On May 3, the SCMA held their 6th Annual Peer Mediation Celebration at the USC Galen Center. The Founders Room was packed with almost 80 attendees and students from more than 8 different schools. Most notably, University High School In Los Angeles received a certificate for Best Practices in Peer Mediation by Kids Managing Conflict (KMC), SCMA’s Education Foundation.
The evening started with a heartwarming panel discussion with high school peer mediators where they discussed their experience as a mediator and how the skills they’ve acquired transformed their lives and the environment of the school. The evening ended with honoring University High School Dean and Peer Mediation Coordinator Karen Crowley as she is embarking on her retirement.
We would like to thank USC, INVLA, and KMC for their co-sponsorship of the event and we look forward to next year.
“A life is not important except in the impact it has on other lives.” These words, uttered by the great American Jackie Robinson, who broke baseball’s “color line” years before the landmark case of Brown vs. Board of Education and decades before the civil rights movement, has special significance for those of us in conflict resolution who are constantly devoting ourselves to impacting lives in positive ways. These words resonated with us as SCMA’s sister organization, Kids Managing Conflict (KMC), hosted dozens of southern California peer mediation program administrators and coaches at its April 26 Symposium on Kids Managing Conflict: Creating Peace on Our Schools Through Dispute Resolution Programs at the California Endowment for the Arts. As Sally Patchen, KMC’s President, noted in her opening remarks, peer mediators have a statistically significant impact on conflict reduction in the schools. SCMA congratulates KMC at its first annual conference of its kind and looks forward to continuing to support KMC’s great work in the community.
SCMA’s own 6th Annual Celebration of Peer Mediation, hosted by SCMA’s immediate Past President Jason Harper, is being held on May 3 at 6 p.m. at the Galen Center at the USC campus. This conference will enable you to hear from student peer mediators and professionals in discussing best practices in peer mediation. Please join us; you cannot beat the $0 cost. You may register at: https://www.scmediation.org/scma-calendar/npe-events/?eid=4361
April finished our initial webinar series to help you build you mediation practices, as past SCMA President Wendy Kramer delivered the very popular webinar on “Tips on Building a Financially Successful Mediation Practice.” If you missed one or more of our Building your Mediation Practice series, and would like to watch a recorded copy, they are available on our website. You may see them at https://www.scmediation.org/webinars/
May brings us our extremely popular annual Employment Mediation Institute. The conference theme this year is “On the Front Lines: How Mediators can Help Heal Workplaces in the #METOO Era.” There is still room to register for this event and discounted “early bird” registration is available through May 4. The panoply of speakers includes some renown employment mediators and speakers, with introductory remarks by Professor Lisa Klerman of USC Gould School of Law. The full schedule of speakers and panels is at https://www.scmediation.org/employment-mediation-institute-2018/, including Cherry-Marie B. Destura, of the Equal Employment Opportunity Commission (EEOC), and Harold Coleman, Jr. of the American Arbitration Association’s Mediation.org. Thank you to President-elect Angela Reddock-Wright and conference chair Samantha Blake for putting together this outstanding lineup of speakers.
And those of you who are in Family Law will not want to miss our two-day Family Mediation Institute in Orange County on June 8-9. Keynote speaker and author Dr. Sam Alibrando heads an all-star lineup of family mediation professionals divided into various panels; a larger description of the program is located at https://www.scmediation.org/family-mediation-institute-2018/ Thank you to Board member Terri Breer and Communications Chair Susan Guthrie and the host of others who have dedicated their time to putting this exciting new conference together.
As you can see from the above, your volunteer Board and committees are dedicated to continuing to add value to your membership. In addition to the above activities, there are a host of others, including our monthly professional development groups. We welcome your comments and contributions and thank you for your continued support.
