USA – CALIFORNIA Trends and Developments Contributed by: Jennifer Jordan McCall and Paul Fraidenburgh, Pillsbury Winthrop Shaw Pittman LLP
Diplomacy, respect and patience Given that the dispute resolution process is inherently stressful and contentious, it is understandable that all parties may be vulnerable to anger. To combat this (as anger can escalate and block resolution), remember that the opposing attorneys are likely to be intelligent and to have some valid points. As much as we want to “win”, being sensitive to their clients’ vulnerabilities and goals increases our chance of settlement. It is crucial to avoid ancillary debates, such as whether the other attorney has been offensive or irritating. Instead, aligning oneself as their reasonable ally in reaching a settlement is a good approach. We are all human. It is important to take a deep breath and try to resolve conflicts that may arise during the settlement process or when discussing the case in the hallway after a court hearing. Naturally, the best foundation for a win is detailed study of the law and the calculations, but respect for the other attorneys, diplomacy and patience are key ingredients to a successful outcome. Moreover, the Judge and the court are likely to observe all reasonable behaviour, which will incentivise them to work to achieve a fair settlement. Recent examples of high net worth litigation In a recent California case, a husband was administer - ing psychiatric drugs to his wife who had previously suffered from depression. He enlisted the support of a local doctor who would bring the drugs to his house on a Saturday and receive cash payments. As a result of over-medication, the wife spent her days and nights alone in a room, mostly sleeping. During this timeframe, the husband arranged for a post-nuptial agreement to be written whereby the parties agreed that the substantial assets of the wife should all be transferred to the husband’s account for “safekeep - ing”. An unscrupulous lawyer was retained by the husband to “represent” the wife in the post-nuptial agreement. Meanwhile, the husband was carrying on an affair with one of his employees. Fortunately, the wife discovered the affair, and this served as a wake- up call for her. She moved to California to live with a family member and retained a competent trust and estates attorney. With the assistance of her family member and the attorney, who referred her to a trust- techniques and dispute resolution Conservatorship Proceedings
worthy hospital, she obtained appropriate psychiatric counselling and was able to extract herself from her medical dependence. The lawyer was able to reclaim the wife’s assets that had been wrongly deposited into the husband’s account. This was made easier when the attorney advised the bank that the wife had been on drugs when the bank made the transfer and the bank admit- ted it had taken instructions from the husband, not directly from the wife, and the assets were immedi - ately transferred back to the wife’s account. Upon realising that he could not entice his wife back to live with him, the husband then brought a Conserva - torship Proceeding. Although he had not seen her for several years, he alleged that she was addicted to the drugs – that he had been administering – and was able to unable to care for herself or for her own assets. For - tunately, the wife had strong California counsel. They were able to explain to the Court Investigator that the wife had received appropriate psychiatric counselling and had rid herself of the medical dependency. The Court came to the aid of the wife. During the proceed - ings, the wife chose to file for divorce. Under govern - ing state law, if a divorce action is pending, the other spouse loses standing to seek a Conservatorship. The Court ruled that that divorce was sufficient to deprive the husband of standing in the Conservatorship case and dismissed his petition. This case illustrates how a Conservatorship can be improperly used as an offensive weapon to control the person and the property of the other spouse in a divorce. In another similar case in New York, a Conservator - ship Petition was successful. In this particular case, although a divorce was pending, the spouse that brought the petition for the Conservatorship was not deprived of standing and was able to succeed. The wife was placed in an institution, and the husband was able to continue his extramarital affair while using the wife’s assets for his comfort and luxurious life style. Used correctly, a Conservatorship can provide Court- supervised oversight of a client’s assets. However, in a contentious family situation, a Conservatorship can
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