Slashing Reorganization Costs by Early Mediation: Helena Diocese Shows the Way

By Donald L. Swanson

Bishop George Thomas of Helena, Montana, says in late-February 2016:

“A conciliatory approach toward sex-abuse victims helped to minimize the expenses associated with the bankruptcy process.”

And the expense minimization is huge!

The Roman Catholic Diocese of Helena, Montana, files for bankruptcy protection in January of 2014.

Prior to filing, the diocese, plaintiff’s lawyers and insurers held confidential mediation sessions, resulting in a settlement agreement to pay millions of dollars to hundreds of victims who say clergy members sexually abused them over decades while the church covered it up. The Diocese then filed the bankruptcy proceeding to effectuate the settlement agreement. See this New York Times article. 

The Bishop describes a stark costs-contrast between the early-mediation approach he followed and a combative approach used elsewhere:

–“the Helena diocese spent about $2.5 million in legal fees during relatively quick bankruptcy proceedings”; while

–“the Archdiocese of Milwaukee has already spent more than $20 million on legal costs, during a long and contentious bankruptcy process.”

Yet, Helena and Milwaukee each provide the same payout amount for sex-abuse victims.  Each establishes a $21 million fund to compensate victims.

The Bishop explains his choice of “mediation and conciliation over acrimoney and litigation” as follows:

Though “originally disposed toward fighting the claims of sex-abuse victims,” he “chose a less confrontational approach” after “meeting with them and recognizing their suffering.”

The Bishop provides further rationale for his early-mediation approach in a February 2, 2014, letter to “the People of the Diocese of Helena” as follows:

“In my personal meetings with victims, it is evident that the scarring and pain continues to affect many of them every day. The impact on their lives cannot be underestimated. To anyone who was abused by a priest, a sister, or a lay Church worker, on behalf of the entire Diocese of Helena, I express my profound sorrow and sincere apologies. No child should experience harm from anyone who serves in the Church.”

Action Item. In every dispute, we should consider whether mediation and conciliation might be the best approach.

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