Abstract: Structured settlements for non-physical injury disputes, such as those arising from wrongful termination and similar employment-related lawsuits, remain a surprisingly underused and unappreciated settlement resolution tool. By taking the time to understand how this useful strategy can positively impact settlement talks, mediators will be better positioned to demonstrate how a series of tax-deferred cash flows can help level out the plaintiff’s tax burden leading to a better, fairer outcome for all parties.
Wrongful termination and similar employment lawsuits present litigants, their counsel and mediators with a few challenges not encountered during negotiations involving most other types of personal injury claims.
One of those challenges is taxes. Unreasonable taxes. Unfair taxes.
Unlike plaintiffs who compromise their physical injury disputes and pay zero taxes on their settlement proceeds (exclusive of punitive damages), those who choose to resolve their employment differences for a single lump sum can end up relinquishing an excessive share of their recovery to taxes.
Regrettably, this grim reality isn’t often realized until well after the case has resolved. Even more regrettable is the fact that overpaying taxes on employment settlements is completely avoidable.
Mediators who are conscious of these dual realities and understand how easily they can help parties overcome them stand to distinguish themselves as conscientious conflict arbitrators who can bring about the fairest of all possible outcomes.
Physical Versus Non-Physical Injury Claims
26 U.S. Code § 104(a)(2) exempts from taxation any damages (other than punitive) whether paid as a lump sum or as periodic payments received “on account of personal physical injuries or physical sickness” even though the word “physical” remains undefined.
Prior to 1996, however, the word “physical” had yet to be added to the code leaving the tax treatment for many types of claims open to interpretation. For obvious reasons, practitioners sought to qualify all sorts of damages, emotional distress chief among them, under § 104(a)(2) in their complaints even when the origin or fact pattern of the claim strayed from the original intent of the law.
Several court cases later (primarily United States v. Burke, Commissioner v. Schleier and Murphy v. IRS), prompted legislatures to address this tax ambiguity culminating with the Small Business Jobs Protection Act of 1996 (Public Law 104-188). The new law added the word “physical” to the code and clarified that emotional distress, unless stemming from an underlying physical injury, was indeed taxable. (See § 1605(b) of P.L. 104-188)
Taxable cash awards, particularly large ones, create serious tax inequity by catapulting the plaintiff into an extraordinarily high tax bracket for a single year even though the award may have been intended to compensation the aggrieved party for years into the future, even a lifetime.
Where is the equity in this?
Clarity Creates Opportunity
With the door for preferential tax treatment of damages permanently closed for wrongful termination and similar torts, the structured settlements industry stepped in to solve the fairness imbalance created when plaintiffs are forced to accept their settlement or verdict in a single lump sum.
By modifying the Qualified Assignment process used to facilitate physical injury structured settlements which pay future income that is 100% income tax-free, the industry was able to create an alternative which allows plaintiffs involved in nonphysical injury claims to mitigate their tax liability.
A Non-Qualified Assignment process now exists which helps parties arrange to have their settlement dollars – and their tax liability – spread out over time. A favorable 2008 Private Letter ruling from the Department of the Treasury (PLR 200836019) reinforced this settlement alternative as a sensible money saving tax deferral strategy.
Save Money, Save Face
Plaintiff A is a single taxpayer earning $80,000 a year (23% tax bracket) after being fired from his job. He plans to work another 15 years but $80,000 is about half of what he had been accustomed to earning. He resolves his wrongful termination lawsuit and nets $1,000,000 which he opts to take in cash.
Using current tax rates for a California taxpayer, Plaintiff A will pay roughly $467,000 in taxes on his $1,000,000 recovery.
Plaintiff B, on the other hand, is also a single taxpayer in identical circumstances and resolves an identical lawsuit netting her $1,000,000. However, she chooses to have her recovery spread out over the next 15 years to avoid the unreasonable, one-time, 47% tax burden. Instead, she chooses to have it paid out over time via a Non-Physical Injury Structured Settlement which lowers the tax she pays on her $1,000,000 to $396,400 – a 15% reduction – netting her $70,600 MORE than if she had chosen the cash lump sum. All at no out-of-pocket cost to anyone.
