems entirely legitimate, so you direct your accounting department to input the changes and your next payment is made accordingly.  Unfortunately, the criminals now have your money and it will be withdrawn from the account before you catch on and can get it back.

How you can protect yourself: ALWAYS double-check directly with your suppliers BEFORE you change any information in your company’s payment system.  Make a phone call directly to a trusted contact at your supplier to confirm whether the communication and new payment instructions are legitimate or not.  A phone call to a direct contact is better than email.  Email can be hacked and/or redirected.  A phone call will take only minutes but will provide you with significant protection.  It will also signal to your suppliers that you are vigilant and care about your relationship with them.

Long story short: Do NOT make any changes to how you pay your suppliers or vendors until you first confirm with them that the change of payment instruction is legitimate.