USA – CALIFORNIA Trends and Developments Contributed by: Jennifer Jordan McCall and Paul Fraidenburgh, Pillsbury Winthrop Shaw Pittman LLP
The Court process Credibility
The tax approach can help resolve a dispute since, if one’s desired outcome is more tax efficient for vari - ous parties it will incentivise them to agree with one’s stance. Conversely, if an opposing party knows that their desired outcome may possibly subject them to significant tax, that can serve as leverage. One should prepare the calculation prior to the set - tlement meeting or mediation and advise the other parties to “do their own math” – if they do not know how to do circular calculations, for example, where part of the remainder goes to charity, giving rise to a deduction from transfer tax, which thereby increases the charitable remainder, further reducing the tax, and so forth. That will be their responsibility and, moreover, it gives counsel a better chance to guide the negotia - tions, since counsel will understand the mathematics ahead of time. Counsel may need to engage a fiduci - ary accountant to assist with these calculations, since these can be quite time-consuming and complex. The settlement agreement Try to arrange for all the parties to be present in a mediation setting for an entire day (often this extends throughout the night, which evolves during the settle - ment process; it is best not to have any parties leave before the settlement agreement is signed, optimally). A tactful, intelligent and flexible mediator is invaluable if one can be arranged to facilitate the mediation. If a settlement is possible, it is advisable to prepare a draft settlement agreement ahead of time; if this is not possible, then do it during the night of the meeting in order to obtain everyone’s signature while they are in the mood to agree. If parties depart from the mediation in the middle of the night, it can create tremendous difficulty in obtaining their signature later, which can also require the entire agreement to be renegotiated. Litigation and resolution The abovementioned tools can be implemented to resolve a difficult case. However, in some cases, opposing parties can be so difficult that they refuse to settle. In such a case, it is essential to be armed with aggressive, strategically skilled and experienced litigators.
In litigation it is extremely important to maintain and build upon credibility. This can be achieved only by being straightforward and 100% truthful with the Judge, the Court representatives, such as the Court Investigator and the other parties about every aspect of the case. It is essential to present one’s point of view at the outset, illustrating why one’s client is enti - tled to their desired outcome. At the same time, where there are inevitable weaknesses in one’s client’s case, it is best to admit those and if possible, explain a miti - gating reason for that weakness. This disarms one’s opponent. Knowledge of the law Naturally, it is critical to carefully research all aspects of the case prior to going to Court, to grasp the issues and digest relevant case law. To be creative and effec - tive, it is essential to try to think outside the box. In a recent real estate case in Wyoming, the local real estate statute was problematic because it was ambig - uous, and a creative attorney was able to win the liti - gation thinking “big picture” to find that the outcome desired by the opponents was likely unconstitutional as an unlawful taking in violation of the 5th and the 14th Amendments of the Federal Constitution, as well as under the governing State Constitution. Cases regarding tax issues should not be avoided, as they can provide key leverage to obtain a desired outcome. The sympathetic client It is important to identify the aspects of a client’s posi - tion that are appealing to the average person, and therefore likely to influence the Court. Determine this by evaluating the legitimacy of their goal. Where, for example, a client has been victimised by the unrea - sonable behaviour of the opposing party, this should be persuasive because it is a wrong that needs to be corrected. On the other hand, if a potential cli - ent appears to be unreasonable, overly aggressive or untruthful, it is not likely to win the sympathy of the Court.
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