Aside from the immediate tax savings, the best part about Plaintiff B’s settlement is that it returns her to her pre-termination cash flow situation. The structured settlement generates roughly $80,000 a year for the next 15 years which, when coupled with her current salary, brings her back to $160,000 of taxable income she had been accustomed to. All on a tax advantaged basis.
All Sides Benefit
Cash offers and demands limit the parties during taxable damage negotiations and can lead to impasse. Employing a Non-Physical Injury Structured Settlement strategy instead affords both sides a better opportunity to bridge the negotiation gap more effectively by focusing on the plaintiff’s after-tax income rather than the gross value of the settlement. Mediators who embrace this creative, needs-based approach to negotiations validate their reputations as fair-minded arbiters who could very likely see their practices enhanced as a result.
We had a wonderful turnout of members, including many current and past Board Members, to honor our current President, Jack Goetz, our President-Elect, Angela Reddock-Wright and many of our illustrious past Presidents on April 21, 2018. The beautiful setting provided by the Del Ray Yacht Club was emphasized by glorious weather and the champagne breakfast to make for a truly special event. The highlight by far was hearing from each Past President in attendance who recounted some of the highlights and challenges that they faced during their terms. Attendees heard many of the inside stories and histories of the SCMA told by those who worked so hard over the years to build our organization into the mediation leader that it is.
Providing opportunities for professional networking, helping mediators build their practices, and low cost educational programming all go to the heart of what SCMA means to many of us. I am so thankful for all the volunteers who continue to devote their efforts for the benefit of our membership. The diversity of our programming continues to make SCMA the premier mediation organization.
Building your mediation practice? Many of you were able to join us in March for Board member Mark Lemke’s webinar on “Using LinkedIn to Build Your Mediation Practice.” If not, you can view it in our webinar library along with past president Nikki Tolt’s “Building Your Mediation Skills and Practice.” Our upcoming April webinar, past president Wendy Kramer’s “Tips to Building a Financially Successful Mediation Practice,” is a tremendous complement to our previous webinars. You may register for this webinar at https://www.scmediation.org/scma-calendar/npe-events/?eid=4347
And what about a workshop for those of you interested in using your mediation skills in other work environments? We have that too, as Jason Harper, our immediate Past President, heads a panel of six mediators who will address Non-Traditional and Unexplored Career Paths for Mediators at USC Gould School of Law on April 7. There is still some space available to register for this event; see https://www.scmediation.org/scma-calendar/npe-events/?eid=4293
Professional networking? If you haven’t had a chance to join one of our regional professional development groups, April is a great time to do so! April will see the launch of our Orange County PDG, with much thanks to Ed Pallotta. But other regional PDGs will also be holding their monthly meetings led by our many dedicated volunteers; please see our website for that information as it is posted.
But April marks the return of one of our best social networking programs, our breakfast with SCMA past presidents. Those of you interested in connecting with some of the top mediators who have served as president of our organization will find this an excellent opportunity to do so. We will also spend some time at this breakfast honoring Joe Markowitz, our 2014 President who was taken from us so prematurely. If you did not have a chance to attend the beautiful service held for him in January, this will be your opportunity to know more about this wonderful individual who contributed so much to our field. You may register for the program at https://www.scmediation.org/scma-calendar/npe-events/?eid=4316
Low cost educational programming? In addition to the previously mentioned programming devoted to building your mediation practice, two noteworthy events are just around the corner. Our May 19 Employment Institute, headed by President-elect Angela Reddock-Wright and chaired by Samantha Blake, will pull together dozens of the top employment and workplace mediators in the area in a half day of topical workshops; see https://www.scmediation.org/employment-institute-2018/ and register early to lock in a reduced price. The other event, our inaugural June 8-9 Family Mediation Institute in Orange County, will include scores of mediators joining us for what promises to be a remarkable experience. Look for an announcement soon on our website regarding early registration for this event. And again, thanks to Board member Terri Breer and her committee, including Susan Guthrie who is doing double duty as a member of the SCMA Communications Committee, in organizing this event.
