If I Were a Bankruptcy Judge, I’d be Promoting Bankruptcy Mediation Now — Part Two

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By Donald L. Swanson

Here’s how a season change worked, as I recall, in the early 1980s: we are at the early stages of an economic recession. The local Bankruptcy Court has one judge, one secretary and a few people in the Clerk’s office. 

As the economic recession intensifies, the local Court’s workload explodes. Motion days occur frequently and are filled with a dozen-or-so hearings scheduled for every hour, all day long. To deal with case-load pressures, the local Bankruptcy Judge takes to ruling from the bench on affidavit evidence, without written opinion, at the end of every hearing. He simply issues and explains his ruling orally and moves on to the next matter, with a terse “Motion granted” or “Objection overruled” journal entry to document the action. He rarely takes a motion day issue under advisement for writing an opinion. He simply doesn’t have time to do so.

The Judge takes occasional grief from appellate courts for lack of written explanations, but he continues doing what’s needed to keep pace with workload demands.

During those days, a mediation-ish process develops among attorneys in this Judge’s Court. All attorneys in a dispute must appear at a hearing—if you don’t show, you lose. So, we all spend lots of standing-around time at every motion day, which leads to hallway discussions among opposing attorneys, who start settling their disputes while waiting for their hearing.

As time moves forward, most disputes scheduled for hearing on a motion day actually resolve by settlement in this way. There’s no sense waiting who-knows-how-long for a hearing and a ruling from the bench on a dispute the Judge will know nothing about until we explain it to him at the hearing.

Ironically, the judge actually serves a mediator-type role during this time: he brings disputing parties together, gets them talking about their disputes, helps them recognize a need to settle, and encourages them toward settlement (albeit, he does so in an indirect and round-about sort of way). Let’s call this old process, “hallway mediation.”

The hallway mediation days are gone. Telephone hearings and electronic filings killed them. While shortcomings in the hallway mediation circumstances are obvious, those of us who practiced there have a respect and nostalgia for the mediation-ish processes that flourished in that environment.

Action Item.  We should all be encouraging every bankruptcy judge to promote bankruptcy mediation now, as a way to prepare for future days when the bankruptcy season arrives again.

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