There are so many volunteers who are dedicated to making our mediation field a better place for all of us, and this page is too small to thank every one of them. However, when you attend one of these events, please let them know you appreciate their efforts as that is their compensation. Do you have an idea for programming that would benefit our community? Please let us know…we value your patronage and continue to want to make your SCMA experience significant.
Imagine something you really, really want, something that would make your life immeasurably better. Now imagine that you can’t find it anywhere. And, when you finally do find it, you’re not 100% sure you can trust the person selling it.
As a business owner, the seller has a duty to make it easy for customers – like you, who can benefit from what they do, to find what they’re looking for and feel confident in their decision to buy.
As a mediator who owns their own practice, you have that same duty.
Unfortunately, many qualified mediators give up on building their practices after a short time, because they hit unexpected challenges and worry they won’t reach the income they desire. Chances are, these mediators just didn’t know how to approach their duty as a seller.
If you want to build a rewarding mediation career, you should take time to learn about the business challenges you will face and how to overcome them.
Although some challenges will depend on personal variables, including location, area of practice, and length of time the practice has been in business, we will discuss some of the most common challenges today.
When you’re just starting out, it can be difficult to be confident in your abilities. But, the only way to build your confidence is through experience. Hang in there and keep going! The more mediations you conduct, the clearer it will become that you really do have the tools to mediate successfully.
The more confidently you can talk about your skills and experience, the easier it will be to convince new clients that you can resolve their dispute. This will help build trust, in turn, making their decision to hire you much easier.
Number of Clients
Almost no one starts a business with a proverbial rolodex filled with clients ready to pay for their services. Like any business owner, mediators need to create a marketing plan to attract new clients to their business.
It’s important to remember that marketing isn’t a one-and-done activity; mediators must constantly engage in marketing activities to remain visible to potential clients.
A good place to start is by identifying your target market and the personal attributes that make you an ideal fit for their specific needs.
Make sure to think about the things you can offer clients that competing mediators can not or do not currently offer. If you only advertise the abilities that are common to all mediators in your specialty, it will not sufficiently reveal what makes you the right choice.
You’ll also need to think about the channels you use to communicate this message. Do you have a website? Are you on social media? Do you use print ads? Do you write a blog?
No matter how you display your skills, the message should be clear and consistent for all of them.
Online visibility is very important. It’s how most people search for the products and services they need. At a minimum, a skilled mediator should have a professional-looking and useful website, and learn how to write an effective mediator profile.
Like a confident attitude, the ability to prove you have put time into your craft through training goes a long way to build trust with potential clients.
But because of the dynamic nature of mediation, it can be hard to quantify sufficient training.
Some states require minimal training, while other states do not mandate training requirements for mediators at all. This, unfortunately, leads to unskilled people calling themselves mediators, and potentially risking their personal reputation and the reputation of mediation in general.
Even mediators who seek out training can find themselves unprepared, since there is no universally accepted standard for training in the United States.
So how do you learn the right skills?
Finding a 40-hour basic mediation training that you trust to provide adequate instruction is a good place to start. This is usually enough to be recognized by the courts as qualified to mediate, if that is the goal, but is really very minimal.
Dispute resolution training providers, colleges, and universities are all resources for more advanced training. You can also find educational and training opportunities at industry conferences and workshops. These types of opportunities are often more agile in their content, allowing them to capture the constantly evolving philosophies in mediation.
Being a relatively new discipline, there are plenty of professionals working in the court system around the country who don’t understand how beneficial mediation can be for individuals involved in a lawsuit.
When supporting entities don’t have confidence in mediation, it can be much harder to convince disputants and their lawyers to take advantage of it.
You can tackle this challenge by being an advocate for mediation in the legal community. Get to know the lawyers and judges in your area, perhaps by holding an open house in your practice. Or, volunteer to give a talk at a conference or meeting for legal professionals.
Be open to talk about the benefits of mediation, and be prepared with concrete examples of those benefits. Put your mediator’s calm and trustworthy demeanor to use by persuasively discussing why mediation is such a promising tool for disputes.
The relationships you build may just change everything!
As we suggested in the opening paragraphs of this article, many mediators give up when they don’t initially see the results they were looking for.
You will face many challenges in every step of your business journey, but the secret to finding success is to seek out trusted advice when you hit a roadblock, then keep plowing through it.
Just keep working, keep marketing, keep learning, and keep communicating, and you will be unstoppable!
Thanks to our many volunteers, February was another good month for SCMA and its members. The Professional Development Groups (PDGs) continue to thrive under the leadership of President-elect Angela Reddock-Wright and Stacey Lisk (Westside), and continued support from leaders such as James Cameron (San Fernando Valley), John Irwin (Pasadena), and Andy Shelby, Marvin Whistler, and Mark Sarni (South Bay). Sayre McNeil has taken the lead in re-forming our Santa Barbara/Ventura group, and Ed Palotta has done the same with Orange County. Plans are under way now to initiate a San Diego group. We hope as a member you have taken advantage of the opportunity to attend these valuable networking sessions.
Our SCMA Education Foundation, Kids Managing Conflict, initiated their plans for 2018. One of their upcoming events include a trip for peer mediators to the Museum of Tolerance. In addition, they are making plans for their first conference of peer mediation programs. Kids Managing Conflict’s website is replete with information about its plans and initiatives; see https://www.kidsmanagingconflict.org/.
February also saw 65 mediators attend a dialogue on voluntary mediator certification at USC Gould School of Law. Presentations by Angela Reddock-Wright, Jason Harper, Barbara Brown, Chris Welch, Adam Ravitch and myself led to a dialogue session with those in attendance. This opportunity for community dialogue and feedback on such an important issue for our field continues to strengthen the initiative. MC3’s efforts will continue to be chronicled on the SCMA website under mediator certification; see https://www.scmediation.org/for-the-public/mediator-certification-program/.
Our friends at the National Conflict Resolution Center (San Diego) hosted our SCMA panel, led by Ana Sambold and Jason Harper, on Non-Traditional and Unexplored Career Paths for Mediators on February 24. Participants attending were excited to meet representatives from fields such as Ombuds and learn about entry paths into those fields. SCMA hopes to announce soon another panel presentation for the Los Angeles area soon.
March continues to be a busy month for SCMA. Another webinar that promises to assist your career, “Using Linkedin to Build Your Mediation Practice,” will feature Board member Mark Lemke. You can register for the webinar at Using Linkedin to Build Your Mediation Practice. The attendees to the February webinar presented by former SCMA President Nikki Tolt appreciated her tips on “Building your Mediation Skills and Practice.” If you missed Nikki’s presentation, but would like to review it, we will be announcing details shortly about how you can access that through the SCMA site.
We appreciate your continued patronage and membership in SCMA and want to continue to provide you with resources and opportunities that help you in your careers. We welcome your continued ideas and suggestions. Have a great month and we will look forward to seeing you at a PDG or other SCMA sponsored event!
The SCMA is excited to announce our new Facebook Group! In an ongoing effort to create a positive community and foster open communication among members, we have a new forum in which members can ask questions, share ideas, post important updates, and network with member colleagues. We will also use it to keep everyone informed of news, announcements, events and more.
This is a “Closed Group” meaning people on Facebook can find and see who’s in it, but only members can see posts.
Because our goal is to create an environment of Mediation and Conflict Resolution Professionals, you will be asked to answer a couple of questions upon requesting to join.